Oil, Food Groups Challenge EPA on Ethanol

The Wall Street Journal

Major oil and food industry trade groups launched an attack Tuesday on an Obama administration move to allow higher concentrations of ethanol in gasoline.

In a lawsuit filed with an appeals court, the American Petroleum Institute, the oil industry's main lobbying arm in Washington, and a coalition of food and restaurant industry trade groups challenged the Environmental Protection Agency's decision to allow up to 15% ethanol in gasoline, up from 10%.

The EPA last month said it would allow the higher ethanol blend only for vehicles manufactured in the 2007 model year or later. The agency is still considering a proposal to allow the 15% ethanol blend for older vehicles.

The API said in a statement the EPA action "puts consumers at risk" because tests of whether the higher concentrations of ethanol could damage cars aren't complete.

The food-trade groups, including the Grocery Manufacturers Association, the American Meat Institute and the National Council of Chain Restaurants, said increasing the use of ethanol in cars will increase corn prices and make food more expensive.

The lawsuit was filed in the U.S. Court of Appeals for the District of Columbia Circuit.

The EPA defended its action, saying it relied on the testing conducted on 19 cars by the U.S. Energy Department.

"This decision is sound, and the agency is confident that it will withstand legal challenge," said EPA spokeswoman Betsaida Alcantara.

It's possible that still more groups emerge in coming weeks to challenge the 15% ethanol blend.

Auto makers have opposed the decision, saying older could be damaged by the higher concentration of alcohol fuel. Auto makers produce so-called flexible-fuel vehicles capable of using up to 85% ethanol, but that technology is not available in many new cars, and comparatively few older vehicles.

"Our primary concern is still what impact this decision will have on consumers—we want to be sure they have a safe and positive experience with any new fuel," said Wade Newton, a spokesman for the Alliance of Automobile Manufacturers.

Makers of power equipment, such as lawnmowers and chain saws, meanwhile, have expressed concern over the liability they might assume if higher ethanol levels damage their equipment.

Regardless of the outcome of the lawsuits, the decision to offer the higher ethanol blend often rests ultimately with gas stations. And gas stations have balked at the cost of installing new equipment to offer it.

"We don't think many stores will decide to sell E15 based on the initial EPA announcement," said National Association of Convenience Stores spokesman Jeff Lenard.