Fuel Rating Rule '14 SS fin

Federal Trade Commission Supporting Statement
for the Automotive Fuel Ratings, Certification and Posting Rule
(“Fuel Rating Rule”)
16 C.F.R. Part 306
OMB Control No. 3084-0068
(1) Necessity for Collecting the Information
The Fuel Rating Rule establishes standard procedures for determining, certifying, and
disclosing the octane rating of automotive gasoline and the automotive fuel rating of alternative
liquid automotive fuels, as required by the Petroleum Marketing Practices Act. 15 U.S.C. §
2822(a)-(c). The Rule also requires refiners, producers, importers, distributors, and retailers to
retain records showing how the ratings were determined, including delivery tickets or letters of
certification.
The Rule further requires producers, importers, distributors, and retailers of alternative
fuels to keep for one year records of any delivery tickets, letters of certification, or tests upon
which they based the automotive fuel ratings that they certified or posted. These records must be
available for inspection by Commission and Environmental Protection Agency (“EPA”) staff
members or by persons authorized by the Commission or EPA.
(2) Use of the Information
By knowing as accurately as possible both the octane or fuel rating requirements of their
cars and the associated rating of what they buy at the pump, consumers simultaneously can save
money, conserve energy, reduce air pollution, and protect their cars against possible engine
damage.
The information that must be kept under the Rule’s recordkeeping requirements is used
by Commission or EPA staff, or by persons authorized by the FTC or EPA. Authorized persons
check the records for enforcement purposes to ensure the accuracy of automotive fuel rating
representations. The information is sought on a case-by-case or spot check basis.
The primary purpose of the recordkeeping requirement is to preserve evidence of
automotive fuel rating certification from refiners through the chain of distribution. Without
records of how the rating of the automotive fuel was represented when the transfer was made, it
would be impossible to trace cases of a rating overstatement from the point of detection at the
retail level back upstream to an offending distributor or refiner.
(3)

Consideration of the Use of Improved Information Technology to Reduce Burden

The Rule permits the use of any technologies that industry members may wish to employ
and that may reduce the burden of information collection. The Rule’s certification and posting
requirements are tailored to take advantage of existing industry practices in order to minimize the
compliance burden. Certifications can be made on computer-generated delivery documents,
resulting in savings of considerable time and labor. As noted above, certification can be

accomplished in either of two ways: on a delivery ticket with each transfer of fuel or by a
certification letter or other written statement, which may be sent and stored electronically.
Although nothing in the Rule requires that these certifications contain any signature (see
§ 306.6), to the extent such a certification may typically involve a signature, the Rule leaves
certifying parties free to use whatever technology they deem appropriate to identify and
authenticate such signatures, consistent with the Government Paperwork Elimination Act, P.L.
105-277, Title XVII, 112 Stat. 2681-749 (GPEA). Likewise, the Rule complies with GPEA by
permitting certain disclosures to be made (see § 306.5) and necessary records to be kept (see §§
306.7, 306.9, 306.11) without regard to format, so that a regulated entity, if it chooses, may
conduct these activities electronically.
Notwithstanding the GPEA, it would be impracticable and incompatible with the purpose
of the Rule to permit the use of electronic mail or other electronic option to substitute for the
automotive fuel rating labels (see §306.12) that retailers must post on the face of each fuel pump.
These disclosures must be made to the consumer at the pump. Nothing in this labeling
requirement, however, expressly prohibits the label itself from being electronically displayed if it
otherwise satisfies the typeface, color, size, and durability requirements of the Rule.
(4)

Efforts to Identify Duplication

Commission staff has not identified any other federal statutes, rules, or policies that
would duplicate the Rule.
(5)

Efforts to Minimize Burden on Small Organizations

The Rule’s rating certification requirements are designed to impose the minimum
possible burden on industry members. The certification of an automotive fuel rating by a refiner
to a distributor or by a distributor to a retailer may be made on any document that is used as
written proof of transfer or a letter or any other written statement. These fuel transfer documents
were already retained by refiners, distributors, and retailers in the ordinary course of business.
To further minimize the certification and recordkeeping requirements, the Rule permits an
automotive fuel rating certification to be provided by means of a one-time letter of certification,
obviating the need for individual certifications on each delivery ticket. This one-time letter
could remain effective for a number of years, and its retention would constitute compliance with
the Rule’s recordkeeping requirements.
(6)

Consequences of Conducting Collection Less Frequently

The fundamental disclosure required by the Rule involves posting the octane rating of
automotive gasoline and the automotive fuel rating of alternative liquid automotive fuels at retail
sale. This requires accurate rating and certification of these fuels. To do less would fail to fulfill
the PMPA’s statutory mandate.

