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.
- more -
(Wright--02/26/92)
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--02/26/92)
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)