Retailers want liability protection before considering E15

By Kris Bevill | February 22, 2012

Liability issues surrounding the use of E15 remain a major concern for many retailers when considering offering the fuel to customers driving 2001 and newer vehicles. The U.S. EPA recently approved required health effects and emissions testing for E15, bringing the fuel one step closer to commercial availability for those drivers, but before retailers can begin selling the fuel for 2001 and newer vehicles, additional requirements must be met, including EPA approval of a misfueling mitigation plan for retailers. State regulations also need to be amended to allow E15 to be sold and retail infrastructure must be approved to store and dispense the fuel. The ethanol industry is working to overcome all of these hurdles, but it remains unclear when the process will be complete.

Iowa is expected to be the first state in the nation to allow E15 to be sold for 2001 and newer vehicles. The blend is already available at numerous blender pumps in the state for use in flex-fuel vehicles, giving those retailers a head start in offering it to other customers when they are able. The ethanol-friendly state also offers incentives to retailers who sell mid-level blends of ethanol and has a statewide renewable fuel standard, which further spurs retailers to make alternative fuels available. The ethanol industry has also been successful there in working through the procedural issues surrounding E15’s legality. “We have been looking at state policies and have modified the necessary policies and requirements to be in a position to offer E15 fairly soon after it goes through the formal approval process and all of the registration and other requirements have been met,” said Lucy Norton, managing director of the Iowa Renewable Fuels Association. “We have moved forward very quickly to put the pieces together here to enable retailers to put E15 in this market so consumers have additional fuel choices.”

For Iowa retailers, the main issue now is gaining approval of a misfueling mitigation plan, according to Norton. The Renewable Fuels Association submitted a mitigation plan to the EPA on Feb. 16 which the group said could serve as a model plan for fuel retailers to follow in order to demonstrate regulatory compliance, but it is unclear when the EPA might approve the RFA’s plan. And some retailers say they will need even further assurance before they begin offering E15.

Minnesota-based CHS Inc., a cooperatively owned diversified energy, grains and foods business which supplies fuel to approximately 1,400 branded retail petroleum outlets and is the nation’s leading E85 retailer through its 800 Cenex-branded convenience stores located throughout the Midwest, said it will continue to support retailers’ decisions to install blender pumps but, as a company, it won’t consider selling E15 until multiple factors are addressed. Issues of concern include liability issues for vehicles and equipment, potential gasoline compatibility issues related to Reid Vapor Pressure levels and state and local fuel regulations, according to Lani Jordan, director of corporate communications at CHS, who added that the business remains committed to providing fuel that meets the broad needs of consumers now and in the future.

Jeff Lenard, vice president of industry advocacy for the National Association of Convenience Stores, said the potential for misfueling liability and the cost of acquiring equipment to sell E15 are two significant hurdles for retailers, but his group is also concerned about consumer acceptance of the fuel. “Retailers must obtain the appropriate storage tanks and dispensers to sell the product, and this can be a very expensive investment,” he said. “In order to justify such an investment, a certain level of consumer demand must exist. Given the opposition of the auto manufacturing industry to E15 and their concerns about the use of the fuel in current vehicles, it is very difficult to evaluate potential consumer demand.” Lenard added that while the NACS believes the EPA’s misfueling regulations are practical, there is still concern that retailers who comply with those regulations won’t receive adequate liability protection. “NACS is pursuing legislation that will provide such legal protection to ensure that a retailer who complies with EPA’s misfueling program cannot be held responsible in the event a self-service customer ignores or disregards the label and introduces E15 into a non-approved engine,” he said.

Valero Energy Corp., which produces more than 1 billion gallons of ethanol annually, more than any other company in the U.S. aside from Archer Daniels Midland Co. and Poet LLC, said it has no intention of selling E15 at any of its 1,000 company-owned retail fuel stores. “Because E15 has not been approved for use in all engines and hasn’t received warranty protection from engine manufacturers, we can’t guarantee its performance and we won’t sell a product we can’t guarantee,” said Bill Day, executive director of media relations for Valero. Some Valero-branded fuel stations are independently owned, however, and Day said those stations can choose to offer E15, but they would have to locate the dispensers under a separate canopy.