Texas AG accuses Woodlands-based company of diluting gasoline

AUSTIN, Texas — The Texas attorney general filed a lawsuit today accusing a gas station company of diluting medium- and premium-grade fuel with regular unleaded at 143 stations.

The lawsuit filed by Texas 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 lawsuit is the third enforcement action by the state against the company.

“The lawsuit filed by the Attorney General is frivolous by any measure” Stuart Lapp, the company’s general counsel, said in a statment. “It is without a basis in law or fact and is a vindictive prosecution of a responsible and respected family-owned company that provides employment for hundreds of people and has based its corporate headquarters in the Houston Area for nearly 30 years. We have always maintained the highest ethical standards and adamantly deny the company has done anything improper.”

Lapp said the company was not surprised by the lawsuit and added “Petroleum Wholesales never cheated consumers.”

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.

According to data released by the Texas attorney general’s office, 48 stations in the state that had 60 percent of their pumps out of compliance. Of those 48, 24 stations were in the Houston area. Five stations had all the pumps out of compliance.

Here are those stations with 100 percent non-compliance:

  • Mobil Sunmart, 1130 Freeport St., Houston
  • Sunmart, 9199 North Loop E., Houston
  • Sunmart, 5709 Lyons Ave., Houston
  • Sunmart, 9140 Eastex Fwy., Houston
  • Sunmart, 9404 North Fwy., Houston

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.

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 then ordered a mistrial, 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.

To see the Sunmart pumps in Houston, click here.