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Supreme Court decision supports ethanol

06/24/2013 @ 9:21am

The Supreme Court on Monday refused to consider legal challenges by several industry trade groups to an Environmental Protection Agency move to expand ethanol use in the U.S.

Trade groups for food producers, the oil and gas sector, and the auto industry all sued to contest a pair of EPA decisions that allowed the sale of gasoline blends containing 15% ethanol. The agency regulates fuels based on the pollution they create.

Currently, most of the U.S. gasoline supply contains 10% of the renewable fuel.

The EPA's move handed a partial victory to ethanol manufacturers, which had pushed the agency to allow the higher blends. The agency allowed the so-called E15 fuel for use in vehicles dating back to the 2001 model year, but not for older cars and trucks.

The various trade groups alleged they would suffer a variety of harms from the increased ethanol use.

For example, members of the food industry argued it would cost more to make and distribute food products because the introduction of E15 fuel would increase demand -- and prices -- for corn, which is used to make most ethanol.

The auto industry alleged the new fuel could damage vehicle engines, prompting consumers to bring warranty and safety claims against car makers. Petroleum refiners and importers said the introduction of E15 would force them to incur substantial costs.

The ethanol industry says E15 passed an EPA safety review and that consumers benefit from having the option to buy fuel with more ethanol because ethanol is often cheaper than oil-based fuels. Ethanol supporters say the renewable fuel is just one factor in corn prices.

Last August, the U.S. Court of Appeals for the District of Columbia Circuit threw out all of the legal challenges without passing judgment on the EPA's ethanol actions. The appeals court said none of the challengers had a legal right to sue because the harms they might suffer were too far removed from the EPA's decision to allow E15.

The Supreme Court, in a short written order on Monday, let that ruling stand, rejecting the challengers' appeals without comment.

The high court's decision won't have an immediate impact on the U.S. gasoline market: The vast majority of filling stations don't offer E15 fuel, save for about two dozen stations in the Midwest, according to a recent count by the ethanol trade group Renewable Fuels Association.

But the decision effectively kills the legal challenges to E15, which is the ethanol industry's main hope for growth beyond its current 10% share of the gasoline market.


Write to Brent Kendall at brent.kendall@dowjones.com and Ryan Tracy at Ryan.Tracy@dowjones.com
(END) Dow Jones Newswires
June 24, 2013 10:01 ET (14:01 GMT)
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