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    Tesoro Files Lawsuit to Prevent Ethanol Regulation

    Company takes on the California Air Resources Board.

    SAN ANTONIO -- In an effort to prevent the implementation of a new regulation that essentially mandates the addition of more crop-based ethanol to gasoline in the State of California, Tesoro Refining & Marketing Co. filed a lawsuit against the California Air Resources Board (CARB).

    The company hopes to prevent passage of a new regulation CARB finalized on Aug. 29, which would result in refiners increasing the amount of crop-based ethanol in gasoline from the current level of 5.7 percent to as much as 10 percent by Dec. 31, 2009.

    "To date, refiners have made significant investments in California to reduce emissions in the state and to ensure full compliance with existing ethanol requirements. However, more and more questions are emerging about the impact crop-based ethanol has on our environment and food supply," Bruce Smith, Tesoro chairman, president and chief executive officer, said in a statement. "We think greater review of the environmental and economic impact of this fuel supply is needed before we increase the ethanol requirements in California gasoline."

    Smith said Tesoro is concerned the new fuel standards conflict with an existing California requirement, which calls for greenhouse gas emissions in the state to be reduced.

    "The CARB rule, which results in the increase of crop-based ethanol in gasoline, violates the intent established by another California regulation (AB 32), which calls for a decrease in greenhouse gas emissions to 1990 levels by 2020," Smith said in a statement. "This new rule increases greenhouse gasesĀ¬ through the addition of more crop-based ethanol at the same time we are investing to reduce greenhouse gases."

    Tesoro, which operates the second-largest refinery in Northern California, expects a ruling on the temporary injunction in the next 30-60 days. A final ruling should be completed within the year, noted Smith.

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