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Nailing E85 legality question

Posted: February 22, 2010 at 11:44 AM CST

EPM associate editor Holly Jessen writes more about the National Ethanol Conference in Orlando in her guest blog.

Last week, I spent three days away from the office at the National Ethanol Conference in Orlando, Fla. To be completely accurate, the hotel where it was held was near Orlando, but actually in the country outside the town of Kissimmee, Fla. No, I mean really in the country. There were cows in a field across the highway.

But forget about the cows. NEC was held this year at the beautiful Gaylord Palms Resort and Convention Center. It was an exciting event attended by many people revitalized by recent positive developments in the world of ethanol.

In his state of the industry address, Bob Dinneen, president and CEO of the Renewable Fuels Association, recalled last year’s conference, held in the midst of a very difficult time for the industry and the economy as a whole. He used the Winston Churchill quote, “When you’re going through hell, keep on going!” in his speech. This year, Dinneen used a Churchill quote again, but one with a different flavor. “A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.”

And that’s exactly what this year’s conference was about–a “Climate of Opportunity.” Dinneen told the audience that the U.S. ethanol industry is strong and rebounding from a recession. That doesn’t mean 2010 will be easy sailing, however. Dinneen called the next year a “seminal year in our industry’s history” in which the blend wall must be broken down, questions about ethanol’s carbon footprint must be addressed and the tax incentive must be extended.

One potential barrier in attitude was clearly illustrated on Feb. 16, the first full day of the conference. During the Washington Insiders’ Roundtable John Eichberger, vice president of government relations for the National Association of Convenience Stores, said that E85 was illegal. His grounds were that retailers don’t have fuel dispensers that are approved for anything above E10, he said, so retailers dispensing E85 are breaking the law. He went on to say that, with one problem, a retailer could be put out of business. “These are real issues that some people are trying to sweep under the rug,” he said.

His comments were jarring, and, largely met with silence. Whether that was due to shock or the confrontational nature of his words, I’m not sure. I certainly wouldn’t have known what to say to him, had I been on that stage.

The next day, during a presentation on conquering the blend wall, Eichberger’s name may not have been directly referenced, but his theory that E85 is illegal was thoroughly broken down. RFA’s Robert White, the director of market development and the moderator for that session, called the comments “scare tactics.”

Marcy Rood Werpy followed up with a presentation on the Clean Cities program. The analyst for Argonne National Laboratory punched holes in his E85 comments with slide after slide without ever once referencing Eichberger. If E85 is illegal, I found myself thinking, why has state and federal money gone to install E85 pumps? Why have certain state and city governments established E85 fleets? Why does the Clean Cities program, which is sponsored by the DOE, even exist? If E85 is illegal, why is this government-industry partnership working to reduce petroleum consumption through alternative fuels, including E85? Why have “the big three” automakers committed to making half of all their vehicles flex fuel by 2012?

The last speaker, Karl Doenges, put several burly nails in the coffin of the “E85 is illegal” theory. The Executive Director of Protec Fuel Management said it was a “gross misstatement” and “patently false”. The Underwriter’s Laboratory (UL) is not a regulatory authority, he said. UL is a certification agency, and a slow one at that. The fire marshal is the regulatory agency, he said. E85 retailers with a waiver from their state’s fire marshal office have the go-ahead to sell the fuel.

The fact is, UL is in the process of reviewing fuel dispensers for use with ethanol. Rood Werpy told audience members that a full dispenser should be approved for use with E85 soon. I can’t put it any better than she did. “That’s very good news for the industry,” she said.

Doenges’ position was not only that E85 is legal, but that the ethanol industry needs to put its focus there, not on E15. As both he and Rood Werpy pointed out, there just aren’t enough E85 pumps in the areas where the majority of FFVs operate. The Renewable Fuels Standard (RFS2) establishes and mandates demand for E85. Couple that with the fact that oil prices will unquestionably rise in the future, he said, and conditions are ripe. “Natural market forces combined with the RFS2 will drive E85,” he said.

I don’t know about you, but it makes good sense to me.

-Holly Jessen