On December 19, 2007, President Bush signed into law the Energy Independence and Security Act (EISA), establishing a requirement that at least 36 billion gallons of renewable fuel be used in the marketplace by 2022.
But there is a major problem with achieving this objective—the only fuels currently permitted for use in the nation are 10% ethanol, E85 (an alternative fuel approved for only flex fuel vehicles) and biodiesel. The dominant fuel is E10. If every gallon of gasoline were blended with 10% ethanol, the nation would consume about 14 billion gallons of renewable fuel – 22 billion gallons short of the mandate.
To address this problem, the Environmental Protection Agency (EPA) is considering a request to authorize the use of 15% ethanol fuels in the market. EPA is required by law to base its decision on the effect such fuels would have on the performance and safety of engines using the fuel and the effect on air pollution emissions.
The EPA is expected to make a decision this fall and will likely approve E15 for use in only a subset of engines, likely to include vehicles manufactured in model year 2007 or later. E15 will not be approved for older vehicles, marine engines or off-road power equipment.
If EPA approves the sale and use of E15, this presents a number of different problems for retailers, including:
- It is illegal for retailers to store and sell any fuel with greater than 10 percent ethanol (including E85) or more than 5 percent biodiesel using existing infrastructure. Retailers must use equipment certified by a nationally recognized testing laboratory (like Underwriters Laboratories – UL) as compatible with the fuel they are selling. (As of July 15, 2010, there were only 2 certified dispensers to sell E85 and only 2 certified dispensers to sell up to E25). Failure to do so exposes the retailer to claims of gross negligence liability, violation of local fire codes and OSHA regulations, violation of tank insurance and state tank fund policy requirements, and provisions contained in many business loan agreements.
- UL will not recertify any equipment. Therefore, any retailer wishing to take advantage of possible market opportunities presented by new approved fuels will be required to replace their dispensers and possibly their underground storage tank system. This will require an economic investment that many retailers will be unable to make.
- This replacement of equipment is required even if UL itself has recognized the equipment as safe and compatible. For example, on February 19, 2009, UL announced that all listed dispensers in the market were safe to sell up to 15% ethanol, but UL was not changing the official certification of those dispensers. Consequently, retailers acting on this announcement would still be violating federal law.
- In addition, if EPA approves E15 for only a subset of engines, retailers may be held liable if a consumer accidently or intentionally misfuels an unapproved engine with E15. Retailers may be fined for violating the Clean Air Act if they do not physically prevent such misfueling. Clean Air Act violations carry fines of up to $37,500.
- Retailers also may be held responsible for the voiding of engine warrantees if consumers use the wrong fuel. Auto manufacturers currently extend warrantees on the existing fleet to accommodate gasoline blended with up to 10 percent ethanol. small engines (such as lawn mowers, chain saw, snowmobiles, etc) and marine engines are likewise not suitable for fuels containing more than 10% ethanol. Such fuels may cause performance or even safety issues.
NACS has endorsed H.R. 5778, the Renewable Fuels Marketing Act of 2010. Introduced July 20, 2010, by Representatives Mike Ross (D-AR) and John Shimkus (R-IL), this bill will:
- Direct EPA to issue guidelines to determine whether petroleum equipment at retail facilities (such as underground storage tanks, underground piping and fuel dispensers) are considered compatible and may be used to safely and lawfully sell motor fuels authorized by the Administrator. This will provide retailers a pathway to obtaining authorization to lawfully sell fuels like E85, B20 and E10+ gasolines through equipment currently in use at a majority of retail outlets. It will also expedite the certification of new devices as compatible with certain renewable fuel blends and increase the inventory of certified compatible equipment available to retailers for upgrades and conversions of outlets. Equipment approved under these guidelines will satisfy all applicable laws and regulations, as well as requirements under tank insurance policies.
- Direct the EPA to issue labeling regulations to inform consumers of the approved uses of fuels to prevent the misfueling of non-compatible vehicles. In the event a self-service customer ignores the labels and misfuels their engine, retailers who comply with these regulations will not be held responsible for Clean Air Act violations or for the voiding of an engine’s warranty.
NACS is working with the Society of Independent Gasoline Marketers of America (SIGMA), Petroleum Marketers Association of America (PMAA), and NATSO, representing travel plazas and truck stops, to sign up additional Members of Congress in support of this legislation. These organizations, along with the Renewable Fuels Association (RFA), sent a letter to Reps. Ross and Shimkus endorsing the legislation.
A retailer letter has been posted at nacsonline.com/grassroots to enable members to write their Representatives and ask for their support of H.R. 5778.