Monday, August 20, 2012

More Reaction To Appeals Court Decision On E15 Ethanol Waiver

Aug 17: Mixed reaction, mostly negative, continues regarding the U.S. Court of Appeals, D.C. Circuit opinion in the controversial E15 (15 ethanol mix with gasoline) split decision in Grocery Manufacturers Assoc. v. U.S. EPA [See WIMS 8/17/12]. The majority Appeals Court held that no petitioner had standing to bring this action and thus dismissed all petitions for lack of jurisdiction. The decision upholds U.S. EPA's granted waivers for the use of E15. In our initial report we indicated that both the American Petroleum Institute (API) and the Environmental Working Group (EWG) issued strong statements disagreeing with Court's ruling. Additional reactions are included below.
    The Renewable Fuels Association (RFA)  issued a release applauding the decision and indicated the approval for model year 2001 and newer light duty vehicles and all flex fuel vehicles represents nearly two-thirds of all vehicles on the road and almost 75% of vehicle miles driven. RFA indicated that since the initial waiver filing in March 2009, vehicles were tested using E15 for a combined six million miles, health effects data on E15 was collected and approved, and a first of its kind misfueling mitigation plan was required and approved in order for retailer[s] to offer E15. Today, at least one station in Lawrence, KS, is selling E15 under the conditions set by the partial waiver.
    RFA President and CEO Bob Dinneen said, "Today's decision is an important step forward in the nation's quest to diversify our nation's fuel supply. Adding an E15 option along side E10 and higher ethanol blends allows consumers to make the fuel decisions that work best for them and their vehicle. Ethanol has a thirty year track record of safe and effective use in the market place and that record will continue. Allowing for additional ethanol use will help lower prices at the pump, create domestic jobs, and accelerate the commercialization of new biofuel technologies."
    House Science, Space, and Technology Committee Chairman Ralph Hall (R-TX) released a statement on the ruling on E15 ethanol ruling saying, "I am disappointed that the U.S. Court of Appeals for the D.C. Circuit today, on purely jurisdictional grounds, dismissed a challenge to the Environmental Protection Agency's partial Clean Air Act waivers for mid-level ethanol blends. The ruling occurred despite the fact that two of the three judges found the petitioners had standing under Article III of the Constitution, and despite the Agency's failure to argue against standing in its own arguments. The majority opinion appears to ignore the near-universal agreement among automakers and engine manufacturers that these waivers will result in damaged engines and voided warranties. I agree with the dissenting opinion of Judge Kavanaugh, which concluded that 'EPA's E15 waiver is flatly contrary to the plain text of the statute.'"

    Chairman Hall indicated further in his release, "EPA's decision to grant a waiver to allow E15 in the marketplace was based on limited scientific analysis and testing. H.R.3199, bipartisan legislation endorsed by the Committee on Science, Space, and Technology earlier this year, would have required a more robust assessment of the state of the science on mid-level ethanol blends, a process that should have been undertaken by the waiver applicants and EPA prior to the Agency's issuance of waivers for E15. Instead, the Agency relied on a single test program conducted by the Department of Energy. More recent evidence suggests serious and legitimate concerns about E15's impacts on engine durability, and even EPA has flagged the risk of widespread misfueling for hundreds of millions of vehicles and engines currently in use. In light of elevated food prices amidst widespread drought conditions, the continued pursuit of greater volumes of corn ethanol in our fuel supply should be re-examined closely. "

    Senator James Inhofe (R-OK), Ranking Member of the Senate Committee on Environment and Public Works, commented on the ruling saying, "The federal court's decision to uphold EPA's plan to permit higher-level blends of ethanol is a huge loss for Oklahomans and consumers nationwide. My constituents in Oklahoma want to be able to use fuel compatible with their vehicles, without having to worry about what kind of damage higher blends of ethanol will do to their engines. This ruling just enables EPA to continue pushing too much corn ethanol too fast through the Renewable Fuel Standard (RFS), a program that has had negative impacts on the safety of those operating vehicles and other equipment as well as food prices.

    "I voted against the 2007 Energy Bill because I knew that dramatically and rapidly increasing the mandated volumes was a bad idea. As this ruling demonstrates, Congress needs to step in with a legislative fix -- that's why I've introduced S.1085, the Fuel Feedstock Freedom Act, which would help mitigate some of the negative impacts of this policy by giving states the option not to participate in the corn ethanol portion of the Renewable Fuel Standard. Today's court ruling should be a wake-up call for the United States Senate to do its job, hold hearings on RFS2, and address the adverse impacts of this unrealistic program."

    The Global Automakers, represents international motor vehicle manufacturers, said it was disappointed with the decision. The Automakers said, "We disagree with the court's finding that automobile manufacturers do not have standing to challenge an agency action that permits the use of a fuel, such as E15, in automobiles not designed or warranted for such use. However, we are pleased that the dissent found that we would have won on the merits of the case and view the majority's ruling as a temporary legal setback." 

    In a related matter, a few days before the ruling the International Energy Agency's (IEA's) latest Oil Market Report (OMR) indicated that the production of fuel ethanol -- produced from fermenting sugar or starch bearing crops such as corn -- has dropped to around 800 thousand barrels per day (kb/d) in the U.S., the lowest level in two years. IEA indicated that this fall in the output of ethanol, which is blended with unleaded gasoline blend stock, follows the worst drought in 55 years in the U.S., which is severely affecting its key corn growing regions. The continued absence of rain in combination with very low U.S. corn stocks have driven up corn prices to record highs during the last weeks.

    The high corn prices, in combination with falling ethanol prices (reflecting in part a combination of a weak economy and automobile efficiency improvements), have slashed ethanol producers profit margins. This has led to a number of ethanol plants reducing or temporarily halting production, which has in turn prompted the two year low in ethanol output. The OMR noted, "Given the current situation, we see U.S. ethanol production at an average around 850 kb/d in 2012, 60 kb/d lower than in 2011."

    Access a release from RFA with links to more information (click here). Access a release from Rep. Hall (click here). Access a release from Sen. Inhofe (click here). Access the release from Global Automakers (click here). Access the complete release from IEA with links to related information (click here). Access the complete opinion and dissents (click here). Access EPA's E15 website for more information and background (click here). [#Energy/Ethanol]