In one of several unveiled last week before lawmakers left town, Texas Democratic Reps. Charlie Gonzalez, Ciro Rodriguez and Gene Green say that only the federal government is liable for any lawsuits resulting from the higher ethanol blend. That would, in turn, protect refiners, ethanol producers, retail manufacturers, auto companies and others in the private sector from damage claims from use of an E-15 blend.
Another bill from Texas Republican Reps. Lamar Smith and Joe Barton, ranking members of the House Judiciary and Energy and Commerce panels, would treat the liability issue under the precedent established in 2005 regarding flu vaccines on the market. It shields manufacturers and distributors that strictly adhere to federal specifications, allowing them to offer E-15 fuel without fear of reprisal.
“What we wanted to do is get these bills dropped before EPA acts and essentially frame the debate next year,” said one petroleum refinery industry lobbyist.
Ethanol backers so far are sticking with a bill introduced over the summer by Reps. Mike Ross (D-Ark.) and John Shimkus (R-Ill.) that more narrowly protects marketers. The bill was endorsed by the Renewable Fuels Association, the National Association of Convenience Stores (NACS) and the Petroleum Marketers Association of America, among others.
Growth Energy CEO Tom Buis told The Hill that the group is still reviewing the Ross-Shimkus bill but that at least it is more narrowly tailored than the liability bills from the Texans. “They’re not necessary,” he said of the two Texas bills.
EPA is going to require labeling of E-15 at the pumps in a proposed rule that may also be out by the end of the year, which should cover marketers.
“They’ve indicated before that as long as the retailer labels the pump, then they’re not liable for misfueling,” he said.
He noted that efforts to win liability protection for E-15 will meet the same fate as unsuccessful efforts for years by oil-state lawmakers to win liability protection against MTBE lawsuits. “You have a judicial system,” Buis said.
That’s exactly the fear of both refiners and marketers.
“There is the potential for it to become another MTBE-type situation which nobody wants to happen,” said John Eichberger, vice president of government relations at NACS.
In that case, producers were simply following the federal guidelines in allowing MTBE to be used as an additive but were later sued when it was found to leak into underground storage tanks and contaminate drinking water.
Environmental groups – some of whom are concerned how the high volatility rate of ethanol can affect air quality – helped defeat MTBE “safe harbor” language when Republicans tried to include it in 2005 energy legislation.
While his group endorsed the Ross-Shimkus bill and tried to move it this year, Eichberger said broader liability protection is necessary.
“We are concerned that if E-15 causes equipment damage or safety issues, that could result in severe liability,” he said. “The chain of liability hits everybody in the supply chain.”
“The intent of both pieces of legislation we fully support,” he said of the two Texas liability bills.
The debate over ethanol use has traditionally been less a partisan than regional one, with coastal and oil-state lawmakers skeptical of — or outright opposing — the idea, and Midwestern producers pressing hard in support.
“This is not anti-ethanol,” the refinery industry lobbyist said of the E-15 liability debate. “It’s anti-EPA and [Energy Department] testing. It’s a vote of no confidence on what they’ve done so far.”
EPA and DOE would rationalize any federal go-ahead on the higher ethanol blend by showcasing testing they have done on the engines of vehicles in certain model years.
EPA Administrator Lisa Jackson told the Senate Agriculture Committee last month that she expects to make a decision on model years 2007 and newer by mid-October.
The agency seems likely to approve the higher blend for cars as old as 2007. The Energy Department is also testing some vehicles built before 2007, as well as tanks and other fuel handling equipment to see how they might be affected by a higher ethanol blend.
“While results from the tests conducted to-date look good, EPA will not make a final decision until DOE completes its current comprehensive testing of the newer vehicles,” according to an agency statement.
The agency appears likely to allow the higher ethanol blend in vehicles as old as model year 2001, but it is far less clear whether the higher blend would be deemed safe for older vehicles.