Issue Update

Last Updated: February 22, 2016

The Issue
Retailers are being encouraged to sell gasoline containing higher levels of ethanol, but there are significant legal and technical hurdles that prevent retailers from doing so. On December 19, 2007, President George W. Bush signed into law the Energy Independence and Security Act of 2007, which dramatically increases the renewable fuel standard (RFS) to require the use of 36 billion gallons of renewable fuels by 2022. If every gallon of gasoline were blended with 10 percent ethanol today, the market would not be able to accommodate the 36 billion gallon mandate. To address this issue, in 2010, EPA approved a waiver allowing the sale of gasoline containing up to 15% ethanol (E15), but only for vehicles manufactured in or after model year 2001. Motorcycles, boats and outdoor power equipment are not authorized to use E15.

NACS Position
NACS supports legislation which would provide an alternative mechanism for determining the compatibility of new and existing equipment with any new fuel that enters the market and would protect retailers from Clean Air Act violations and certain liabilities associated with consumer misfueling provided the retailer complied with EPA labeling requirements. In addition, NACS supports legislation that would protect market participants from potential liability if an approved fuel or fuel additive is declared a defective product. No retailer should be subject to litigation for a lawful action taken today if the law changes tomorrow.

Retail Impact
Federal law and many state and local regulations require retailers to use equipment certified by a nationally recognized testing laboratory, such as Underwriters Laboratories (UL), as compatible with the fuel they are selling. Failure to use certified equipment exposes the retailer to claims of negligence, 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. Further, if the retailer allows the consumer to misfuel a non-approved engine with E15, that retailer could be held liable for violating the Clean Air Act (fines up to $37,500) and for any damage to the consumer’s engine. In addition, if the fuel were ever declared a defective product by a court, retailers could be held retroactively liable for selling the fuel.