Fuel Rating (Biodiesel) SS

Supporting Statement
Automotive Fuel Ratings, Certification and Posting
16 C.F.R. Part 306
(Control Number: 3084-0068)
Section 205 of the Energy Independence and Security Act of 2007 (“EISA” or the “Act”)
requires the Federal Trade Commission (“FTC” or “Commission”) to promulgate labeling
requirements for fuels containing biodiesel or biomass-based diesel (collectively, “biodiesel
fuels”). Accordingly, the FTC has published proposed amendments to its rule for “Automotive
Fuel Ratings, Certification, and Posting” (“the Fuel Rating Rule” or “Rule”). In accordance with
the Paperwork Reduction Act (“PRA”) 44 U.S.C. 3501-3521, FTC staff seeks approval from the
Office of Management and Budget (“OMB”) for the proposed Rule amendments.
(1)

Necessity for Collecting the Information

The Commission first promulgated the Fuel Rating Rule, formerly known as the Octane
Posting and Certification Rule (“Octane Rule”), 16 C.F.R. Part 306, pursuant to the Petroleum
Marketing Practices Act (“PMPA”), 15 U.S.C. 2821. This Rule became effective on June 1,
1979, and initially applied only to gasoline. The Energy Policy Act of 1992 (“EPA 92”), Pub. L.
102-486, amended the PMPA and required the Commission to amend the Rule to establish
automotive fuel rating determination, certification, and posting requirements for liquid
alternative automotive fuels. Accordingly, on July 21, 1993, the Commission amended the
Octane Rule, effective October 25, 1993, to include alternative liquid automotive fuels. The
1993 amendment did not explicitly name biodiesel fuels as covered alternative fuels.
In 2007, Congress passed EISA, which addresses three different categories of biodiesel
fuel blends and mandates that the Commission promulgate labeling requirements for two of
them. For fuel at blends containing less than or equal to five percent biodiesel or biomass-based
diesel, no specific label is required. For fuel blends between five and no more than twenty
percent, EISA requires that the label must state that the fuel blend “contains biomass-based diesel
or biodiesel in quantities between 5 and 20 percent.” For fuel blends that contain more than
twenty percent biodiesel or biomass-based diesel, the label must state that the fuel blend
“contains more than 20 percent biomass-based diesel or biodiesel.” The Act further gives the
FTC discretion to determine the specific size, layout, and color of the required label, as well as to
require any additional wording necessary to “inform consumers of the percent of biomass-based
diesel or biodiesel that is contained in the biomass-based diesel or biodiesel blend that is offered
for sale . . . .”
Consistent with the directive in Section 205 of EISA, the Commission is proposing to
amend the Fuel Rating Rule to clarify that biodiesel fuels are subject to the rating and
certification requirements of the Fuel Rating Rule and to include labeling requirements for
biodiesel fuels containing at least five percent biomass-based diesel or biodiesel. Under the
proposed amendments, producers, importers, and distributors of biodiesel fuels containing more
than 5 percent biodiesel or biomass-based diesel must certify the percentage by volume of
biodiesel or biomass-based diesel in the fuel. In addition, retailers of such fuels must post a label

containing the appropriate congressionally mandated language and, for blends containing more
than 20 percent biodiesel or biomass-based diesel, the percentage of biodiesel or biomass-based
diesel contained in the fuel. For example, a blend containing 6 percent biodiesel must be labeled
“Biodiesel Blend” and include the words “contains biomass-based diesel or biodiesel in
quantities between 5 and 20 percent,”1 while a blend containing 30 percent biodiesel must be
labeled “B-30 Biodiesel Blend” and include the words “contains more than 20 percent biomassbased diesel or biodiesel.”
As noted above, the proposed amendments make clear that retailers of biodiesel fuels are
subject to the Fuel Rating Rule’s rating and certification procedures for other alternative fuels.
Under those procedures, industry members “must possess a reasonable basis, consisting of
competent and reliable evidence, for the percentage by volume of the principal component [in
this case, biodiesel] of the alternative liquid automotive fuel that [they] must disclose.” 16
C.F.R. § 306.5(b). Producers, importers, and distributors must also certify the automotive fuel
rating of the fuel that they transfer for resale. They may make this certification by either
including it on a delivery ticket with each transfer or by a one-time letter or other written
statement. Finally, retailers must post the required fuel label on each face of each fuel dispenser.
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

The Fuel Rating Rule’s certification and posting requirements for liquid alternative
automotive fuels provide consumers with information necessary to make informed fuelpurchasing decisions based on, among other things, the suitability of a fuel for use in their
vehicle and the environmental impact of that fuel. This approach allows fuel producers and
marketers the flexibility to develop and blend fuels appropriate for location and climate, and is
consistent with EPA and original equipment manufacturer requirements.
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

1

The proposed amendment allows, but does not require, retailers of blends containing more than 5 but not
more than 20 percent to also post the precise percentage of biodiesel or biomass-based diesel.

