Hot Fuel Settlements Cause Division Among Convenience Retailers

KANSAS CITY, Kan. — 7-Eleven Inc. and Sheetz Inc. are among several retailers objecting in Kansas federal court to proposed settlements in "hot fuel" cases.

On Jan. 26, a Kansas federal court gave preliminary approval to settlements with 28 defendants — including BP Products North America Inc., Casey's General Stores Inc., ConocoPhillips Co., Chevron USA Inc., E-Z Mart Stores Inc., ExxonMobil Corp., Flash Market Inc., Shell Oil Products US, Thorntons Inc., Motiva Enterprises LLC, Sinclair Oil Corp. and Love's Travel Stops & Country Stores — regarding a consumer class-action lawsuit concerning how gasoline and diesel fuel are sold at retail gas stations.

The issue behind "hot fuel" refers to when diesel and gasoline are sold warmer than the standard 60 degrees Fahrenheit. While fuel temperature is compensated for at all points of the refining and wholesale fuel process, it's not at the retail pump. When fuel is warmer than the standard, it expands and allegedly gives consumers less energy for the price.

7-Eleven, Sheetz and others object to the Kansas court's January decision, alleging that those companies settling are attempting to push a pro-automatic temperature compensation (ATC) campaign that was already rejected by a congressional body, and to deprive ATC opponents of their First Amendment rights, according to legal website Law360.

"The settlements seek to create this campaign [for ATC] by providing a de facto slush fund that will make payments to state governments if and when states change their laws, in accordance with the named plaintiffs’ and plaintiff’s counsels’ wishes,” the objectors argue.

In addition, 7-Eleven, Sheetz and others say the settlement would circumvent the National Conference on Weights and Measures, which rejected the ATC in 2009, the news outlet reported.

Under the terms of the judicially approved settlements, six of the companies — BP, Chevron, ConocoPhillips, ExxonMobil, Shell and Sinclair — would collectively pay $22.92 million into funds to:

• Reimburse retailers for the cost of installing equipment that corrects for the effects of temperature on motor fuel; and
• Help state officials who oversee the retail sale of motor fuel to make sure any changes in how motor fuel is sold is done lawfully.

Eighteen other companies agreed to pay $1.577 million to also assist state officials in ensuring motor fuel is sold lawfully, while four companies including Casey's agreed to gradually convert a portion of their existing and new stations — where permitted by law — to have fuel pumps that can adjust for the effects of temperature.

The proposed settlements would provide no money directly to consumers who have purchased motor fuel.

The Kansas federal court scheduled a hearing for June 9 at 9:30 a.m. to determine whether to give final approval to the settlements.