Friday, February 22, 2013

Business Coalition Appeals E15 Use To Supreme Court

Feb 21: The American Petroleum Institute (API) and other groups announced that they have appealed to the U.S. Supreme Court, a D.C. Circuit Court decision rejecting a challenge to EPA's grant of partial waivers for use of the ethanol-gasoline blend, E15. On January 15, 2013, D.C. Circuit, denied an en banc reconsideration [See WIMS 1/16/13] of Grocery Manufacturers Association v. U.S. EPA (consolidated with a number of other cases) and thus the original 2-1 decision was upheld. That decision ruled "that no petitioner has standing to bring this action, we dismiss all petitions for lack of jurisdiction." [See WIMS 8/17/12].
    API's group director for downstream and industry operations Bob Greco told reporters at a press briefing teleconference, "We've filed this petition because the D.C. Circuit incorrectly concluded that none of the 17 petitioners had standing to challenge the E15 partial waivers -- not the engine manufacturers whose products will run on this new fuel blend, not the petroleum industry who must undertake massive infrastructure changes to accommodate the blend and meet the renewable fuel mandate, and not the food producers who now face significantly greater competition in the commodities market for corn, the conventional feedstock for ethanol.

    "Had EPA stayed within its statutory authority and followed proper procedures, it would have waited until ongoing E15 testing on engines and fuel systems was completed before allowing the use of E15. Then it would have discovered that E15 is not safe for millions of vehicles now on the road. Although we hope the court will resolve the E15 problem, we also believe our experience here represents only one of many underlying problems with the Renewable Fuel Standard, so we are calling on Congress to repeal the program."
    The Grocery Manufacturers Association (GMA), Executive Vice President for Government Affairs Louis Finkel, a part of the coalition petitioning the Supreme Court said, "The procedural grounds on which the DC Circuit Court based its split decision to dismiss our petition are unfounded. All the while, the significant issues at the heart of our case continue to go unanswered. In the end, it's consumers who will pay the heaviest toll for the court's decision, as it cleared the way for an expansion of misguided food–to-fuel policies at a time when Americans can least afford it. 

    "The DC Circuit's decision came as the most devastating drought the U.S. had experienced in 50 years was driving the price of corn up nearly 40 percent. The decision effectively increased demand for a crop that was already in extremely short supply, thanks to Mother Nature and an unworkable Renewable Fuels Standard (RFS) policy. A few short months later, the Environmental Protection Agency denied the petitions of eight governors asking the agency to waive in whole or in part the RFS mandate requirements in response to the drought-induced low level of stocks.

    "If the lower court and the regulating agency are unable or unwilling to provide relief under these most extreme circumstances, it's clear that further action is needed to pursue responsible energy policies that don't pit our nation's energy needs against food security for families. That is why GMA is elevating this issue to the highest court in the land. Implementation of the RFS has had a profound negative impact on the economy and the structure of markets in energy, agricultural commodities and food manufacturing. The application of the RFS to allow E15 into the market will only exacerbate a situation that is already having a negative impact on consumers and the economy.
    "Corn acreage increased from nearly 82 million acres planted in 2005 to more than 96 million acres in 2012. By comparison, the acreage planted with the next two biggest crops, soybean and wheat, stayed flat. From 2005 through 2011, the price of: corn rose by $4.05; soybean rose by $6.85; and wheat rose by $4.08. By comparison, in the previous six year period, commodities rose only modestly. These increased acres planted should provide some price relief by adding additional supply. However, any gains in supply are largely offset by the fact that 40 percent of production acreage planted is devoted to ethanol production. 
    "The available supply and price of corn and other affected commodities has an enormous impact on the cost inputs to food production. As hard as food and beverage companies work to deliver safe, nutritious food to consumers at affordable prices, the laws of economics dictate that consumers will feel the effects of these higher input costs at the retail level at a time when many families are struggling. The original suit filed argued that EPA had exceeded its authority and violated the law when approving the use of E15; but more importantly, it put consumers at risk of food insecurity. These facts have not changed. We continue to support this position and are now looking to the Supreme Court to overturn the decision of the lower court to ensure that GMA and the coalition's arguments are heard."
    Other groups participating in the legal action include: American Meat Institute; National Chicken Council; National Council of Chain Restaurants of the National Retail Federation; North American Meat Association; National Pork Producers Council; National Turkey Federation;and Snack Food Association.
    Bob Dinneen, president and CEO of the Renewable Fuels Association (RFA), issued a short reply saying, "Good luck with that. We now know why gas prices keep going up and up -- to fund unnecessary Big Oil lawsuits to protect their monopoly on the fuel market. I wonder if food prices will spike as well to cover the cost of this Supreme Court challenge?"
    Access a release from API and link to the lengthy teleconference transcript for more details (click here). Access the GMA release (click here). Access the RFA response (click here). Note: See the WIMS links above for legal and regulatory background. [#Energy/E15, #Energy/RFS]
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