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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.
Under GPEA, however, 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, because these disclosures must be made to the consumer at the pump, although nothing in
this labeling requirement 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

Under Sec. 205 of EISA, the Commission does not have discretion to forgo this
rulemaking proceeding. Nonetheless, 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 certification and posting requirements for alternative fuels were designed to
impose the minimum possible burden on industry members. The proposed amendments require
refiners, producers, importers, distributors, and retailers of biodiesel fuels to 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. 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
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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 burdens, 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 element of information collection the Rule requires consists of placing a
label on the face of each biodiesel fuel dispenser at every biodiesel fuel outlet. To do less than
this would fail to fulfill the statutory mandate of EISA.
(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)

Consultation Outside the Agency

Pursuant to OMB regulations implementing the PRA, the Commission is seeking public
comment on PRA aspects of the Rule, as required by 5 C.F.R. 1320.8(d). See 70 Fed. Reg.
49,925.
(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:

Recordkeeping: Staff has previously estimated the burden of complying with the
recordkeeping burden of the Fuel Rating Rule to be five minutes per industry member. Applying
that burden to the 3,700 producers, distributors, and retailers of biodiesel fuels results in a total
annual burden of 308 hours.

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Disclosure: Staff has previously estimated that retailers of automotive fuels incur an
average burden of approximately one hour to produce, distribute, and post fuel rating labels.
Because the labels are durable, staff has concluded that only about one of every eight retailers
incur this burden each year. Applying these estimates to the approximately 1,500 retailers of
biodiesel fuels results in a total annual burden of 188 hours (1,500 retailers x 1/8 x 1hr).
Labor costs associated with hours burden:
Labor costs are derived by applying appropriate hourly cost figures to the burden hours
described above. Staff estimates the mean hourly wage for employees of producers, importers,
and distributors of biodiesel fuels to be $21.39,2 and the mean hourly wage for employees of
biodiesel retailers to be $14.35.3
Applying these rates to the relevant affected populations, this would total $3,922 for
recordkeeping for producers and distributors of biodiesel fuel (2,200 x $21.39/hour x 5 minutes
each) and $1,794 for retailers (1,500 x $14.35/hour x 5 minutes each) and $2,698 (188 hours x
$14.35) for retailer labeling requirements. Thus, cumulatively, $8,414 in labor costs.
(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 biodiesel fuels. Retailers, however, incur the cost of procuring and replacing fuel
dispenser labels to comply with the Rule. Staff has previously estimated that the price per
automotive fuel label is about fifty cents and that the average automotive fuel retailer has six
dispensers. Applying those estimates to the biodiesel fuel industry results in an initial cost to
retailers of $4,500 (1,500 retailers x 6 pumps x .50). In addition, staff has previously estimated
the useful life of dispenser labels to range from 6 to 10 years. Applying 8 hours, the mean of that
range, and distributing the costs on a per-year basis, staff estimates the total annual replacement
labeling cost to be $93.75 (1,500 x 1/8 x .50). Thus, the cumulative approximate costs would be
$4,600.
(14)

Estimate of Cost to Federal Government

Because staff anticipates that the cost to the FTC of administering the proposed
amendments will be de minimis, it retains its prior estimate of $22,000 as the cost per year to
implement the Fuel Rating Rule. This represents .15 of an attorney/economist work year, and
includes employee benefits.

2

Bureau of Labor Statistics, 2006 Employment Statistics Survey, Annual Average Hourly Earnings for Oil
and Gas Extraction Production workers.
3

Bureau of Labor Statistics, May 2006 Occupational Employment Statistics Survey, “Correspondence
Clerks,” Table 1.

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(15)

Changes in Burden

As detailed above, Commission staff estimates that the Rule amendments will result in a
497 hour increase in total annual burden.
(16)

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

(17)

Display of the Expiration Date for OMB Approval
Not applicable.

(18)

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

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