Texas Attorney General Greg Abbott is accusing Petroleum Wholesale LP, Sun Development LP and related defendants of defrauding their customers by diluting medium and premium-grade gasoline with regular unleaded fuel.

The defendants, both based in the Houston area, are charged with falsifying octane levels, defrauding customers and violating the Texas Deceptive Trade Practices Act.

A spokesman for the Attorney-General says the state uncovered the alleged fuel dilution scheme, known as cross-dumping, when it was investigating reports that the defendants were calibrating their gasoline pumps to deliver less fuel than was disclosed to customers.

According to court documents filed by the state, investigators discovered more than 1,000 instances in which the defendants cross-dumped fuel at 143 sites. The majority occurred at service stations in and around Harris County between 2005 and 2008.

The state also claims it has evidence that the defendants improperly sold conventional fuel at locations that required reformulated fuel. Reformulated fuel, which includes detergents and oxygen, is intended to reduce carbon-monoxide emissions.

In addition to operating Sunmart Travel Centers & Convenience Stores, the defendants also operate about 80 service stations licensed by the state to sell fuel under branding agreements with three fuel companies.

The state seeks a temporary and permanent injunction against the defendants as well as civil penalties of up to $20,000 for each violation.

An attorney for Petroleum Wholesale says the company has never cheated consumers, and this lawsuit is frivolous and not based on facts.

via Texas attorney general accuses companies of diluting gas | Energy | Chron.com - Houston Chronicle.

This isn't the first time this company has been in trouble with the state. Last year, a Harris County jury returned a $30 million verdict against Petroleum Wholesale, after it was accused of calibrating gas pumps to deliver less than a full gallon of fuel.