Fuel Rating Rule '17 Supptg Stmt 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.

2

(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 14, 2017, the FTC sought public comment on the disclosure and recordkeeping
requirements associated with the Rule. No relevant comments were received.
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: 33,052 total burden hours (13,500 recordkeeping
hours + 19,552 disclosure hours)
Recordkeeping: Based on industry sources, staff estimates that approximately 162,000
fuel industry members1 each incur an average annual burden of approximately five minutes to
ensure retention of relevant business records2 for the period required by the Rule, resulting in a
total of 13,500 hours.

1

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 162,000 fuel industry members, including 156,418 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/biofuels/biodiesel/production/ (Biodiesel Producers); http://www.afdc.energy.gov/fuels/
(Alternative Fuel Stations); http://www.nacsonline.com/YourBusiness/FuelsReports/2015/Documents/2015NACS-Fuels-Report_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.

3

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 (19,552 of 156,418industry
member retailers) incur this burden each year, resulting in a total annual burden of 19,552 hours.
Estimated annual labor costs: $390,430
Labor costs are derived by applying appropriate hourly cost figures to the burden hours
described above. Here, the average hourly wages of refiners, producers, distributors, and
importers is $35.12.3 The average hourly wages of retailers is $11.48.4 The recordkeeping
component, 13,500 hours, consists of approximately 465 hours for producers, distributors, and
importers; 13,035 hours for retailers. Thus, the total annual labor cost for recordkeeping is
$165,973 ((465 hours x $35.12) + (13,035 hours x $11.48/hour)). The disclosure component,
which concerns retailers, is approximately 19,552 hours. Thus, total annual labor cost for
disclosure is $224,457 (19,552 hours x $11.48/hour).
(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; thus, $12
labeling cost at inception per retailer.5 Staff has previously estimated a dispenser useful life
range of 6 to 10 years and, based on that, assumed a useful life of 8 years for labels, the mean of
that range. Given that, replacement labeling will not be necessary for well beyond the relevant
period at issue, i.e., the immediate 3-year PRA clearance sought. However, conservatively
averaging the $12 labeling cost at inception per retailer over that shorter period rather than
average useful life, annualized labeling cost per retailer will be $4. Cumulative labeling cost
would thus be $78,209 (156,418 retailers ×1/8 x $4 each, annualized).
(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.

3

See http://www.bls.gov/iag/tgs/iag211.htm#earnings (Bureau of Labor Statistics, December 2016 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 2016 Current
Employment Statistics, Average Hourly Earnings for Gasoline Station Production and Nonsupervisory
Employees).
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).

4

(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, and has more conservatively averaged labeling
costs per year using the shorter period at issue, i.e., the immediate 3-year PRA clearance sought,
rather than the longer average useful life of labels.
(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