LINCOLN, Neb. (DTN) -- The U.S. House of Representatives on Wednesday passed a bill to allow permanent year-round E15 sales, two weeks after E15 was pulled from the farm bill.

The bill passed on a 218-203 vote after a motion to recommit the legislation back to committee failed. Reflecting that E15 is as much regional as partisan, 95 Democrats joined 122 Republicans to pass the bill while 90 Republicans and 113 Democrats opposed it. One independent also backed the bill.

H.R. 1346 represents a compromise from the farm bill version, most notably when it comes to small-refinery exemptions. Starting on Jan. 1, 2028, those refineries would receive an automatic 75% exemption from their Renewable Fuel Standard obligations, according to the bill text.

The U.S. Environmental Protection Agency would lose its existing authority to grant hardship-based SREs after 2028. In addition, 75% of those exempted volumes would be reallocated to other refiners.

Rep. Frank Pallone, D-N.J., said during an hour debate that the current state of the economy with rising gasoline prices and continued inflation essentially led him to vote for the bill.

"This is not a bill I would have proposed if I or any Democrats were given a seat at the negotiating table," he said. "However, it is a compromise, and despite my reservations, I am voting yes because year-round E15 can offer some relief at the pump as prices soar across the board due to Trump's reckless war in Iran and the disastrous Republican energy agenda. And despite my serious concerns with the process by which this bill was brought to the floor today, the bill is a step in the right direction as President Trump and congressional Republicans carelessly undermined renewable fuels and pushed policies that hurt our farmers."

Pallone said drivers are saving, on average, about 30 cents per gallon to fill up their tanks with E15.

"This fuel provides significant savings for families during the summer driving season, so let's ensure it continues to be available at gas stations across the country all year with certainty, which is what this bill does," he said.

Rep. Mariannette Miller-Meeks, R-Iowa, said it makes sense to pass the bill, considering the EPA has granted summer waivers to allow E15 sales to continue since 2011.

"That means Washington already recognizes that this policy makes sense," she said.

"What we are doing today is removing an outdated prohibition and finally providing certainty for farmers, producers, retailers and consumers year-round," Miller-Meeks said. "E15 as an American-made domestic fuel that is homegrown, lowers gas prices, strengthens our energy independence, and supports rural communities across Iowa and our country."

Miller-Meeks said that nationwide E15 would save drivers money at the gas pump, but the debate is about boosting the agricultural economy as well.

"Agriculture is hurting right now. Input costs remain high through the Biden administration, commodity prices are down and farm bankruptcies are rising. I've looked farmers in the eye, as they've told me, their family farms, their legacies, their community bank, their community implement dealer (are at risk), not because they're failing, but because Washington keeps moving the goalpost."

Year-round E15 would increase corn demand by 2.4 billion bushels, Miller-Meeks said, strengthen domestic energy production, support more than 128,000 American jobs and inject "billions into rural economies and saves Americans money."

FAPRI ANALYSIS

The Food and Policy Research Institute at the University of Missouri concluded in an analysis this week that the E15 bill would benefit consumers, and especially diesel users, through lower Renewable Fuel Standard compliance costs.

Though the measure would support corn markets through higher demand, FAPRI said year-round E15 and the other provisions of the bill would hurt soybean farmers in the form of reduced biodiesel demand.

FAPRI modeled three scenarios with the legislation. If the bill only adopted expanded E15 use, the fuel's use would expand by less than 1% per year. The analysis also modeled the effects of granting E15 year-round and what might happen if 75% of 600 million gallons and 900 million gallons in small-refinery exemptions are not reallocated starting in 2028.

In all the E15 scenarios considered by FAPRI, ethanol use would rise significantly while biomass-based diesel use would fall as ethanol substitutes for the advanced biofuel in the RFS.

FAPRI said year-round E15 would raise corn and soybean meal prices and increase feed expenses for livestock producers.

In addition, FAPRI said gasoline prices would rise only slightly between 1 and 3 cents per gallon, while diesel and biodiesel prices would fall 30 cents to 55 cents per gallon by 2035.

