The Environmental Protection Agency issued a fuel emission waiver covering 38 states on Thursday to ease the flow of existing supplies of gasoline into the market amid increasing fears of fuel disruptions from Texas to New York.

EPA issued the 38-state waiver after reports the Colonial Pipeline would be shut down as many large refineries are closed due to flooding from Hurricane Harvey. The Colonial Pipeline delivers a big chunk of the eastern seaboard's gasoline supply from the Gulf Coast to New York City. The new waiver supersedes and expands a previous waiver that EPA Administrator Scott Pruitt issued on Wednesday to include 12 states and Washington, D.C.

The waiver allows refiners to forgo the continuation of summer gasoline blends, which are meant to control ozone-forming smog. Refiners and terminal blenders of the fuel can now bypass the strict blending rules and move to winter gasoline blends that require less work and cost to produce, and can get to market faster.

Thursday's action includes: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont, Delaware, the District of Columbia, Maryland, New Jersey, New York, Pennsylvania, Florida, Georgia, North Carolina, South Carolina, Virginia, West Virginia, Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Dakota, South Dakota, Ohio, Oklahoma, Tennessee, Wisconsin, Alabama, Arkansas, Louisiana, Mississippi, New Mexico, and Texas.

Ethanol on the waiver

In response to the ethanol industry's push for Pruitt to approve a nationwide waiver that supports higher blends of renewable fuels, Pruitt included a specific carve out for 15 percent gasoline-to-ethanol fuels in Thursday's waiver, although it doesn't give the industry everything it wanted.

"The sale of gasoline containing up to 15 percent ethanol (E15) must continue to comply with federal rules, which are designed to minimize the potential for E15 being used in vehicles that are not designed to use this fuel," the agency said.

The Renewable Fuels Association, representing the ethanol industry in Washington, said that means sellers of E15 must continue using EPA-mandated fuel labeling meant to prevent owners of wrong model-year vehicles from using blends of ethanol that are higher than 10 percent. Use of 15-percent ethanol fuel in the wrong model-year vehicle could result in engine damage or misfiring.

"Sure it's good news. Retailers in all of those states that already have an approved MMP [Misfueling Mitigation Plan] can start selling E15 TODAY rather than waiting two more weeks (and this waiver includes many Midwestern states where there is lots of E15)," said the group's executive vice president Geoff Cooper in an email to the Washington Examiner.

But Renewable Fuels Association CEO Bob Dinneen sent a letter to Pruitt on Thursday morning asking him to relax labeling requirements for E15 in the emission waiver, which Thursday's waiver doesn't mention.

Dinneen has been lobbying this week to get Pruitt to approve a nationwide waiver in the wake of Hurricane Harvey to help mitigate gasoline price spikes and supply shortages. Ethanol prices remain much lower than gasoline prices and blending more ethanol in the nation's fuel supply would mitigate anticipated shortages in gasoline from refiners and pipelines closing down around the Gulf, he said.

"We believe the waiver has the potential to provide much-needed relief to consumers in these areas facing gasoline supply shortages and price spikes," Thursday's letter read.

"However, the full potential of the waiver to provide emergency relief can only be realized if EPA relaxes certain additional regulatory requirements related to the sale of E15," the letter stated. "Retailers' ability to utilize E15 immediately will require confirmation from EPA that certain regulatory requirements will not become obstacles to the sale of E15 blends during this period."

Dinneen wants the misfueling plans to be waived. More specifically, he wants EPA's pre-approval process of a gas station's plan to inform the consumer about E15 to be waived. Retailers selling the mid-grade ethanol fuels must file a misfueling plan with EPA that can take weeks, even months, to approve.

"Compliance with such requirements would make it virtually impossible for E15 blends to help alleviate the current supply shortages," Dinneen wrote.

Dinneen sent Pruitt the letter on Thursday before the new waiver came out, thanking him for Wednesday's 12-state and Washington, D.C. waiver that would help to support E15.

Although, EPA is not waiving the misfueling plan in the Thursday waiver, RFA is still voicing approval because it will allow retailers with mitigation plans in place to sell the fuel.