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North Carolina Fuel Retailers Concerned Over Ethanol

RALEIGH -- North Carolina petroleum and convenience retailers foresee problems if the federal Environmental Production Agency (EPA) raises its ethanol blending mandate from 10 percent to 15 percent.

"We all support alternative, renewable fuels, but the way things are going we may have a problem, because the country won't be able to meet the federal requirements on how much ethanol and advanced biofuels it must use," said Doug Howey, government affairs director of the North Carolina Petroleum and Convenience Marketers (NCPCM).

Howey cited the federal Renewable Fuel Standard (RFS) that calls for a certain amount of renewable fuels to be included in the nation's fuel supply. In 2009 the requirement was 11.5 billion gallons. In 2010 it's 12.95 gallons; in 2011, 13.5 billion gallons; and in 2012 it will be 15.2 billion gallons.

The dilemma is that if every gallon of gasoline in the country subject to the RFS requirement is blended with 10 percent ethanol, refiners will hit a "blend wall" of 12 billion gallons of renewable fuel between 2011 and 2012, which is short of the 13.5 billion gallons called for in 2011.

To solve the dilemma, the ethanol industry has petitioned the EPA to increase the blend to 15 percent. And that's the problem, according to Howey. "If the blend is increased to 15 percent there will be potential conflicts with existing laws and regulations, liability problems, and possible equipment and engine damage," he said. "The engine damage may come about because pre-2001 cars, which make up 50 percent of the existing fleet, may not be able to handle E15 without complications."

Howey pointed out that Dr. Candace Wheeler, a research and development technical fellow at General Motors Co., noted long-term durability issues for the 240 million vehicles on the road today remain unresolved. Some cars may run just fine on E15, while others could have problems.

"The conflicts with existing regulations will arise," Howey explained, "because several federal regulations, state laws and local ordinances, as well as insurance policies, require the use of Underwriters Laboratories-certified (UL) dispensing equipment, underground storage tanks and piping -- and although the UL has taken the position that it has 'confidence' that most petroleum retailers can safely sell up to 15 percent ethanol blended gasoline, it has not actually 'certified' the equipment.

Howey fears that if there's an underground leak due to the increased blend, retailers may be held liable for the cleanup costs, and insurance companies may deny coverage. "Not to mention the fact that manufacturers of small engines such as lawn mowers, boats and chainsaws believe E15 will overheat and damage small engines, for which retailers may also be blamed," added Howey.

The EPA was originally going to render its decision Dec. 1, 2009, as to whether it will increase the blend to 15 percent ethanol, but has postponed it until some time in 2010, after field tests by the Energy Department have been completed.

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