Grocery, Oil Groups Sue EPA Over Ethanol Decision

The Grocery Manufacturers Association, the American Petroleum Institute and other groups filed a lawsuit challenging the EPA’s decision to allow more corn-based ethanol in gasoline.

Lobbying organizations representing companies that include Tyson Foods Inc. and Coca-Cola Co. are part of the lawsuit filed today in the U.S. Court of Appeals for the District of Columbia Circuit. The groups, including the American Meat Institute and the Snack Food Association, said the EPA lacked the authority to make the decision and will result in higher food costs.

The EPA’s decision “will increase the amount of corn being diverted to our gas tanks and away from meat and poultry production,” J. Patrick Boyle, the Meat Institute’s chief executive officer, said in an-mailed statement. The AMI includes Tyson, Smithfield Foods Inc. and Kraft Foods Inc. among its members.

More Testing

The EPA last month granted a request from ethanol producers to increase concentrations of the fuel in gasoline to as much as 15 percent from 10 percent for vehicles made for 2007 and later. The agency may make a decision affecting model years 2001 through 2006 later this month, after further testing.

The American Petroleum Institute said government and industry tests have shown “potential safety and performance problems” and that the EPA should have waited for the additional tests to be completed.

The EPA’s decision was “grounded firmly in science,” Betsaida Alcantara, deputy press secretary for the agency, said in an e-mailed statement. “This decision is sound, and the agency is confident that it will withstand legal challenge.”

Archer Daniels Midland Co. is among the ethanol producers that pressed the EPA to raise the limit for an industry that’s had at least a dozen companies seek bankruptcy protection since 2008. Oil companies, automakers and environmental groups say adding more ethanol may damage engines, boost food prices and worsen air quality, and refiners and convenience stores that sell fuel may be reluctant to market the new blend.

Boosting Demand

Growth Energy, a lobbying group that includes Poet LLC of Sioux Falls, South Dakota, the largest U.S. biofuels-maker, has said raising the “blend ratio” would boost demand. By law, the U.S. must use 12 billion gallons of renewable fuels such as ethanol next year, up from 10.5 billion in 2009, and use 15 billion gallons by 2015.

“Having been unable to dispute the overwhelming science in favor of E15, they are now turning to the legal process to slow progress on renewable fuels,” Growth Energy Chief Executive Officer Tom Buis said, referring to opponents of the EPA decision. “E15 is a good fuel for American motorists,” he said in an e-mailed statement.

The annual market value for ethanol in the U.S. has risen to $27.1 billion since federal support began under President Jimmy Carter during the 1970s energy crisis.

The case is Grocery Manufacturers Association v. U.S. Environmental Protection Agency, 10-1380, U.S. Court of Appeals, District of Columbia Circuit.

To contact the reporters on this story: Alan Bjerga in Washington at abjerga@bloomberg.net:

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.

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