B100 California's Endangered SPECIES?

High level blends-everything above B5-could be limited, even banned, in California under new state regulations.
By Liousa Aronow | March 01, 2004
It looks like a typical self-serve gas pump. It has shiny reflective metal and glistening white trim, with instructions on how to pay inside.

But this pump is different.

It's connected to a 1,000-gallon storage tank decorated with sunflowers and the word "biodiesel." A meticulous sign on the pump explains the fuel and its cold weather properties. Unfortunately, with the adoption of new regulations by the California Department of Food and Agriculture (CDFA) Division of Measurement Standards (DMS), this biodiesel pump may soon be declared illegal.

The regulations, which were announced to the public in early February, could have serious consequences for all biodiesel stakeholders in California, because they would limit sales of biodiesel over B5, discourage new customers and prohibit the sale of B100 to the public. But the consequences go beyond California, because at least 30 other states utilize portions of California's fuel regulations. California is also a leader in the use of B20 and B100, with 11 public fueling stations and many fleets utilizing biodiesel to meet their EPA Alternative Fuel Mandate. Much of this fuel is produced in other states.

The period for public comment has passed but the rules have not been finalized. They are due to go into effect in early April. Meanwhile, biodiesel stakeholders outside and within California are putting their heads together to create strategies for adapting to the regulations, or promoting amendments to them.

Three areas are addressed in the proposed regulations: warning labels for biodiesel fuel, the standards for biodiesel before blending with diesel, and standards for the final blended fuels. The stringent regulations were revised by the CDFA in response to the suggestions of several petroleum business and vehicle manufacturing associations.

Yokayo Biofuels is one business that would be severely affected by the proposed CDFA restrictions. The distributors of B100 opened a pump last November at the Solar Living Center in Hopland. This convenient spot is one of three public pumps they supply, along with co-ops, fleets, businesses, and individuals. "We have no plans on reducing our distribution of B100 as fuel," insists Kumar Plocher, president of Yokayo Biofuels.

Further north in Laytonville, Kimber Holmes just took out a business license for her biodiesel delivery business last April, and she was looking forward to opening a small station by the highway. "I just got a $1500 permit to pump fuel into people's cars," Homes said. "That's a huge amount of money for a mom and pop business. Why didn't Weights and Measures tell me I wouldn't be able to do this in a few months?"

"This will probably be my final straw," stated Mike Lewis, general manager of San Diego's state-of-the-art Regional Transportation Center (RTC). "There are an unlimited number of government agencies that are involved in our business, and it gets to a point where you want to quit. . . if I have to deal with this anymore, I'll just drain the tank, put diesel stickers on it, and live a happy gas station owner's life."

The RTC opened last August as not only the first public biodiesel station from Long Beach south, but as the most state-of-the-art alternative fueling station in the United States. Biodiesel is not profitable for RTC, but Lewis is willing to provide fuel service if the regulatory obstacles don't increase.

The first new regulation requires that all pumps or containers of fuel above B5 have a label reading: "CAUTION: THIS FUEL MAY NOT BE SUITABLE FOR USE IN SOME DIESEL ENGINE VEHICLES. ITS USE MAY VOID YOUR WARRANTY, CHECK YOUR ENGINE MANUAL OR WITH YOUR ENGINE MANUFACTURER BEFORE USING."

"We've never once had a legitimate claim of damage due to biodiesel," Lewis asserted. "Now we have a warning that it's not for use in VW's." Volkswagon is the only vehicle manufacturer that specifically states that the use of biodiesel will void a warranty. While engine warranty issues continue to be controversial, several engine manufacturers have even clearly written that the use of biodiesel will not void their warranties.

The controversy regarding the regulation revolves around the ASTM standard D6751, for biodiesel blending stock. The regulation does not represent a major change in regulations but a mandate to enforce it. ASTM D6751 clearly states that it's a standard for a "blend stock," not a neat fuel, whether it's used in B2 or B99. Most biodiesel sold in the U.S. meets these strict standards. Unfortunately, there currently is no standard for the neat fuel.

