Colorado Wyoming Petroleum Marketers Association : FTC Issues Final Fuel Rate Rule

Federal Trade Commission's new ethanol warning requirement goes into effect in July.

1/17/2016

NACS Daily - ALEXANDRIA, Va. - Last Thursday, the Federal Trade Commission (FTC) published final amendmentsto its Fuel Rating Rule. First promulgated in 1979, the rule determines the fuel rating that appears on fuel pump labels and how octane levels are calculated, and helps consumers in selecting the appropriate fuel type for their vehicles. In particular, the rule requires motor fuel retailers, at the point of sale, to post a notice indicating a fuel's octane ratings, cetane ratings (for diesel fuel) or other FTC-approved rating. The rule also includes specific requirements for rating and certifying fuels, as well as posting the ratings at the point of sale.

In general, the final amendments to the rule relate to gasoline-ethanol blends with greater than 15% volume ethanol and are calculated to update the rule to accommodate the sale of ethanol blends above E15 through E85 (such as E50). Under the final rule, convenience and fuel retailers would be required to post the following on all retail fuel pumps that dispense ethanol blends: 'Use only in flex fuel vehicles. May harm other engines.' Other labels are also required. Retailers must label pumps dispensing mid-level blends (ethanol concentrations above E15 but no greater than E50), with a label noting the fuel's ethanol content (either the exact percentage of ethanol in the fuel, or the percentage rounded to the nearest factor of 10).

In contrast, high-level blends (ethanol concentrations between E50 and E83), may be labeled with the exact percentage of ethanol concentration or the percentage rounded to the nearest multiple of 10, or may simply indicate that the fuel contains '51% to 83% Ethanol.' Significantly, because ethanol blends that meet the Environmental Protection Agency's (EPA) E15 waiver are already required under EPA rules to have a similar label, they are exempt from the FTC's labeling requirements.

In addition, the final amendments adjust the rule to require labels for ethanol blends to be based on the percentage of ethanol rather than the percentage of the principal component of the fuel. There are no changes in the final rule to the current labeling requirements for E10, biomass-based diesel or biodiesel.

When NACS commented on the proposed rule, the association told the FTC that any requirements to state specific ethanol percentages found in mid-level or high-level blends would be burdensome to retailers and negatively impact consumers. Although NACS is pleased that the FTC heeded this advice with regard to high-level blends, the association remains very concerned with the FTC's decision to require specific percentage labeling for mid-level blends. According to the FTC, the mid-level blend label will 'offer consumer benefits [that] outweigh the burden on retailers.' NACS remains unconvinced and believes that this rule will impose significant burdens on the fuel retailer community and will likely lead to inefficiently high fuels prices as retailers try to minimize changes in their blend ratios to avoid the need to change labels on a daily basis.

The final rule will go into effect on July 14, 2016. NACS counsel has prepared a memorandum analyzing the final rule, which is available onlinefor NACS members.