EPA submits rule for higher-ethanol fuel labels

WASHINGTON Wed Sep 22, 2010 7:32am EDT

WASHINGTON (Reuters) - The White House is reviewing a proposal from federal regulators to require labels on gasoline pumps selling fuel containing up to 15 percent ethanol, a sign the government could be close to approving a higher ethanol blend in gasoline.

The Environmental Protection Agency filed the rule last week with the White House Office of Management and Budget. The EPA is expected to decide by mid-October whether to approve a petition from a group of ethanol producers to increase the blend of ethanol in gasoline from the current 10 percent to up to 15 percent, known as E15 gasoline.

"This sounds like what you would expect if EPA was moving toward some kind of limited approval for E15," analyst Mark McMinimy of Washington Research Group said about the label proposal.

In its filing to the White House, the EPA said the labels were needed on pumps "to ensure that consumers do not fuel their vehicles or engines with unapproved fuels".

The agency previously said on its website that it would propose an E15 labeling rule for pumps at the same time it made a decision on the higher-ethanol blend petition.

"No decision has been made on whether to approve E15," an EPA spokesperson said.

Still, Growth Energy, the coalition of ethanol producers that filed the E15 petition with the EPA, questioned why the agency would propose new pump labels if it was not going to allow higher ethanol blends.

"It's definitely promising," Growth Energy spokeswoman Stephanie Dreyer said.

The EPA is awaiting test results from the Department of Energy on how E15 fuel affects the performance of vehicles built in 2007 and later model years.

The DOE said it expected to submit that information to the EPA by the end of this month.

The department will then send similar E15 testing data on vehicles manufactured between 2001 and 2006 to the EPA in November, with an agency decision expected in December on whether E15 can be used in those vehicles.

Ethanol producers are seeking approval for E15 to remove a surplus of ethanol caused by government mandates to make more ethanol-blended fuels to stretch domestic gasoline supplies and cut fuel imports.

States and filling stations will not be required to make E15 available.

Under the Renewable Fuel Standard, oil refiners are required to blend 12 billion gallons of ethanol into gasoline this year. The mandate rises steadily to 15 billion gallons by 2015.

(Reporting by Tom Doggett; Editing by Alden Bentley and Dale Hudson)