By Stephanie Kelly
NEW YORK (Reuters) - The Trump administration has tightened restrictions on the use of ethanol in hand sanitizer, citing safety concerns and forcing some suppliers to halt sales at a time of soaring demand, according to sources and documents seen by Reuters.
The crackdown is meant to protect consumers from potentially dangerous impurities in hand sanitizer, but could worsen shortages at a time when households, hospitals and nursing homes need sanitizer to fight the coronavirus pandemic.
The restrictions have dealt a blow to fuel ethanol producers. The industry has invested millions of dollars since last month to ramp up the output of corn-based alcohol sanitizer to offset slumping fuel demand.
Fuel ethanol production has fallen to a record low of 537,000 barrels per day and halved from month-ago levels as gasoline demand has slumped. Fuel demand has dropped by roughly 30% worldwide due to stay-at-home orders.
The U.S. Food and Drug Administration (FDA) on April 15 issued limits on certain chemicals permitted in alcohol-based hand sanitizer, updating temporary guidance it adopted last month as the health crisis deepened and more manufacturers registered to produce hand sanitizer.
Since then, the FDA has notified several fuel ethanol companies that their product does not meet safety standards, forcing them to halt production and cancel supply agreements, according to a source familiar with the matter. The source requested anonymity to speak candidly about the situation.
In one case, the FDA said it had found significant levels of the carcinogen acetaldehyde in ethanol supplied by a company for use in hand sanitizer, according to a recent email exchange seen by Reuters.
"FDA has reviewed your ethanol data and determined that it is not acceptable as an ingredient under the Agency's temporary hand sanitizer policies," it wrote.
The FDA told Reuters it decided to update the guidance after reviewing ingredient data supplied by ethanol companies and fielding multiple questions from companies seeking clarification about its temporary production policies.
The agency said in a statement it was committed to "working with manufacturers, compounders, state boards of pharmacy and the public to increase the supply of alcohol-based hand sanitizer available to Americans."
Some companies are still launching efforts toward production of hand sanitizer. Biofuels producer Archer Daniels Midland announced on Wednesday it was providing industrial ethyl alcohol to Sazerac Company, a distilled spirits producer, to help increase hand sanitizer production.
The FDA did not immediately respond to a request for details on the number of ethanol companies it had notified for failing to meet its April 15 guidance. Its move has drawn criticism from suppliers who say it should further ease its safety standards to ensure hand sanitizer is widely available during the coronavirus outbreak.
"Where are the pros and cons here? You've got nursing homes out of hand sanitizer," said Allan Delmare, a distiller at Dida's Distillery in Huntly, Virginia, which had been purchasing ethanol to produce finished hand sanitizer.
(Reporting by Stephanie Kelly; Editing by Aurora Ellis and Tom Brown)