Many B100 users in California were surprised to learn that the ASTM tested fuel they had been purchasing for years had never been officially approved. But this wasn't a problem when B100 pumps made their first public appearance.

"The first station with B100 was an Olympian station (in San Francisco), and state officials were at the opening," said Graham Noyes, vice president of World Energy. "The state never took action against the station. Only recently has the state taken a second look. There may be some interests that see biodiesel as a threat to their economic well-being. . . they're trying to toss up some regulatory hurdles."

David Lazier, at the CDFA explained, "Our initial proposal was to use ASTM D6751 for neat fuel, and we proposed D975 for blends. . . . In the comment period, it became clear that we had overstepped our boundaries by adapting D6751 for finished fuel, so we changed it."

In the proposed rules ASTM D975, the standard for diesel fuel, would be required for all finished biodiesel blends. This is not a problem with B2 or B5. "Studies show that B20 can meet D975, depending on the viscosity and distillation of the petroleum used," said Scott Hughes, state regulation analyst for National Biodiesel Board (NBB). But blends above B20 differ greatly from petroleum, mostly because biodiesel is not a distilled fuel.

If it were to pass D975, B100 could be sold, said Mike Cleary, director at CDFA DMS. "We'd have to look at it on a case-by-case basis. If it didn't pass the test, we'd have to take the product off sale."

The proposed legislation package will probably spend the month of March in the Office of Administrative Law, where it will be scrutinized for duplication with other laws and unnecessary language. Public notices and comments will be reviewed. This is a closed process; no further public comments will be considered. Next, the package will proceed to the desk of the Secretary of State.

Regulations experts from the NBB have been talking with DMS officials, and have identified a couple of paths forward to mitigate the possible consequences of the rules.

Hughes has been working for several months to promote "labels that are more positive for consumers, more user-friendly." He has been communicating with OEMs (Original Engine Manufacturers) to "develop a consensus line around cautionary statements, and the need to have all blends labeled. We plan to take that to the Secretary of Food and Agriculture and show them that here's a consensus that wasn't part of the original consideration."

They're also working with ASTM to develop a new "Fill and Go" specification for B20, and a "Stand Alone" specification for B100. The process may take 18 months, but it's a priority for biodiesel stakeholders because with EPACT regulations, federal, state, and utility fleets will have to decrease their petroleum use by 20 percent by 2005. With B20 as the blend of choice by EPACT users, demand for the fuel is expected to increase dramatically.

The legislative process may be invoked to promote interim standards until specific ASTM standards for B20 and B100 are developed. Concerning interim standards, Lazier remarked, "I am reasonably sure that our office would not be opposed to a law."

With so many state legislatures looking to California for direction, all biodiesel stakeholders are encouraged to write to their state representatives to support interim ASTM standards for B20 and B100.

It may be possible for biodiesel marketers to apply for a variance from the CDFA. There is a provision in the law that allows centrally located fleets and co-ops to use developmental fuels for two years, while collecting data on the real world experience for ASTM. The variance would probably be renewable.

Leaders at NBB are looking into an "umbrella variance" for fleets and co-ops in California, to streamline the process. State DMS officials have responded positively to the idea of dealing with one organization, instead of hundreds of variance requests.

"The variance would contain reporting requirements for the NBB to abide by," explained Lazier. "They would have to report on a quarterly basis about the gallonage, the fleets using it, and any catastrophic failures. The whole idea of using a variance is that it's working towards an ASTM standard."

While NBB leaders continue dialogue with state officials, the numerous B100 providers and users of California are beginning to create strategies. By forming a statewide biodiesel co-op, some people hope to work within the variance process. Customer education materials could be shared and fuel could be purchased in bulk.

"It's unfortunate that we have to go that route, but it's positive in that it might give us lobby power," said Ray Newkirk, owner of Pacific Biofuel in Santa Cruz. "We jump through the hoops, and when all the hoops are jumped through, it might help small producers and distributors. We must turn obstacles into opportunities." ,

Louisa Aronow is a freelance writer living in California.

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