FOR RELEASE: FEBRUARY 26, 1992
FIRST CASE INVOLVING OCTANE-LABELING RULE INCLUDES COVERAGE OF GASOHOL PRODUCTS: Wright Cos. agrees to settle FTC charges
The Federal Trade Commission has charged the Las Vegas, Nevada-based Wright Companies with failing to certify and correctly post on gas pumps the octane ratings for gasoline -- including gasoline blended with fuel oxygenates such as alcohol -- in viola- tion of the FTC's Octane Labeling Rule. The FTC also charged in its complaint that Wright Cos. overstated the octane ratings displayed on its pumps. A proposed consent decree to settle these charges, filed in federal court along with the complaint, would prohibit Wright Cos. from engaging in future Octane Rule violations.
In a related action, the FTC charged William P. Wright of Henderson, Nevada, alleging that he violated the Octane Rule as well. Wright Cos. and Mr. Wright have jointly distributed and sold gasoline and gasohol in California and Nevada.
The Wright Cos. settlement, the first involving alleged violations of the Octane Rule, signals that businesses marketing gasohol and similar blends of gasoline must follow the rule's certification and disclosure requirements.
In its complaint against Mr. Wright -- an officer and director of Wright Cos., Express Oil and Gas of Nevada, and Diversified Desert Properties, Inc. -- the FTC asked the court to prohibit further violations of the Octane Rule and to order him to pay civil penalties.
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The FTC's 1979 Octane Rule requires retailers to disclose the octane rating of their gasoline by posting the now-familiar bright yellow sticker on each pump. Under the rule, gasoline refiners and importers determine the octane rating. Then each entity in the distribution chain must certify the octane rating to the next recipient, based either on its own determination or the certification it received.
Octane ratings are a measure of gasoline's ability to resist automotive engine "knock" or "ping" which results from an uneven burning of the compressed fuel-air mixture, notes an FTC Fact Sheet on octane ratings. Using a gasoline with too low an octane rating can result in loss of power and sometimes engine damage. The disclosure requirements of the Octane Rule help consumers choose gasolines suited to their vehicles. (For the proper octane-level gasoline, consumers should consult their owner's manual.)
The complaint against Wright Cos. alleges that the company misrepresented the octane level of gasoline blended with alcohol, sometimes referred to as "gasohol." The proposed consent decree would prohibit future misrepresentations of the octane level of automotive gasoline, including gasohol and other blended gaso- lines. The octane rating for gasoline mixed with alcohol or other oxygenates and blending agents can be determined by fol- lowing the test procedure set out in the Octane Rule.
The specific rule violations alleged by the FTC in its complaints against Wright Cos. and Wright include:
-- failing to post on each gasoline dispenser an octane rating that is consistent with the rating certified to them or that is based on a separate determination;
-- failing to certify the octane ratings either by placing such information on the delivery ticket accompanying the transfer of gasoline or by using a letter of certification; and
-- failing to make available for inspection by the FTC certain documents upon which the posted ratings or certifications were based.
The complaints also charge the defendants with violating the FTC Act by overstating the octane ratings displayed on their gasoline pumps.
Wright Cos. is in the process of liquidating under Chapter 7 bankruptcy proceedings. Therefore, the proposed consent decree does not call for civil penalties. In its complaint against Wright, the FTC is seeking civil penalties. The court could assess civil penalties of up to $10,000 for each violation of the Octane Rule.
The FTC's Dallas Regional Office handled the investigations. The complaint and proposed consent decree against Wright Cos. were filed in the U.S. District Court for the District of Nevada, in Las Vegas, on Feb. 25. The complaint against Wright was filed in the U.S. District Court for the Southern District of California, in San Diego, also on Feb. 25. The Commission vote to file the complaint and proposed consent decree against Wright Cos. and the complaint against Wright was 4-0, with Commissioner Dennis A. Yao not participating.
NOTE: The Commission files a complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint against Wright is not a finding or ruling that he has actually violated the law. The case will be decided by the court.
NOTE: The proposed consent decree with Wright Cos. is for settlement purposes only and does not constitute an admission of a law violation. The consent decree is subject to court approval.
A July 1991 FTC consumer fact sheet titled "Octane Ratings" offers answers to some typical questions about octane. Free copies are available from the address below.
Copies of the complaints and proposed consent decree and the fact sheet on octane ratings are available or will be shortly, from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY 1-866-653-4261. # # #
MEDIA CONTACT: Howard Shapiro, Office of Public Affairs 202-326-2176
STAFF CONTACT: Tom Carter or David Griggs Dallas Regional Office 100 N. Central Expressway, Suite 500 Dallas, Texas 75201 214-767-5503
Civil Action Nos. Wright Cos.: CV-S-92-157-HDM-RJJ William P. Wright: 92-281H (CM) (Wright)