As long as we’ve had automobiles, entrepreneurs have been running gas stations where people can fill their tanks. And as long as gas stations have been around, Californians have been dealing with the problems that arise when the fueling process goes awry.
Over the years, politicians and regulators have stepped in, responding to calls for new rules to protect public health and safety from the various hazards that come with storing and transporting volatile petrochemicals. And their responses worked; exploding gas stations are more a tired trope of Hollywood action movies than a thing we need to worry about.
Yet now, with the rise of electric vehicles and a better economic rationale for gasoline delivery, the way people and companies fuel their vehicles is changing. Fuel prices are volatile, as the market response to recent attacks on Saudi oil infrastructure demonstrates. The rise of e-commerce and renewed efforts to repair and expand infrastructure has brought greater demand for fleet vehicles — those owned by businesses or organizations rather than individuals. Traditionally, fleet owners either bought gas at retail rates or bought in bulk and stored the fuel in tanks on their properties.
These days, another option exists: contracting out the service to fuel delivery companies. This approach lowers costs while avoiding the risk and hassle of a company owning its own on-site tank and allows companies to hedge against sudden changes in fuel prices.
Unfortunately, this generation’s entrepreneurs are being held back by rules written to tame the worst practices of gas-station owners in the past. Federal and state hazardous materials-handling rules help detect hazards before they cause problems. But when other regulators exert authority to impose standards on fueling businesses, they impose a real burden on these emerging business models.
California proves an illustrative example. Delivering fuel from tanker trucks to smaller vehicles requires wading through a quagmire of rules — some mundane, others carrying an extreme burden. To start, the California state fire code regulates on-demand fueling and defines where fueling may take place. Companies can’t deliver fuel on public streets, for example, nor can they fuel vehicles in parking garages. Additionally, the vehicles must be at least 25 feet away from buildings, property lines and things that can ignite.
Other rules require a permit from local fire officials in each jurisdiction where a company operates. Localities can impose further standards, including requiring approval of each individual site where fuel is to be delivered. What’s more, California has 877 permitted fire departments, each of which may adopt a bespoke version of the state’s fuel delivery regulations on top of the existing state and local ones.
But the bureaucracy doesn’t stop there. California also requires delivery tankers to comply with state air quality standards, and these rules differ among each air quality district. In some places, fuel delivery companies are treated like gas stations; in others, they are not. Where they are, they face more stringent standards related to fuel vapor recovery. Most of California’s air quality districts don’t have rules that accommodate fuel delivery, however, so fueling companies in those parts of the state may only operate as research and development projects.
Suffice to say, these rules make the business of fuel delivery a compliance and permitting nightmare.
Simplifying the process for companies with new models of old businesses is always a challenge, but by no means an insurmountable one. One possibility is for state legislators to mandate that each air quality district approve rules to accommodate fueling operations or exempt them from existing air quality rules altogether. This would harmonize air quality rules across the state, allowing existing areas served on a research basis to enter commercial service.
The state could also adopt an approach similar to that of the fire code. For example, it could change the current “opt-in” portion of the code to an “opt-out” one, which would discourage local governments from creating fuel delivery rules while allowing optional discretion. Alternatively, legislators could allow localities to approve delivery operations but prevent them from requiring approval for each specific delivery location. This would follow precedent from similar delivery businesses, such as those delivering home heating fuel oil, that do not need to get a new permit for each customer’s home they deliver to.
For their part, local officials can include fuel delivery as a by-right property use in their zoning codes.
Gas stations dominate the automotive fuel market in America, but new types of fueling companies are rising to challenge them. As it stands, these companies face a patchwork of overlapping and sometimes conflicting regulations in each jurisdiction they move into. If California legislators see value in changing the old fueling model, unwinding and simplifying fire- and air- quality-related delivery regulations would be a natural place to start.