REFINING INTERESTS PUSH BACK

Rep. Harriet Hageman, R, Wyo., called on House members to vote against the bill, arguing the measure would raise prices at the pump.

"This bill is disastrous for Wyoming refiners and independent petroleum producers, leading to a direct loss of at least 750 jobs in my home state," she said during the hour-long debate on the bill.

"And just to correct the record, it isn't the farmers that produce ethanol or E15, it is the refiners. And this bill threatens to put them out of business. And in fact, it's interesting that anyone who supports this bill has not yet mentioned the fact that it is the refiners' workers that will be forced mandated to meet the E15 requirement."

Hageman said year-round E15 would pressure those refineries that already are at risk of closure.

"We could lose upwards of 266,000 indirect jobs that depend on small refineries," she said.

"The EPA's own regulatory impact analysis of the 2026-2027 biofuel mandate says the RFS will cost American families about $20 billion a year. This bill would create a $3 billion or more annual cost increase for small refineries because of the blending and compliance costs. This bill will increase the cost of gasoline by an average of over 35 cents per gallon, with some states seeing an increase of well over $1 per gallon."

CBO ANALYSIS OF BILL

The Congressional Budget Office said in an analysis of the legislation that it would increase the federal deficit by $2.27 billion in the next 10 years.

Allowing E15 sales year-round would increase demand for corn-based ethanol, increase demand for corn and modestly raise corn prices, according to the CBO. It also found the bill would reduce federal payments from USDA commodity programs and reduce direct spending on agriculture subsidies.

CBO said that because ethanol has lower energy content than gasoline, higher ethanol blends would lead to slightly more gasoline consumption and increase revenues from the federal excise tax on gasoline.

It also said year-round E15 nationally would increase claims on the 45Z Clean Fuels Production tax credit, also contributing to increased revenues.

CBO estimates that HR 1346 would reduce direct spending on crop insurance by $1.3 billion in 10 years.

The CBO said the proposed changes to the Renewable Fuel Standard that would prohibit the U.S. Environmental Protection Agency from reallocating biofuels volumes to other refineries could significantly reduce demand for biomass-based diesel. That, in turn, could depress soybean prices.

The CBO also raised the possibility that the bill would ultimately have spillover negative price effects on other crops, including wheat, grain sorghum, canola and sunflowers.

The bill would also require EPA to issue new regulations on the labeling and storage of E15, meaning it would impose stricter regulations on the private sector.

The CBO said there would be considerable budget uncertainty from the legislation, depending on how quickly consumers and retailers adopt E15, the actual volume of small-refinery exemptions and unpredictable prices changes on commodities including corn and soybeans.

INFLUENCE ON E15 BILL

Rep. Zach Nunn, R-Iowa, said during debate earlier in the day on a resolution to vote on the E15 bill that it was time to make E15 available nationally year-round.

"We should be focused on a domestic-based energy source," he said, "one that pairs up our traditional fuels with our biofuels, and this bill has that privilege of doing it."

Nunn said there's been "a lot of misinformation out there" about the bill. Opponents of the legislation have been pushing a narrative that E15 would be mandated.

Lee Zeldin, administrator of the U.S. Environmental Protection Agency, was questioned during a Senate Appropriations subcommittee hearing on Wednesday about the so-called "Nationwide Consumer and Retailer Fuel Choice Act."

Sen. Deb Fischer, R-Neb., asked Zeldin whether the bill she cosponsored was a mandate on E15, and he answered, "No, senator."

Nunn decried the push made by opponents of expanded E15 to prevent it from reaching the House floor.

"There's insider lobbying going on, and there's been backroom deals on this very floor between people who are putting Iowa farmers and American consumers last," Nunn said.

"I was not going to let that happen. They tried to kill it by making sure it never reached the floor, and foreign companies flooded this building with lobbying dollars."

Read more on DTN:

"House Passes Farm Bill But Strips E15," https://www.dtnpf.com/…

Todd Neeley can be reached at todd.neeley@dtn.com

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