* E15 could go in more than half U.S. vehicles on roads
* Service stations worried about being sued over E15 (adds concerns of livestock feeders, Growth Energy's E15 petition)
By Tom Doggett
WASHINGTON, Jan 20 (Reuters) - U.S. regulators are expected to announce on Friday that a 50 percent increase of ethanol in gasoline is safe to use in vehicles built during the 2001 to 2006 model years, sources familiar with the matter told Reuters.
The Environmental Protection Agency last October approved gasoline with up to 15 percent ethanol for cars and trucks made during 2007 and later. Gasoline previously could hold up to 10 percent ethanol.
The 50 percent ethanol boost for cars and trucks built since the 2001 model year would cover more than half the vehicles now on U.S. highways.
EPA's decision on Friday will come after the agency had about a month to review final vehicle test data from the Energy Department, according to two independent sources that did not want to be named.
The move should please ethanol producers and the U.S. farmers who grow the corn used to make it.
However, livestock feeders and food makers fear so-called E15 gasoline will raise corn prices due to increased demand from ethanol makers for the grain, which is fed to cattle and hogs and its starch is also used in a variety of consumer products.
Service station owners worry that putting higher ethanol blends in older cars could lead to lawsuits if the fuel damages engines.
U.S. law requires the amount of ethanol blended into U.S. gasoline to gradually increase from 12 billion gallons last year to 12.6 billion gallons this year and then to 15 billion gallons by 2015.
Another reason service stations are reluctant to offer E15 is because most fuel pumps have not been certified to sell it, and they worry consumers might mistakenly put it into the engines of boats and yard equipment, like chainsaws not approved to use it.
To help consumers, the EPA plans to put E15 labels on gasoline pumps so the fuel won't be with other blends.
Several trade groups, including the National Petrochemical and Refiners Association, have sued the EPA because they said the agency does not have the authority under the Clean Air Act to approve E15 gasoline in some engines but not in others.
Supporters of E15 say it is a home-grown fuel that will help reduce U.S. dependence on foreign petroleum suppliers.
Growth Energy, a group of ethanol producers, petitioned the EPA in March 2009 to boost the ethanol blended into gasoline to 15 percent.
Growth Energy says moving to E15 would create more than 136,000 green-collar jobs across America and allow the United States to avoid importing almost seven billion gallons of gasoline a year. (Reporting by Tom Doggett; Editing by David Gregorio and Carol Bishopric)