Tesoro Drops Suit Over California Gas Standard

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Tesoro Drops Suit Over California Gas Standard

SAN ANTONIO -- Tesoro Corp. dropped its lawsuit against the California Air Resources Board (CARB) after a judge denied the company’s request for a temporary injunction, the San Antonio Business Journal reported.

Last month, a California Superior Court judge rejected Tesoro’s bid to delay a new gas standard set to take effect in the state next year. The new rule would up the percentage of ethanol required to be blended into gasoline from 5.7 percent to 10 percent.

Tesoro, which operates two refineries in California, already made modifications to its facilities to accommodate the new rule, according to Lynn Westfall, spokesman for the company. But Tesoro still filed the lawsuit because, as Westfall told the Business Journal, the production of ethanol is believed to increase greenhouse gas emissions.

"The new rule appears to be in conflict with another state law that calls for a decrease in greenhouse gas emissions," Westfall said. "We asked the judge to delay enforcement of the rule until this conflict can be resolved."

Judge Timothy Frawley said he was not persuaded Tesoro would prevail on the merits of its case at trial or that the company would suffer "irreparable harm" from the new standard. He also said a 1999 environmental evaluation that assessed impacts of using ethanol in amounts up to 10 percent was sufficient to meet state health codes.

"We have decided to drop our lawsuit because in his ruling the judge made clear that he did not accept our central arguments," said Mike Marcy, manager of external affairs for Tesoro’s California refineries. "We feel that the court was wrong in its analysis, but nevertheless we have decided not to pursue the matter any further."

The new standard will replace one established in 1999 and addresses toxic and smog-forming pollutants, but not greenhouse gases. CARB separately is developing a low-carbon fuel standard. Tesoro argued the board should coordinate the two fuel regulations, the Business Journal report stated.

"The CARB rule, which results in the increase of crop-based ethanol in gasoline, violates the intent established by another California regulation, which calls for a decrease in greenhouse gas emissions to 1990 levels by 2020," Bruce Smith, chairman, president and CEO of Tesoro, said in a news release.

Dimitri Stanich, a spokesman for the board, said they acknowledge ethanol produced from corn is problematic, in that studies have shown its production leads to an increase in greenhouse gas emissions. "The increase [in greenhouse gas emissions] is dependent on the source of the ethanol," Stanich said, "and we are working on ways to address those concerns."