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US appeals court rejects industry challenge to EPA ethanol blend decision

08.20.2012  | 

Trade groups representing the oil and auto industries had challenged the decision. Bob Greco, downstream director at the American Petroleum Institute, said it is "astounding that the court does not accept that refiners, who must comply with the ethanol mandate, have standing to bring this case."

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By RYAN TRACY and BRENT KENDALL

WASHINGTON -- A federal appeals court recently dismissed legal challenges to the Environmental Protection Agency's move to expand ethanol use in the US.

The vast majority of gasoline in the US contains about 10% ethanol. Ethanol manufacturers asked the EPA in 2009 to allow the use of 15% blends in a bid to expand their market.

The EPA, which regulates fuels based on the pollution they create, granted the industry a partial victory when it approved so-called E15 fuel for use in vehicles dating back to model year 2001, though not in older models.

Trade groups representing the oil and auto industries in late 2010 challenged that decision, saying a “partial” approval of the product would expose them to lawsuits from customers who put the fuel in the wrong engine.

Food companies, fretting that more ethanol use would drive up the costs of corn-based animal feed, also sued.

On Friday, the US Court of Appeals for the District of Columbia Circuit, in a 2-1 ruling, dismissed the challenges on jurisdictional grounds, saying none of the parties had a legal right to challenge the EPA decision.

Bob Greco, downstream director at the American Petroleum Institute, which represents the oil and gas industry, said it is "astounding that the court does not accept that refiners, who must comply with the ethanol mandate, have standing to bring this case."

A 2005 law requires refiners to blend increasing amounts of ethanol into the US fuel supply.

Bob Dinneen, president of the ethanol trade group the Renewable Fuels Association, said “today's decision is an important step forward in the nation's quest to diversify our nation's fuel supply,” adding that it would allow “consumers to make the fuel decisions that work best for them and their vehicle.”

In a statement, the EPA said that “this decision and EPA's previous actions do not require the use or sale of E15. EPA will continue to work with stakeholders to ensure a smooth transition as businesses decide whether to introduce E15 into the market.”

Despite the ruling, it’s not clear how widely E15 will be adopted. On Friday, Mr. Dinneen’s group cited only one gas station, in Lawrence, Kan., that sells E15.

Major auto makers have said their warranties won't cover damage associated with E15 fuel, even though the EPA has said E15 is safe in newer vehicles.

And the National Association of Convenience Stores, a trade group representing gasoline stations, has raised concerns about whether the fuel can be safely stored in underground tanks and about liability for customers who use the fuel in the wrong engine.


Dow Jones Newswires



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Bobby Fontaine
08.20.2012

I wrote the ethanol article below. You are free to edit and publish it however you wish

For the Ethanol Mandate, the Real Issue is Speculators
by Bobby Fontaine

The problem is not so much grain supplies but the prices going so high that third world countries and the food relief organizations that support them can't afford to feed their people anymore. This leads to political unrest and death all over the world, like last years "Arab Spring" being a direct result of rising grain prices caused by federal ethanol mandates. Ethanol supporters can defend high grain prices by showing that ever since ethanol has placed higher demands on corn markets, more corn has been grown to meet it. That however doesn't change the fact that the reason grain prices are so high even though there is ample supply is speculators. And the only reason speculators feel confident enough to risk billions of dollars to drive up grain prices is because federal biofuel mandates insure higher than normal demand on corn, and soybean for biodiesel.

Higher demand for soy and corn, along with being able to sell it for higher prices, causes farmers to choose to grow them over other crops, which puts pressure on the supply side for all related food markets, including meat producers who use grain for animal feed. This gives speculators a field day of betting that all commodities markets will rise. This in turn forces the cost of everything we eat to unrealistically high levels. But since we have such a strong economy, we won’t starve. This however does keep us from being able to make our economy stronger, which is causing a lot of people to become unemployed and stay that way. In third world countries, higher grain prices means they don’t eat, which in the long run, the unrest that follows costs us greatly, to say nothing of the humanitarian aspect of what we’re doing to them.

No reason for starvation

What I’m saying is we will have enough grain to supply all the markets in need, hopefully with next year bringing in a better crop so we can re- supply depleted stores. But speculators are forcing prices up to unrealistic levels so we can no longer afford to buy them without a great deal of pain. This way they make money at everyone’s else’s expense, including their own since they are human beings and will suffer through whatever they cause for the rest of us. This is to say nothing of the fact that they will also have to help pay to clean up after the problems they cause through taxes and straining the economy further, perhaps beyond repair. And the only reason they are able to do this is because they know which way the markets are pointing as long as we have mandates that insure prices will keep rising.

Federal laws that require ethanol and biodiesel be used as fuel forces such a large shift in the direction of grain markets, and subsequently all food markets, that speculators can easily see what no one is supposed to be smart enough to see, which is the direction

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