November 9, 2010 / 6:04 PM / 9 years ago

UPDATE 3-Food groups sue U.S. for ethanol boost in gasoline

 * EPA had ruled 2007 and newer cars can burn E15
 * Food groups say ethanol boost would raise prices
 * EPA E15 decision on 2001 to 2006 cars expected soon
 (Adds EPA reaction, paragraph 10)
 By Timothy Gardner
 WASHINGTON, Nov 9 (Reuters) - Livestock producers and food
industry groups filed a suit on Tuesday seeking to overturn a
U.S. decision to allow higher levels of ethanol in gasoline,
saying it could push up food prices.
 The Grocery Manufacturers Association, the National Meat
Association and other groups sued the Environmental Protection
Agency, saying regulators overstepped their authority when they
ruled last month that gasoline retailers could sell fuel
containing up to 15 percent ethanol. That is an increase from
the current allowable level of 10 percent.
 The EPA ruled that cars built in 2007 and later could burn
the fuel, known as E15.
 "This will put pressure on the meat and poultry supply,
which will lead to higher food prices for consumers," J.
Patrick Boyle, president of the American Meat Institute, which
is one of the groups, said in a release.
 Ethanol is made mostly from corn in the United States. Food
groups say E15 will increase both corn demand, and in turn,
meat prices because livestock eat the grain. About a third of
the U.S. corn crop is used to make ethanol.
 Corn prices Cc1 briefly hit more than a two-year high on
Tuesday above $6 a bushel on droughts in key producing areas
and after the government cut its crop output forecast.
 The food groups said the EPA did not have the power to make
the decision.
 "In approving E15 ... the EPA has clearly exceeded its
authority under the Clean Air Act," the coalition of groups,
which filed the case with the U.S. Court of Appeals, said in a
 "The agency has a legal obligation to adhere to the letter
and spirit of the Clean Air Act and, in this case, has failed
to do so," the group said.
 The EPA defended its action. "First and foremost, EPA's
decision was based on strict adherence to the Clean Air Act and
grounded firmly in science," said Betsaida Alcantara, a deputy
press secretary at the agency.
 The EPA is set to decide whether to allow E15 for cars
built from 2001 to 2006 by the end of the year, pending the
completion of tests by the Department of Energy.
 Growth Energy, the ethanol industry group that had asked
for the E15 waiver, said that food companies, not ethanol
production, have raised food prices.
 "In 2008, these big food companies gouged consumers while
trying to shift the blame to America's ethanol producers and
farmers, so we're not surprised by their actions today," said
Tom Buis, the head of Growth.
 Ethanol producers have said the use of hybrid seeds and
other techniques are pushing up corn yields and that there will
be plenty of the grain for everyone.
 They also say they need E15 to reduce a growing glut of
supply brought about by government mandates that call for
increasing amounts of ethanol to be blended into the overall
gasoline supply.
 In an effort to trim reliance on foreign oil, U.S. mandates
require 15 billion gallons of ethanol to be blended into
gasoline by 2015, up from 12 billion gallons this year.
 Industry groups for automobile manufacturers, oil refiners
and gasoline filling stations have also opposed the ruling.
 (Editing by David Gregorio and Walter Bagley)

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