On December 1, the Environmental Protection Agency announced its plan to take more time to study the data concerning our industry’s E15 waiver request and to prepare for a final decision around June of this year.

ACE views this as a “glass half - full” circumstance. We would have strongly preferred that EPA approve the use of E15 in all cars already, yet we recognize the Agency was under pressure from special interests to reject the waiver.

It is inescapable – approval of E15 is certain this year, and three encouraging details in EPA’s announcement give us clues to the direction they are heading.

First, in the letter explaining its decision, EPA acknowledged “it is clear that ethanol will need to be blended into gasoline at levels greater than the current limit of 10 percent.” They don’t simply mean E85 – EPA recognizes midlevel blends are necessary.

Second, EPA indicates that “our engineering assessment to date indicates that the fuel, engine, and emission control systems on newer vehicles (2001 and newer model years) will likely be able to accommodate higher ethanol blends such as E15.” EPA cannot gracefully backpedal from a statement like that.

Finally, EPA announced plans to establish a working group, which ACE will participate in, to address retail labeling issues. Again, this signals that EPA recognizes that E15 and other midlevel blends are bound to happen so they want to prepare retailers and consumers for the eventuality.

Between now and mid-year EPA plans to examine the catalyst durability data in a dozen cars, and they indicate that based on the results of that data, they may be in a position to approve E15 for newer cars (2001 or newer) by June. This is directionally encouraging , but ACE will continue to make the case that the data supports the use of E15 in all vehicles, and we cannot be satisfied with E15 as the final move.

Further, it is ACE’s strong position that ultimately we need to shift the power to decide what fuels motorists use away from government agencies and oil companies and back to the consumer. Maximum consumer choice to use E10, E15, E20, E30, E85, or “ethanol-free” gasoline is preferred, and ACE believes that when consumers are finally given these choices, they will select the ethanol-blended fuels that work best for them.

That is why ACE will continue to work aggressively over the next several months to enact legislation introduced by U.S. Senators Harkin (D-IA) and Lugar (R-IN) to provide incentives for the installation of blender pumps and to require the production of more FFVs. Their legislation, S. 1627, the “Choice Act , ” will be one of ACE’s top legislative priorities for 2010. We encourage you to ask your Senators to cosponsor this bill.