(Changes headline, recasts with new comments from Perdue)
By Humeyra Pamuk
WASHINGTON, Feb 27 (Reuters) - U.S. Agriculture Secretary Sonny Perdue said on Wednesday he had been reassured by his counterpart at the Environmental Protection Agency (EPA) that the agency would "very likely" finish its rule allowing year-round sales of higher ethanol blends of gasoline in time for summer driving season.
Perdue had told a Congressional hearing earlier in the day that EPA would probably fail to complete the rule in time, something that could have proven a setback for the agriculture industry keen to boost its sales of corn-based ethanol.
"Today he told me he thought it was very likely that they could get it done and would do so if at all possible," Perdue told reporters in Washington, referring to EPA Acting Administrator Andrew Wheeler.
EPA said in a statement that is was working "expeditiously" to finish the rule by June 1, and would have a draft proposal ready later this month.
President Donald Trump had announced in October he was directing the EPA to allow year-round sales of E15 before summer in a win for the powerful corn industry which supplies ethanol.
E15 gasoline contains 15 percent ethanol, versus the 10 percent found in most U.S. gasoline. The summer-time ban had been imposed over concerns that E15 contributes to smog in hot weather, though recent studies have shown its impact on air quality may not be significantly different than E10.
The EPA had initially planned to release a draft of the rule in early February but ran into delay due to the 35-day partial government shutdown that began in late December.
The rule is also meant to include simultaneous measures the EPA promised the oil industry to curb speculation of biofuel credits, known as Renewable Identification Numbers or RINs.
Under the U.S. Renewable Fuels Standard, oil refiners have to blend increasing volumes of biofuels into the nation's gasoline and diesel each year, or purchase RINS from those who do.
Oil companies have complained speculation in the credit market has inflated prices and cost them hundreds of millions of dollars - one of a long list of complaints by the industry about U.S. biofuel policy.
Biofuel backers have argued that coupling E15 with the more complicated trading reforms have slowed things down.
"We have no doubt that the so-called RIN reforms sought by oil refiners are bogging this rulemaking down. Thus, I reiterate the request we formally made last month to split RIN reform and year-round E15 into two separate rulemakings and expedite the E15 rule," Geoff Cooper, head of the Renewable Fuel Association said.
(Reporting by Humeyra Pamuk; Additional reporting by Jarrett Renshaw; editing by Richard Valdmanis, Marguerita Choy and Lisa Shumaker)
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