Liability issues related to E15 likely to linger

By Kris Bevill | October 14, 2010
Posted Oct. 19, 2010

The U.S. EPA's approval of E15 for use in 2007 and newer vehicles may be a small victory for ethanol producers, but retailers say it's unlikely any of them will sell the fuel until liability issues are resolved.

In a release issued shortly after the EPA's approval on Oct. 13, the National Association of Convenience Stores urged its members to use extreme caution when considering selling E15, stating that EPA approval does nothing to remove retailers' legal obligations regarding storage and sale of the fuel. "Further, limiting E15 use to only vehicles manufactured since 2007 could expose retailers to significant liability risk if a consumer were to fuel a non-approved engine with E15," stated John Eichberger, NACS vice president of government relations.

The EPA said in its proposed E15 label rule that it would not typically hold a fuel retailer liable for customer misfueling into any vehicle, engine or piece of equipment, provided that the station's pumps were properly labeled. That does little to comfort retail fuel groups such as NACS, which claim that the Clean Air Act includes a provision that allows for citizens to sue retailers for misfuelings. NACS said it is concerned that misfuelings could be both accidental and intentional, and labels may not provide them with enough litigation protection.

Valero Energy Corp. is expanding the availability of E85 at many of its retail stations, but corporate communications director Bill Day, indicated that the fuel retail giant will not be as supportive for E15. "Valero is one of the nation's leading ethanol producers, and generally supports pro-ethanol policies," he said. "But in this case, it's hard to imagine any retailer, including Valero, selling the E15 blend at its sites without liability or warranty protection."

"The easiest way to remedy the situation is to mandate that everything's full-serve, that you do not allow the customer to have the opportunity to misfuel, either deliberately or unintentionally," said NACS spokesman Jeff Lenard. The American Petroleum Institute explored the mandatory full-service station measure as a possible misfueling solution in a scoping study and found that, while it may be effective, its overall effectiveness is unknown and it would be extremely expensive to implement. The annual nationwide cost of such a program was estimated by API to be $10.6 billion.

Lenard agreed that mandatory full-serve stations would be expensive and wouldn't necessarily mitigate legal risks for the fuel retailer, but said liability issues must be resolved before retailers will consider selling E15. "Nobody wants to pay lawyer's bills 10 years down the road for something they didn't see coming," he said.

In July, Reps. Mike Ross, D-Ark., and John Shimkus, R-Ill., attempted to alleviate liability issues stemming from the introduction of higher ethanol blends with the Renewable Fuels Marketing Act of 2010. The NACS supported the bill, as did the Petroleum Marketers Association of America and the Renewable Fuels Association, among other groups. The bill was referred to the House Energy and Commerce Committee and it is unlikely to be voted on before the end of the year. "There is no indication that the Ross-Shimkus legislation will move in the lame duck session," said Steven Tomaszewski, press secretary for Rep. Shimkus, adding that Shimkus will make the bill a personal priority in the next session of Congress.