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Mike Groll  /  AP
Corn farmers are the immediate beneficiaries of a new EPA ruling allowing more ethanol in gasoline. staff and news service reports
updated 10/13/2010 1:27:27 PM ET 2010-10-13T17:27:27

Angering environmentalists but pleasing corn farmers, the Environmental Protection Agency on Wednesday approved blending higher concentrations of ethanol into gasoline for newer vehicles.

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Mixtures with up to 15 percent of the corn-based fuel at the pump are now allowed, up from the previous maximum of 10 percent for vehicles manufactured since 2007.

"Thorough testing has now shown that E15 does not harm emissions control equipment in newer cars and light trucks," EPA chief Lisa Jackson said in a statement. "Wherever sound science and the law support steps to allow more home-grown fuels in America’s vehicles, this administration takes those steps."

The move, which comes a month before November's elections, is politically popular in rural farm areas. But ethanol faces strong opposition from the auto industry, environmentalists, cattle ranchers, food companies and a broad coalition of other groups.

Opponents argue that the increase in production of corn and its diversion into ethanol is making animal feed more expensive, raising prices at the grocery store and tearing up the land. Manufacturers of smaller engines — used in everything from lawn mowers to boats — also oppose increasing the use of the fuel, saying those engines are not designed for the higher concentrations.

The Obama administration has remained supportive of the renewable fuel, and the EPA has said a congressional mandate for increased ethanol use can't be achieved without allowing higher blends.

Congress has required refiners to blend 36 billion gallons of biofuels, mostly ethanol, into auto fuel by 2022, up from 12 billion gallons this year. The goal is to reduce America's dependence on foreign oil and reduce fossil fuel emissions tied to global warming.

The approval could lend struggling Democrats support in the Midwest ahead of the Nov. 2 congressional elections. But the higher blends are unlikely to be quickly adopted by gasoline retailers.

Gas station owners are concerned about the liabilities of selling the fuel because automakers say the higher blends may rot fuel lines and damage engines over time. They could be sued by consumers if E15 harms the engines of cars, boats, lawn mowers and chain saws.

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"We don't think it serves anybody well to rush the higher blends into the marketplace," said Gloria Bergquist, a spokeswoman for the Alliance of Automobile Manufacturers, who added more testing needs to be done on whether it hurts engines. "As automakers we built our vehicles to run on E10. You can't change the fuel after the car is made."

An immediate hurdle is the price of corn, which has hit two-year highs near $6 a bushel.
Ethanol consumes one out of every three bushels of corn produced by U.S. farmers.

Livestock feeders and food makers worry about increased demand from ethanol makers for the grain.

"America's vast fuel needs cannot be met by burning our feed supply," said a trade group for meatpackers on Tuesday.

Decision comes early
The ethanol industry has maintained that there is sufficient evidence to show that a 15 percent ethanol blend in motor fuel will not harm engine performance. They say increased consumption of the renewable fuel creates new jobs and replaces imported oil.

The industry group Growth Energy petitioned the EPA to raise the blend earlier this year. The agency is expected to make a second decision on the ethanol concentration allowed in cars manufactured between 2001 and 2006 after more testing is completed at the end of November.

The decision could cause confusion at service stations as people would have to consider which pump to use based on the age of their car.

"We're really going to make the consumers a guinea pig here," said Craig Cox of the Environmental Working Group, which opposed increases in the fuel. "Have we really thought through what it's going to take to distinguish E15 to E10?"

The Obama administration's decision to boost the ethanol concentration in gasoline is  a victory for the ethanol industry as it struggles to hold on to $6 billion in subsidies.

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An increased public skepticism of the renewable fuel has caused some lawmakers who have always championed ethanol to divert the money to other priorities. A key tax credit is scheduled to expire at the end of this year, and some in Congress are considering cutting it or doing away with it altogether.

Ethanol producers say expiration of the credits, which are paid to oil companies as an incentive to blend gasoline with ethanol, could mean the loss of almost 40 percent of the industry's plants and tougher times for a domestic fuel that is good for national security.

Critics say the industry should stand on its own after receiving subsidies for 30 years and argue the tax credits are a waste of taxpayer dollars.

Valero Energy, a large oil refiner and ethanol producer, said it generally supports pro-ethanol policies. "But in this case it's hard to imagine any retailer, including Valero, selling the E15 blend at its sites without liability or warranty protection," said Bill Day, a Valero spokesman.

To help clear up any confusion with drivers, the EPA on Wednesday also proposed a rule on placing E15 labels on gasoline pumps.

The Associated Press and Reuters contributed to this report.


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