Tesoro sues air regulators over ethanol rule

Times Staff Writer

Fuel maker Tesoro Corp. on Tuesday sued California air regulators to block a new regulation that is expected to sharply boost ethanol use in the state’s gasoline starting in 2010.

The San Antonio-based company, which operates refineries in Los Angeles and the Bay Area city of Martinez, said the new fuel specifications could conflict with the state’s push to cut greenhouse gas emissions and could have ramifications for the environment and U.S. food prices.

“This new rule increases greenhouse gases -- through the addition of more crop-based ethanol -- at the same time we are investing to reduce greenhouse gases,” Tesoro Chief Executive Bruce Smith said. “We think greater review of the environmental and economic impact of this fuel supply is needed.”


The case was filed in Sacramento Superior Court.

Tesoro’s primary arguments to the court had little to do with food or the environment. The company said the state Air Resources Board did not give refiners enough time to make the needed plant modifications, did not give enough weight to the costs involved, and did not make sure the new fuel specifications would be compatible with the state’s still-evolving low-carbon fuel standard.

The new regulation, finalized by the air board at the end of August, alters the state’s existing gasoline formula to accommodate blending more ethanol into each gallon of California gas without worsening air pollution.

Beginning in 2004, most of California’s gas has included 5.7% ethanol. The air board expects refiners to bump up the ethanol blend to 10% when the rules take effect at the end of 2009.

Michael Scheible, the air board’s deputy executive officer, had not seen the lawsuit late Tuesday. He noted that Tesoro’s news release recited many common concerns about ethanol, but said that without seeing the lawsuit it was impossible to comment on the company’s legal arguments.

“The things that were in the press release . . . we don’t think those are legitimate factors that will affect our ability to meet AB32,” Scheible said. The groundbreaking law known as AB32 lays out ambitious goals for reducing greenhouse gas emissions and their effects.

Scheible said the new fuel policy was laid out more than a year ago. Refiners had primarily complained about the timetable for the switch and the cost of paying to offset emissions if they miss the deadline, he said.