As prepared for delivery
Press briefing teleconference on E15 lawsuit
Robert Greco, API group director, downstream and industry operations
Thursday, February 21, 2013
Opening statement:
Good morning everyone. Thanks for calling in.
Today, API, GMA, and several other groups are filing a petition with the U.S. Supreme Court, asking that it reverse the D.C. Circuit’s decision to dismiss our challenge to EPA’s partial waivers for E15. The other groups 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
- Snack Food Association
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.
In his dissent, D.C. Circuit Judge Brett Kavanaugh said, “EPA’s disregard of the statutory text is open and notorious – and not much more needs to be said.”
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.
That testing was being conducted by the Coordinating Research Council (CRC). It showed that E15 could damage valves and valve seats in the engines of some of the tested vehicles, which included a number of common brands.
Later phases of the testing identified an elevated incidence of fuel pump failures, fuel system component swelling, and impairment of fuel measurement systems in some of the vehicles tested. The testing found that E15 could cause erratic and misleading fuel gauge readings or cause faulty check engine light illuminations – and that it also could cause critical components to break and stop fuel flow to the engine.
These are problems that could lead to breakdowns and increase safety risks for motorists.
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 RFS has become unworkable. In addition to problems with E15, the RFS requires the blending of progressively greater volumes of ethanol in gasoline to levels that raise safety concerns and are simply unsustainable. This blending requirement was a significant factor in EPA’s premature and unwise decision to approve E15.
The RFS has also required refiners to blend increasing amounts of cellulosic ethanol in gasoline for the last three years even though this fuel has yet to be produced in commercial quantities. What’s worse, refiners are required to buy “credits” for not using a fuel that doesn’t exist.
API is not opposed to the use of renewable fuels in the gasoline supply, and the fact is refiners will continue using ethanol and other biofuels with or without the RFS mandate. Ethanol has valuable blending qualities – enhancing octane, helping fulfill environmental requirements, and meeting consumer demand – and there is also potential to increase exports of ethanol to overseas markets.
The RFS was enacted at a time when our nation’s energy landscape was far different. Today, with domestic production of oil and natural gas on the increase, we are steadily reducing our dependence on foreign sources, with benefits well beyond what the RFS program has achieved.
We look forward to the Supreme Court’s review of this case, but we will join the voices of other stakeholders – from farm groups and the food industry to environmental NGOs – to encourage repeal of the RFS.
Thank you. Now I will invite Louis Finkel from GMA to make some opening remarks.
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As prepared for delivery
Press briefing teleconference on E15 lawsuit
Louis Finkel, EVP of Government Affairs
Grocery Manufacturers Association
February 21, 2013
Opening Remarks:
As my colleague at API has just outlined, 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 could not have come at a worse time – in the dead heat of August, as the most devastating drought we’ve experienced in the last 50 years drove corn prices up nearly 40 percent in a matter of weeks. The decision effectively increased demand for a crop that was already in extremely short supply, thanks to Mother Nature and an unworkable 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 enact 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, as Bob has discussed, and in agricultural commodities and food manufacturing. And the application of RFS to allow E15 into the market will only serve to make a bad situation worse.
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. And again, flooding the market with E15 will make it worse for consumers.
The available supply and price of corn and other affected commodities has an enormous impact on the cost inputs to food production. And 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.
When the original suit was filed, we argued that EPA exceeded its authority and violated the law when approving the use of E15, but more importantly, it put consumers at risk. 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 our arguments are heard.