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U.S. oil, food groups petition Supreme Court over ethanol blend

Source: Thomson Reuters Foundation - Thu, 21 Feb 2013 19:32 GMT
Author: Reuters
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* Latest move by opponents struggling to limit ethanol use

* Supreme Court takes up small proportion of petitions filed

By Timothy Gardner

WASHINGTON, Feb 21 (Reuters) - U.S. oil and food groups petitioned the Supreme Court on Thursday to reverse a lower court's decision upholding the use of higher ethanol blends in cars, another step in their struggling effort to put limits on use of the renewable fuel.

The U.S. ethanol industry, which mostly makes fuel from corn, has pushed for E15, which contains 15 percent ethanol, up from the traditional blend containing 10 percent. They rejoiced when the U.S. Environmental Protection Agency (EPA) in 2011 expanded use of E15 to cars built in 2006 and before.

But the move angered the American Petroleum Institute (API), the Grocery Manufacturers Association (GMA), and other industry groups who filed Thursday's petition.

Ethanol can cut into the profits of gasoline producers, while food groups complain that use of the fuel can raise grain and meat prices. They blame ethanol for helping to push corn prices to record levels during last year's drought, the worst in over 50 years.

During the drought, ethanol opponents petitioned the EPA to temporarily waive the ethanol mandate. The food and oil groups also petitioned the U.S. Court of Appeals for the D.C. Circuit to overturn its earlier decision allowing E15. They lost on both counts.

"If the lower court and the regulating agency are unable or unwilling to provide relief under those most extreme circumstances, it's clear that further action is needed," Louis Finkel, an official with the GMA, told reporters in a teleconference about the Supreme Court petition.

The Supreme Court only takes up a small proportion of the petitions that are filed, making the fate of Thursday's action uncertain.

Ethanol opponents say that E15 can damage valves and pumps in older cars, citing, among other studies, those done by the Coordinating Research Council, a non-profit group supported by the API and several automobile manufacturers.

But the federal appeals court last month said in its 2-1 decision that the group's claims of harm were speculative.

The EPA's mandate requires fuel blenders to mix more and more biofuels including ethanol into motor fuels every year and peaks at 36 billion gallons a year in 2022. Much of the gasoline now sold in the U.S. contains 10 percent ethanol.

The sale of E15 is not widespread yet and faces barriers, including the cost to service stations of installing special pumps. Some service station owners also fear they could be liable to claims that engines were damaged by the fuel.

Companies, including Archer Daniels Midland Co, Green Plains Renewable Energy Inc and privately held POET, could benefit from higher sales of E15. An ethanol industry group said Thursday's petition showed desperation.

"The sun sets every day and Christmas comes once year and Big Oil is just as predictable in their endless efforts to protect their bottom line and its monopoly on the liquid fuels market," said Tom Buis, the CEO of Growth Energy, an ethanol industry group.

Even if the Supreme Court does not take up the case, ethanol opponents will likely continue to try to reform the U.S. ethanol mandate, which forces blenders to use more fuel from corn and other sources, including grasses and trees.

Bob Greco, the API's director for industry operations, said the oil industry has to take "massive infrastructure changes" to accommodate E15.

The U.S. Department of Agriculture on Thursday forecast U.S. corn use for ethanol at 4.675 billion bushels in 2013/14, up 175 million bushels from the current marketing year.

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