October 6, 2008

Tesoro Files Lawsuit Against CARB to Prevent Implementation of New Regulation

Tesoro has announced that its operating subsidiary, Tesoro Refining & Marketing, has filed a lawsuit against the California Air Resources Board to prevent the implementation of a new regulation, which would essentially mandate the addition of more crop-based ethanol to gasoline in California.

In addition, the company is seeking a temporary injunction to stop enforcement of the rule while the lawsuit is being heard.

In August 2008, the California Air Resources Board (CARB) finalized a rule concerning gasoline specifications for the state of California. The new rule would result in refiners increasing the amount of crop-based ethanol in gasoline from the current level of 5.7% to as much as 10% by December 31, 2009.

Tesoro noted that the impact of crop-based ethanol is multi-faceted and that even the future availability of the fuel could be at risk if the current $0.51 per gallon subsidy is overturned.

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

Bruce Smith, chairman, president and CEO of Tesoro, said: "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."