Texas AG Accuses Company of Diluting Gasoline

Thursday, Aug 18, 2011  |  Updated 11:29 PM CDT
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Texas AG Accuses Company of Diluting Gasoline

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Lawsuit says Petroleum Wholesale L.P. falsified octane levels, defrauded customers and violated the Texas Deceptive Trade Practices Act.

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The state attorney general filed a lawsuit Thursday accusing a gas station company of diluting medium- and premium-grade fuel with regular unleaded at 143 stations.

The lawsuit filed by Attorney General Greg Abbott against Petroleum Wholesale L.P. and related defendants says they falsified octane levels, defrauded customers and violated the Texas Deceptive Trade Practices Act.

"Attorney General Greg Abbott is attempting to protect Texas taxpayers' pocketbooks," said Abbott spokeswoman Lauri Saathoff.

The state is seeking a temporary and permanent injunction against the defendants to stop such activities. The state also is seeking civil penalties of up to $20,000 for each violation of the Texas Deceptive Trade Practices Act. Saathoff said it has not yet been determined how many penalties they will bring against the company.

The lawsuit said the attorney general's office found that the defendants diluted fuel in more than 1,000 instances, with the majority of such "cross-dumping" incidents happening in and around Houston.

The incidents happened between 2005 and 2008. Abbott said in a news release that as of Thursday, the defendants haven't provided the state with documents after 2008.

The defendants operate Sunmart Travel Centers & Convenience Stores and about 80 other service stations licensed by the state to sell fuel under branding agreements with three major fuel companies.

The state also found the defendants were selling unbranded fuel at branded stations, where brand-name products with performance-enhancing additives are advertised. Abbott said the defendants hid this practice from the branded fuel providers.

Abbott's office also found that the defendants were improperly selling conventional fuel instead of the reformulated fuel intended to reduce carbon-monoxide emissions that's required by the federal Clean Air Act for areas like Houston that exceed certain air quality levels.

Petroleum Wholesale attorney Stuart W. Lapp said in a statement Thursday that the company "has never cheated consumers."

He called the lawsuit "frivolous," saying it is "without a basis in law or fact."

The lawsuit is the third enforcement action by the state against the company. Last year, a Harris County jury returned a $30 million verdict against Petroleum Wholesale, accusing them of calibrating their gas pumps to deliver less than a full gallon of fuel. Saathoff said that although a judge ordered a mistrial in that case, the state has asked the newly appointed judge to overrule the mistrial and reinstate the jury verdict.

In 2009, Petroleum Wholesale was ordered to pay $100,000 for violating state identity theft prevention laws.

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