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(7) Circumstances Requiring Collection Inconsistent With Guidelines
The collection of information in this Rule is consistent with the guidelines stated in 5
C.F.R. § 1320.5(d)(2).
(8)

Public Comments/Consultation Outside the Agency

On March 12, 2014, the FTC sought public comment on the disclosure and recordkeeping
requirements associated with the Rule. One comment was received.
The comment noted favorably that fuel-related rules are “imperative” and that they “need
to be reviewed every two years to make sure entities, etc.[,] are in full compliance.” Although
the Rule’s review is not necessarily subject to such frequency, the Commission reviews this Rule
and all current FTC rules (and guides) periodically. These reviews seek information about the
costs and benefits of the Commission’s rules and guides as well as their regulatory and economic
impact. The information obtained assists the Commission in identifying rules (and guides) that
warrant modification. Moreover, the Commission may propose amendments to its rules outside
of its periodic review of them. Thus, for example, recently the Commission published for public
comment proposed ethanol-related amendments to the Fuel Ratings Rule. See 79 FR 18850
(April 4, 2014).
Pursuant to the OMB regulations, 5 C.F.R. Part 1320, that implement the PRA, 44 U.S.C.
§ 3501 et seq., the FTC is providing this second opportunity for public comment while seeking
OMB approval to renew the pre-existing clearance for the Rule.
(9)

Payments or Gifts to Respondents
Not applicable.

(10) & (11)

Assurances of Confidentiality/Matters of a Sensitive Nature

The Rule requirements for which the Commission seeks OMB approval do not involve
collection or disclosure of confidential or otherwise sensitive information.
(12)

Hours Burden and Associated Labor Costs
Estimated annual hours burden: 1 33,700 total burden hours (13,750 recordkeeping hours
+ 19,950 disclosure hours).

1

Under the Fuel Rating Rule, refiners, producers, importers, distributors, and retailers of automotive fuel must
retain, for one year, records of any delivery tickets, letters of certification, or tests upon which they based the
automotive fuel ratings that they certify or post. See the Fuel Rating Rule’s recordkeeping requirements, 16
C.F.R. §§ 306.7; 306.9; and 306.11. The term automotive fuel includes gasoline and alternative liquid
automotive fuels. 16 C.F.R. § 306.0 (i). Therefore, staff derived the number of fuel industry members by
adding up the number of refiners, producers, importers, distributors, and retailers of these types of fuel. Staff
consulted government agencies and industry sources in estimating a population of approximately 165,000 fuel
industry members, including 159,597 retailers of automotive fuel. Some of the government websites reviewed
to update these numbers include: http://www.eia.gov/dnav/pet/pet_pnp_cap1_dcu_nus_a.htm (Gasoline

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Recordkeeping: Based on industry sources, staff estimates that 165,000 fuel industry
members each incur an average annual burden of approximately five minutes to ensure retention
of relevant business records for the period required by the Rule, 2 resulting in a total of 13,750
hours.
Disclosure: Staff estimates that affected industry members incur an average burden of
approximately one hour to produce, distribute, and post octane rating labels. Because the labels
are durable, only about one of every eight industry member retailers (19,950 of 159,597 industry
member retailers) incur this burden each year, resulting in a total annual burden of 19,950 hours.
Estimated annual labor costs: $ 364,207
Labor costs are derived by applying appropriate hourly cost figures to the burden hours
described above. Here, the average hourly wages of producers, distributors, and importers is
$30.56. 3 The average hourly wages of retailers is $10.54. 4 The recordkeeping component is
approximately 450 hours for producers, distributors, and importers and 13,300 hours for retailers.
Thus, the total recordkeeping component has a combined annual labor cost of $153,934 ((450
hours x $30.56) + (13,300 hours x $10.54)). The disclosure component is approximately 19,950
hours for retailers, therefore, the total disclosure component has an annual labor cost of
$210,273.

