EPA Clarifies Legality of Selling E15

In a letter to NACS and other industry stakeholders, EPA says that selling E15 will only become legal when waivers' conditions are met.

March 31, 2011

WASHINGTON - The Environmental Protection Agency (EPA) clarified this week that its approval of a waiver to use E15 in vehicles manufactured in or after model year 2001 does not resolve all conditions necessary for the legal sale of this type of fuel and that sale of fuels containing more than 10% ethanol into non-flexible fuel vehicles is currently prohibited. In a March 24 letter to NACS, API, SIGMA, PMAA, the Renewable Fuels Association and the National Petrochemical & Refiners Association, the EPA itemized some of the conditions that must be met before E15 can be sold. NACS is concerned, however, that the agency failed to mention other factors that also must be resolved.

"The Clean Air Act (Act) currently prohibits the sale of gasoline containing more than 10% ethanol for use in gasoline-only vehicles and engines. Selling E15 gasoline for use in certain gasoline-only vehicles and engines will only become legal when the waivers' conditions" are met, wrote the EPA.

Here??s the text:

"The conditions in the E15 waivers are designed to mitigate the potential for misfueling ofE15 in vehicles, engines, and equipment for which E15 is not approved. These conditions include labeling requirements for pumps dispensing E15, product transfer document requirements, and participation in a compliance survey at fuel retail dispensing facilities to ensure proper labeling of dispensers. EPA has also published proposed regulations to promote the successful implementation of the E15 partial waivers. The proposed regulations parallel the misfueling conditions on the E15 partial waivers.

"In addition, Section 211(a) of the Act, 42 U.S.C. ? 7545(a), prohibits any fuel manufacturer from selling designated fuel, such as motor vehicle gasoline, unless it is registered with EPA. However, since the conditions associated with the E15 waiver have not yet been met, it remains illegal to blend more than 10% ethanol into gasoline sold for use in gasoline-only vehicles and engines. The Act does not, however, prohibit retail gasoline stations from selling gasoline blended with up to 85% ethanol for use in flexible fueled vehicles or engines, and it does not prohibit the sale of gasoline containing up to 10% ethanol for use in gasoline-only vehicles and engines.

"Sections 211 and 205 of the Act, 42 U.S.C. ?? 7545 and 7524, authorize EPA to assess significant civil penalties for improper fuel blending. To avoid violations of the Act, EPA suggests that retail gasoline stations that sell gasoline blended with more than 10% ethanol for use in flexible-fueled vehicles or engines take appropriate steps to prevent gasoline-only vehicles and engines from being misfueled with fuel containing more than 10% ethanol.

"For example, the likelihood of violations can be reduced for a retailer selling fuel containing greater than 10% ethanol if the retailer affixes warning labels to all pumps dispensing this product informing the public that the product may only be used in flexible-fueled vehicles or engines. EPA encourages fuel providers to employ other strategies at their facilities that are cost-efficient and effective in further reducing the risk of misfueling."

NACS notes that the conditions itemized in this letter fail to mention other requirements concerning equipment compatibility.

Federal law requires that all retail petroleum equipment must be certified by a nationally recognized testing laboratory as compatible with the fuel it stores and dispenses. However, until last year there were no dispensers certified for any blends above 10% ethanol and certification of equipment is non-retroactive ?" which means if a retailer??s dispenser or underground equipment is not certified for the ethanol blend being sold, all of the equipment must be replaced. Failure to do so places the retailer in violation of regulations of the Occupational Safety and Health Administration and potentially in violation of tank insurance policies and bank loan covenants. Further, the retailer could be held liable for gross negligence in the event of a release.

NACS is working on legislation to provide alternative mechanisms for determining the compatibility of equipment, thereby giving retailers the possibility of lawfully using existing equipment to sell new fuels.

NACS is also concerned that the agency has not taken steps to ensure that retailers who comply with the yet-to-be-issued labeling requirements cannot be held responsible for Clean Air Act violations that may occur if a self-service consumer ignores the warnings. This is a serious concern for retailers who are unable to control the independent actions of their customers and who may be fined or sued under the Act for violations ?" the fines of which can be up to $37,500 per violation. We are working on legislation that would also resolve this issue.

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