Liability risk shouldn’t hurt sale of high-ethanol fuel — USDA

Source: Marc Heller, E&E reporter • Posted: Friday, October 28, 2016

Fuel retailers’ potential liability for engine damage caused by high-ethanol fuels shouldn’t deter them from selling it, a Department of Agriculture official said yesterday.

Michael Scuse, USDA undersecretary for Farm and Foreign Agricultural Services, said at an event promoting E15 and E85 fuel that complications with insurance are part of “some misinformation that’s out there” about fuel blended with ethanol.

Trade associations representing retailers say limited liability insurance is one deterrent to selling E15, a blend of 15 percent ethanol and 85 percent gasoline that U.S. EPA approves for use in cars built since 2001. The great majority of gasoline sold in the United States contains 10 percent ethanol.

Older cars aren’t approved for E15, nor are boats or small equipment such as lawn mowers, which EPA says can suffer damage from the fuel’s corrosive effects. The still-higher blend of E85 is strictly for flexible-fuel vehicles, EPA says.

“I think once the consumers start using the products of E15 and higher, they’re going to see that these are very good products at a reasonable price, and I think they’ll start using more and more E15 and higher blends,” Scuse told reporters at a Sheetz gas station in Manassas, Va., that installed E15 pumping equipment with help from a USDA program.

“We have farmers across the Midwest that have been using blends as high as E85 now for a number of years without any issues,” Scuse said.

The insurance issue has been a talking point for critics of EPA’s renewable fuel standard, which sets minimum volumes of biofuels to be mixed into the nation’s fuel supply. While bigger companies such as Sheetz are sometimes willing to take that risk, the smaller retailers who run most of the nation’s gas stations usually aren’t, said Bill Douglass, owner of Douglass Distributing in Sherman, Texas, and chairman of the Small Retailers Coalition, a group urging changes to the RFS.

Retailers are in a bind because they usually have to install equipment approved by a nationally certified testing laboratory, such as Underwriters Laboratory, or risk voiding tank insurance, according to the Association for Convenience & Fuel Retailing, a trade group. If a customer misfuels, the retailer can be held responsible for violating the federal Clean Air Act, with fines up to $37,500, the association said.

The association said it supports federal legislation to protect retailers from liability as long as they follow EPA label requirements. Rep. John Shimkus (R-Ill.) introduced such legislation three years ago; it didn’t advance in committee.

The nation’s largest insurer of gas stations and convenience stores, Federated Mutual Insurance Co., has warned more about risks related to misfueling with diesel, said Scott Zaremba, owner of Zarco 66 in Lawrence, Kan., which became the country’s first E15 retailer in 2012. A company spokeswoman didn’t have any information yesterday about Federated Mutual Insurance’s views on the subject.

Proponents of ethanol say critics overstate the likelihood of misfueling. At the Sheetz station in Virginia, the pumps are marked with yellow labels on the E15 hoses, as well as yellow handles and yellow warning labels on the pumps advising motorists which vehicles take the fuel.

The E85 dispensers are marked with red labels and red handles.

Scuse used the news conference to tout USDA’s biofuel infrastructure partnership, which is providing $210 million to help gas stations in 21 states add equipment to sell high-ethanol blends. Officials at USDA say the program promotes a cleaner-burning fuel that supports farmers by providing a market for corn.

The partnership, created at the direction of Agriculture Secretary Tom Vilsack, isn’t part of the five-year farm bill that outlines USDA programs, Scuse said. That means its future beyond this year will be determined by the next presidential administration.