Producers); http://www.eia.gov/petroleum/ethanolcapacity/ (Ethanol Producers);
http://www.eia.gov/biofuels/biodiesel/production/ (Biodiesel Producers); http://www.afdc.energy.gov/fuels/
(Alternative Fuel Stations);
http://www.nacsonline.com/YourBusiness/FuelsReports/GasPrices_2014/Documents/2014NACSFuelsReport_
full.pdf (Petroleum Stations).
2

Under the Fuel Rating Rule, refiners, producers, importers, distributors, and retailers of automotive fuel must
retain, for one year, records of any delivery tickets, letters of certification, or tests upon which they based the
automotive fuel ratings that they certify or post. See the Fuel Rating Rule’s recordkeeping requirements, 16
C.F.R. §§ 306.7; 306.9; and 306.11. The term automotive fuel includes gasoline and alternative liquid
automotive fuels. 16 C.F.R. § 306.0 (i). Staff derived the number of fuel industry members by adding the
number of refiners, producers, importers, distributors, and retailers of these types of fuel. Staff consulted
government agencies and industry sources in estimating a population of approximately 165,000 fuel industry
members, including 159,597 retailers of automotive fuel. Some of the government websites reviewed to
update these numbers include: http://www.eia.gov/dnav/pet/pet_pnp_cap1_dcu_nus_a.htm (Gasoline
Producers); http://www.eia.gov/petroleum/ethanolcapacity/ (Ethanol Producers);
http://www.eia.gov/biofuels/biodiesel/production/ (Biodiesel Producers); http://www.afdc.energy.gov/fuels/
(Alternative Fuel Stations);
http://www.nacsonline.com/YourBusiness/FuelsReports/GasPrices_2014/Documents/2014NACSFuelsReport_
full.pdf (Petroleum Stations) .
3

See http://www.bls.gov/iag/tgs/iag211.htm#earnings (Bureau of Labor Statistics, December 2013 Current
Employment Statistics, Average Hourly Earnings for Oil and Gas Extraction Production and Nonsupervisory
Employees).
4

See http://www.bls.gov/iag/tgs/iag447.htm (Bureau of Labor Statistics, December 2013 Current
Employment Statistics, Average Hourly Earnings for Gasoline Station Production and Nonsupervisory
Employees).

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(13)

Estimated Annual Capital and/or Other Non-labor Related Costs

Staff believes that the Rule does not impose any capital costs for producers, importers, or
distributors of fuels. Retailers, however, incur the cost of procuring and replacing fuel dispenser
labels to comply with the Rule. Staff conservatively estimates that the price per automotive fuel
label is two dollars and that the average automotive fuel retailer has six dispensers. 5 In addition,
staff has previously estimated the useful life of dispenser labels to range from 6 to 10 years.
Applying 8 years, the mean of that range, and distributing the costs on a per-year basis, staff
estimates the total annual replacement labeling cost to be $39,899 (159,597 retailers x 1/8 x
$2.00).
(14)

Estimate of Cost to Federal Government

Staff estimates that a representative year’s cost of administering the Rule’s requirements
during the 3-year clearance period sought will be approximately $25,000. This represents .15 of
an attorney/economist work year, and includes employee benefits.
(15)

Adjustments/Changes in Burden

There are no changes in estimated burden per affected entity. Staff has obtained updated
estimates for the number of affected entities.
(16)

Statistical Use of Information
There are no plans to publish for statistical use any information the Rule requires.

(17)

Requested Permission Not to Display the Expiration Date for OMB Approval
Not applicable.

(18)

Exceptions to the Certification for Paperwork Reduction Act Submissions
Not applicable.

5

See 75 Fed. Reg. 12,470, 12,477 (Mar. 16, 2010) (proposed rulemaking) (estimating the price range per pump
to be one to two dollars).

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