US appeals court rejects industry challenge to EPA ethanol blend decision


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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