Governor Pataki Signs Legislation to Prohibit "Exclusivity" Fuel Contracts and to Provide Grants for Conversion of Pumps to Handle Alternative Fuels

August 01, 2006

New York Governor George E. Pataki has signed legislation that will prohibit the use of "exclusivity" contracts between fuel distributors and filling stations. Under these agreements, service stations are not allowed to purchase or sell fuels from a source other than their main distributors, most of which do not offer E85 (85% ethanol, 15% gasoline), or other renewable fuels. The new law will exempt renewable fuels from the provisions of any future motor fuel franchise agreements between fuel providers and retail service stations.

"Renewable fuels provide an opportunity for us to significantly reduce our dependence on imported petroleum, and this new law will help to increase the use of renewables by allowing service stations to sell these clean, homegrown fuels," said Pataki. According to state tax records, there are about 200,000 flexible-fuel vehicles, which can run on either E85 or gasoline, are registered in New York State.

The new law applies to E85 biodiesel fuel, hydrogen, and compressed natural gas. Distributors who violate the law by entering into "exclusivity" contracts will be subject to a penalty of $1,000. If the distributor does offer renewable fuels, it is allowed, under franchise agreements, to require the stations to use their brands. For more information about the new law, read Governor Pataki's July 31 press release.

Pataki also announced a grant program worth $10 million for stations to install new pumps or to convert existing gasoline pumps to handle alternative fuels. The New York State Energy Research and Development Authority (NYSERDA) will administer the grants, which NYSERDA estimates will support conversion of 400 – 600 pumps. Finally, the state will provide a tax credit worth 50 percent of the cost of the cost of purchasing alternative fuel vehicle refueling equipment that would be used by facilities selling E85, biodiesel, CNG, hydrogen, natural gas, liquefied or petroleum gas. The DOE Alternative Fuel Data Center publishes a complete list of New York incentives for alternative fuels.

Earlier in the month, New York State Thruway Authority announced plans to install renewable fuel pumps at all 27 travel plazas on the New York Thruway. Pataki announced the groundbreaking of the first plaza installation in Greene County. For details, see the governor's July 13 press release.