E15 Survives Appeals Court Challenge

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E15 Survives Appeals Court Challenge


WASHINGTON, D.C. -- E15 appears to be here to stay now that a U.S. appeals court upheld the government's approval of the higher blend of ethanol gasoline.

In a 2-1 ruling, the court said the food and auto industries, and oil refiners failed to show they were harmed by approval of the 15-percent blend of ethanol, up from the usual 10 percent, according to Reuters.

For its part, the food industry argued that the blend's approval could mean higher corn prices. The auto industry said it could be sued if the fuel leads to engine malfunctions. And the refiners maintained that they would face additional expenses for handling E15.

E15 came on the scene last year when the Environmental Protection Agency (EPA) approved the blend for use in cars and light trucks made since model year 2000. It is barred from use in light equipment or older vehicles.

This ruling by the appeals court gives the biofuels industry a boost, but may not have any immediate impact on sales. Biofuels makers sought the higher blend rate as a way to satisfy a federal guarantee of a share of the gasoline market, set at 13.2 billion gallons this year and rising to 15 billion gallons annually from 2015. Governors of four poultry-raising states asked the EPA in the past week for relief from the mandate, Reuters reported.

"It (the court ruling) is an important decision. It validates the EPA decision," said Bob Dinneen, head of the Renewable Fuels Association, an ethanol trade group.

As for sales, he said, "I'm not sure it's going to have much of an immediate impact."

Currently, there is a limited network for sale of E15, due to practical barriers that include the cost of installing so-called blender pumps that can dispense blends as high as E85 and the ongoing process of obtaining state approval of E15 for sale. The EPA gave its final regulatory approval in June.

Liability remains a main concern among the retail community. Many convenience store and gas station operators worry they will be held legally liable if customers put the wrong blend in their cars and void vehicle warranties. At the NACS 2012 Day on Capitol Hill this spring, retailers raised the issue with legislators.

A spokesman for NACS, the Association for Convenience & Fueling Retailing, also told Reuters that customers are not asking for E15.

Michael Frohlich of Growth Energy, the ethanol trade group that petitioned EPA in 2009 for E15 approval, expects it to be a slow progression of the blend showing up in more stations. The ethanol industry is centered in the U.S. Midwest and Plains, so those regions probably will lead in E15 adoption, he said. "It won't happen overnight."

Ethanol is popular in farming regions of the country as a home-grown fuel that reduces U.S. reliance on imported oil while creating rural jobs and boosting farmer income, the news outlet reported. However, recent scorching temperatures across the middle of the country, combined with a lack of rain, has led to the worst drought in 50 years and is forecasted to cut the U.S. corn crop by 13 percent from last year.

The four state governors who want relief from the ethanol mandate say the corn crop is too small to allow 40 percent of it to be used in making biofuel without severe economic disruption. The Environmental Working Group said the court decision should prompt lawmakers to reform the ethanol mandate.

In its ruling, the U.S. Appeals Court for the District of Columbia Circuit said the trade groups that filed the appeal presented speculative and indirect claims of harm from the approval of E15. According to Reuters, engine manufacturers, for example, "provided almost no support for their assertion that E15 'may' damage the engines they have sold, subjecting them to liability," wrote Chief Judge David Sentelle.

Similarly, the judge wrote, the refiners said they would face additional expenses for handling E15 without showing there was no other way for them to meet U.S. targets for biofuels use. And foodmakers' desire for low corn prices has no footing in a statute about cars, he wrote.