Oil industry loses legal battle against E15

The Supreme Court on Monday dealt a big blow to the oil industry, when it decided not to hear a legal challenge against the federal government’s decision to approve the sale of fuel containing 15 percent ethanol.

The decision not to hear the case — which was issued without comment Monday morning — was a defeat for the American Petroleum Institute and several other groups that have been vigorously fighting the Environmental Protection Agency’s 2010 approval of the E15 blend. Although the agency green-lighted the sale of E15 for cars and trucks made since 2007, the higher-ethanol blend is not authorized for older vehicles.

After the U.S. Court of Appeals for the District of Columbia ruled in January that the API and more than a dozen other groups did not have standing to challenge the EPA’s limited approval of E15, the American Petroleum Institute and other organizations appealed to the Supreme Court.

Harry Ng, API vice president and general counsel, called the high court’s move “a big loss for consumers, for safety and for our environment.”

The oil industry argues that E15 has not been proved safe, there are high “misfueling” risks that could cause filling station owners to face liability when the fuel is inadvertently pumped into older cars and there is a limited market for the mix, especially since some automakers have warned drivers that using the fuel will void their warranty.

Ng said the EPA was “irresponsible” in approving E15, “even though government research showed potential infrastructure concerns at our nation’s gas stations that could lead to serious safety and environmental problems.”

Charles Drevna, the head of America’s Fuel and Petrochemical Manufacturers, said the Supreme Court’s decision “will have negative repercussions for consumers” by allowing “the EPA’s decision to place politics ahead of science (to) stand.”

Biofuel backers cheered the decision.

Tom Buis, the CEO of Growth Energy, which originally petitioned the EPA to approve E15, called the move “a true victory for the American biofuels industry” as well as consumers, the economy and the environment.

Bob Dinneen, the president of the Renewable Fuels Association, said the Supreme Court’s decision “ends a long and drawn-out petroleum industry effort to derail the commercialization of E15.”

But while this legal fight may be over, the industry’s larger war against an eight-year-old law mandating the use of more ethanol and other alternative fuels is just beginning. The oil industry is furiously lobbying lawmakers to tinker with the 2005 renewable fuels standard, and, in some cases, repeal it altogether. At the same time, oil companies and industry trade groups are asking the EPA to use its authority to waive some of the requirements.

The Energy and Commerce Committee has begun a broad, bipartisan review of the renewable fuel standard, ahead of possible changes. It is set to hold a hearing on the issue Wednesday afternoon.

Some refiners say they have already reached a so-called “blend wall,” a threshold where adding the required volume of ethanol to gasoline supplies would result in ethanol blends exceeding the 10 percent cap approved for use in all vehicles. Because the RFS was established with target volumes — rather than percentages — a recent decline in gasoline use means that blend wall has arrived sooner than expected. The effects are different from some refiners; their individual obligations are determined by their share of the fuel market.

Renewable fuel supporters counter that the mandate was designed to drive innovation in the fuels market and force changes by refiners, automakers and motorists ultimately helping to wean the U.S. off foreign oil in exchange for domestically produced alternatives.