Advisory opinion overruling the 1979 staff opinion letter regarding gasohol

1522 	FEDERAL TRADE COMMISSION DECISIONS
Advisory Opinion 	116 F.T.C.
Re: 	The Commission overruling the 1979 staff opinion letter
regarding 	gasohol. 	[Nebraska 	Gasohol 	Committee,
R811005]
January 8, 1993
Dear Mr. Sneller:
In October, 1979, the Federal Trade Commission staff, in an
informal staff opinion issued to what is now known as the Nebraska
Gasohol Committee, concluded that gasohol was not covered by
either the definition of "automotive gasoline" in Title II of the
Petroleum Marketing Practices Act ("PMPA"), 15 U.S.C. 2821, 1 or
the Commission's Octane Rule, I 6 CFR 306. 2 The purpose of this
letter is to advise you formally of the Commission's view that,
notwithstanding the earlier news expressed by the staff, gasohol is
covered by the PMPA and the Octane Rule.3 Accordingly, the
1979 staff opinion letter should not be given any weight.
In the 1979 opinion, gasohol was defined as a mixture of 90%
unleaded gasoline and 10% ethyl alcohol. The staff noted that the
definition of "automotive gasoline" in Section 201 (6) of the PMPA
is "gasoline of a type distributed for use as a fuel in any motor
vehicle." The staff took the position that gasohol did not fall within
the scope of the statutory definition because it was not gasoline, but
a mixture of gasoline and alcohol.
When the staff issued its opinion in 1979, the Commission had
not reviewed or approved staffs interpretation of the PMP A. The
Commission first considered the issue in responding to a 1983 letter
from the Honorable John Dingell, Chairman of the House Commit-
tee on Energy and Commerce. 	In the Commission's reply, then
1 Section 201(6) of the PMPA. 15 U.S .C. 2821(6). stales that the term "automotive gasoline" means
gasoline of a type distributed for use as a fuel in any motor vehicle.
2 In 1979, the Nebraska Gasohol Committee was called the Agricultural Products Industrial Utiliza-
tion Committee.
3 Under the Commi ss ion's Rules of Practice. the staff is authorized to consider all requests for advice
and to render advice, where practicable. in those circumstances in which a Co mmi ssio n opinion would
not be warranted. 16 CFR 1.1 (b). Howe ver. staff advice is not reviewed or approved by the Commis-
sion and is given without prejudice to the right of the Commission to rescind the advice. 16 CFR I .3(c).

NEBRASKA GASOHOL COMMITTEE 	1523
1522 	Advisory Opinion
Chairman James Miller stated that the Commission itself had not
formed a view concerning the applicability of the requirements of
the PMP A and the Octane Rule to gasohol. He also noted that staff
opinions are not binding on the Commission. 	Chairman Miller
further stated that the staff would continue to watch developments
in this area, and, if appropriate, recommend further Commission
action.
Recently, the Commission interpreted the PMPA and the
Octane Rule as covering gasohol. The Commission enunciated its
position concerning gasohol in testimony before the House Sub-
committee on Energy and Power, in June, 1990, and again in June,
1991. In both occasions, the Commission testified that the manda-
tory posting of octane ratings is appropriate for gasohol.4
In February, 1992, the Commission addressed the gasohol issue
in the context of an enforcement action, alleging that gasohol sales
are covered by the Octane Rule. 	Specifically, the Commission
alleged that the Wright Companies had violated the Octane Rule
by , among other things, misrepresenting the octane content of
automotive gasoline, including gasoline blended with alcohol, other
oxygenates or blending agents. The Consent Decree resolving the
Octane Rule charges against the Wright Companies also specifi-
cally requires future compliance with the Octane Rule in connec-
tion with the sale of automotive gasoline, including gasoline
blended with alcohol, other oxygenates or blending agents.5
The Commission's conclusions are consistent with the legisla-
tive history of the PMPA. 	In drafting the PMPA, Congress was
aware that all gasoline is a blend of ingredients (e .g., tetraethyl lead
and gasoline in the case of leaded gasoline, which was indisputably
4 See "Prepared Statement of the Federal Trade Commission on Gasoline Marketing before the House
Energy and Commerce Co mmittee, Subcommittee on Energy and Powe r, June 20, 1990," and "P repared
Statement of th e Federal Trade Commi ssion on th e Octane Di splay and Disclos ure Act of 1991 before
the House Energy and Commerce Committee, Subcommittee on Energy and Power, June 12. 199 J ."
5 The Consent Decree in the Wili am P. Wright case (Civil Action No. 92-28 1H (CM) ), which was
nego tiated after the Con se nt Dec re e in t he Wright Companies case (Civil Ac ti on No. CV- S-92-157 -
HDM-RJJ), also co vers gasoho l. 	See the Commi ss ion' s Press Releases relating to the Wright
Companies and William P. Wright cases that were issued on Fe bruary 26, 199 2 and October 15, 1992,
respectively.

