How can a distributor meet the defense elements in the case of gasoline that is obtained from another distributor's terminal through an exchange agreement?
In the case of a downstream standard violation found at the retail level, under § 80.79(a)(3) each distributor who sold, transported, or stored any of the gasoline found to be in violation is presumed liable, and in order to establish a defense under § 80.79(b), in addition to other defense elements must show evidence of quality assurance program. As a result, in the case of an exchange agreement, presumptive liability would apply both to the distributor who sold the gasoline to the retail outlet, and to the terminal-distributor who supplied the gasoline in question.
The terminal-distributor could meet the did-not-cause and the quality assurance program defense elements through test results that show
the gasoline in question met all applicable standards when dispensed. The seller-distributor could rely on the terminal-distributor's testing to show the gasoline met applicable standards when dispensed from the terminal, if this testing is properly performed.
Assuming the terminal-distributor has adequate test results, the more difficult defense element for the seller-distributor would be showing it did not cause the violation through the delivery truck, for example by mixing with conventional gasoline from a prior truck load. This did-not-cause showing by the seller-distributor would be necessary even in a case where a common carrier truck is used to deliver the gasoline (where the seller-distributor never had physical custody of the gasoline), because the truck carrier is acting as the agent of the seller-distributor.
For practical purposes, the most likely way a seller-distributor could show it did not cause a violation found at a retail outlet is to show who or what did cause the violation. For example, if it could be shown that the violation was caused by delivery from another distributor of gasoline that was off-spec, the seller-distributor would establish the did-not-cause defense element.
Of course, if the seller-distributor has test results from the delivery truck showing the gasoline delivered to the retail outlet met all applicable standards, the seller-distributor would be able to establish a full defense.
In addition, in order to establish a defense the seller-distributor must present evidence of a quality assurance program of sampling and testing, as specified in § 80.79(b)(1)(iii), and product transfer documents for the gasoline in question that indicate the gasoline met all relevant requirements, as specified in § 80.79(b)(1)(ii). (7/1/94)
This question and answer was posted at List of Reformulated Gasoline and Anti-Dumping Questions and Answers: July 1, 1994 through November 10, 1997 (pdf)