NBB In Sight

Biodiesel industry approves comprehensive fuel quality policy
By Joe Jobe | August 01, 2006
The call for fuel quality in the biodiesel industry continues to intensify as more production comes on line virtually every week. The real concern about poor-quality fuel entering the market and sullying the reputation of biodiesel is not just theoretical. Fuel quality issues were experienced during similar periods of rapid growth in the European biodiesel industry and in the U.S. ethanol industry. The marketplace and competition eventually dealt with the fuel quality problems in both cases, but not before the reputation of the product's reliability in those markets sustained long-term harm.

Simply relying on the marketplace and competition alone to weed out poor-quality product is not enough. That would mean that customers would have to have failures in substantial numbers over several years in order to condition the market to select only quality fuel. The problem with this process is that many-if not most-customers who have failures because of poor-quality fuel will never come back to biodiesel. Plus, they will spread their stories of biodiesel failures far and wide.

Engine and equipment manufacturers continue to withhold support and caution customers against using biodiesel blends primarily because of their concern over fuel quality. Original equipment manufacturers (OEMs) and other stakeholders continue to ask the National Biodiesel Board (NBB), "What is the biodiesel industry doing to enhance fuel quality in the market?"
NBB Chairman Darryl Brinkmann appointed a task force to examine this issue and make policy recommendations. The task force was chaired by Gary Haer of West Central and included a cross-section of highly respected industry leaders. The group spent hundreds of hours examining this issue. The result was a comprehensive fuel quality policy recommendation. The recommendation was approved by the NBB Governing Board and discussed again at length among all NBB members on a Web conference in June. At the June NBB meeting in Washington, D.C., the policy was passed unanimously.

Fuel Quality Policy: What is it and what does it mean?
The Fuel Quality Policy can be viewed on the NBB Web site home page and serves as a written document to answer the question of what the biodiesel industry is doing to enhance fuel quality in the marketplace. This includes further promotion of the BQ-9000 quality assurance program; heightened education of fuel distributors, customers and other stakeholders; and aggressive outreach with government fuel regulators to encourage proactive testing and enforcement.

The policy also includes a written compliance and enforcement guide that provides step-by-step instructions on procedures for a stakeholder to report non-compliant fuel and suppliers to appropriate state and federal fuel regulators and enforcement officials.
The federal tax code is specific about the need for the product to meet ASTM D 6751 in order to be eligible for the tax incentive provided under the JOBS Creation Act of 2004. Manufacturers or blenders taking the tax credit on this off-spec fuel may be in violation of tax law and subject to Internal Revenue Service penalties under the law. This is one example of a federal agency that has the responsibility and authority to regulate fuel quality.

If fuel goes into a vehicle that is operated on-road, the U.S. EPA requires that fuel to meet EPA registration requirements, as well as conform to regulations related to ultra-low-sulfur diesel fuel (ULSD). After ULSD is fully phased-in later this year, any diesel fuel which exceeds the 15 parts per million sulfur spec will be illegal.

The EPA will enforce sulfur regulations through the policy of "presumptive liability." That means that if on-road fuel is found to be non-compliant for sulfur requirements, including biodiesel blends, any supplier of fuel anywhere in the chain is presumed liable for the non-compliance-and potentially liable for the corresponding civil and criminal penalties. This is unless they can prove that they are not responsible for the violation. Defenses against presumptive liability include a proactive testing and documentation program, and regimented quality control/quality assurance.

Throughout 2006, the NBB has been conducting a specific outreach program with the state divisions of weights of measures. Agri-Fuels is the contractor that has been implementing the project on behalf of the NBB and will continue to collect information, educate state fuel regulators and encourage proactive compliance testing.

Not all states regulate fuel, and of the ones that do, not all have adopted ASTM D 6751. The NBB has started a fuel quality section on the Members Only section of its Web site, which includes the fuel quality policy, enforcement guide and information regarding fuel regulations for each state. Once the state database is more fully populated, it will be moved to a public section of the Web site.

Violation of state and federal fuel regulations is a serious matter and could involve serious consequences. Provisions of the Sarbanes-Oxley Act of 2002-passed as a result of corporate and accounting scandals, such as Enron and WorldCom-make corporate executives personally responsible for the criminal actions of their companies. Therefore, providing quality fuel is not just a matter of good business, it is a matter of law.

The new comprehensive fuel-quality policy is a dramatic stand by the biodiesel industry on the side of fuel quality. It is an unusually powerful statement when an industry association unanimously votes to use its own membership dues to solicit the government to more strictly regulate its members. These measures are especially important during the current period of growth to protect consumers and the reputation of biodiesel as a high-performance, reliable fuel. Some stakeholders may argue they cannot afford to implement fuel quality measures. The fact is, they can't afford not to implement them.
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