1524 	FEDERAL TRADE COMMISSION DECISIONS
Advisory Opinion 	116 F.T.C.
covered by the definition of gasoline in the PMPA).6 	Congress
stated that, as commercially distributed, gasoline contains compo-
nents added to the blend after completion of the refining process.
Congress referred to these components as additives, which are
designed to boost octane, clean internal carburetor parts and impart
specific characteristics to the gasoline, such as cold starting ability,
resistance to vapor lock and prevention of fuel freezing. 	In fact,
Congress specifically described tetraethyl lead as an additive that
was often used to boost the octane rating of gasoline.7
Consequently, the Commission concluded that Congress recog-
nized that gasoline does not have a particular molecular structure,
but is, rather, a mixture of differing molecules. 	In light of the
PMPA' s legislative history, there is no indication that Congress
intended to exclude from PMPA coverage any gasoline-based fuel
for which an octane rating can be detennined using the (R+M)/2
test method.8 Nor is there any indication that Congress intended to
exclude a gasoline-based fuel merely because it contains compo-
nents other than gasoline itself.
Since the 1979 staff opinion was issued, gasohol has become an
increasingly common automotive fuel and the ethanol in gasohol
has come to be viewed generally as a relatively low-cost octane
enhancer. Ethanol has become more popular as lead, also an octane
enhancer, has been increasingly regulated by the Environmental
Protection Agency. Rather than always being sold as "gasohol," as
it was when the 1979 staff opinion was issued, gasohol is now often
marketed either as "gasoline," or with an explanation that the
gasoline contains ethanol. 	Finally, gasoline blended with 10%
ethanol, does not lose its essential character as gasoline which can
6 H.R. Rep. No. 161, 95th Cong., I st Sess. 16-18 ( 1977) and S. Rep. No. 732, 95th Cong .. 2d Sess.
19-20 ( 1978).
7 Id.
8 See PMPA Sections 20 I (I) and (2) and 202(a)( I). Gasoline re liners are required to detem1ine the
octane ratings of the gasoline they produce in accordance with this formula. The for:nula is the sum,
divided by two, of the Research Method and the Motor Method, two accepted laboratory test methods
for evaluating the antiknock performance of automotive gasoline. This formula and method for
determining the octane rating of automotive gasoline - (R+M)/2 - is recommended by the American
Society for Testing and Materials ("ASTM "). The test method is referenced and discussed in ASTM
D4814, "Standard Specification for Automotive Spark-Ignition Engine Fuel." Congress specified this
method in the PMPA, and it was adopted in the Commission's Octane Rule.

NEBRASKA GASOHOL COMMITTEE 	1525
1522 	Adviso ry Opinion
be demonstrated by the fact that its octane rating can be detennined
by following the (R+M)/2 formula specified in the PMPA. 	For
these 	reasons, 	against 	the 	historical 	legislative 	background
discussed above, the Commission has interpreted the PMPA and
the Octane Rule as covering gasohol.
The Energy Policy Act of 1992, enacted into law on October
24, 1992, amends the PMPA to extend automotive fuel posting
requirements to all liquid automotive fuels. 	When the required
conforming amendments to the Octane Rule become effective one
year after the date of enactment of the Act, gasohol will be covered
expressly by the Octane Rule.9
Pursuant to Rule l.3(b) of the Commission's Rules of Practice,
any advice given by the Commission is without prejudice to the
right of the Commission to reconsider the questions involved and,
where the public interest requires, to rescind or revoke the action.
This Commission opinion, overruling the 1979 staff opinion letter
on this subject, has been placed on the public record for the benefit
of interested persons.
The Energy Policy Act of 1992. Pub. L. No. 102 -486 ( 1992).	
9