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Harms, M.G. Oil pay thousands for improperly labeling gasoline

A blender pump is shown in this 2012 photograph at a Mitchell gas station. (Chris Huber/Republic)

PIERRE -- Two companies accused of mislabeling gasoline have agreed to pay South Dakota a combined $78,500 to settle the allegations.

Attorney General Marty Jackley announced Monday that an agreement reached with Harms Oil and M.G. Oil, two companies accused of mislabeling 85 octane gasoline as 87 octane, will resolve the outstanding 85 octane sale issue between the state and gasoline wholesalers.

By mislabeling gasoline as having a higher octane rating, the companies were alleged to have knowingly charged inflated prices to consumers in South Dakota. An octane rating is the standard measure of a fuel's performance. Fuel with a low octane rating can cause engine problems.

According to a state Attorney General's Office news release, the investigations into both companies did not reveal any unusual profits or unusual profit margins during the relevant time period.

The release says Harms Oil agreed to pay the state $50,000 -- $25,000 to the South Dakota Department of Public Safety to recoup the cost of purchasing and using a portable octane tester; $3,500 to produce educational materials for retail businesses; and $21,500 to the Attorney General's Office, which will be put in the state's general fund.

M.G. Oil agreed to pay $28,500 -- $25,000 to the South Dakota Department of Public Safety to recoup the cost of purchasing and using a portable octane tester and $3,500 to produce educational materials for retail businesses, the release says.

Both companies have agreed to obey all state and federal laws regarding the labeling of gas at the retail level, the sale and delivery of 85 octane gas and the certification of the fuel rating for each delivery made, the release says.

Harms Oil and M.G. Oil will provide quarterly statements verifying their compliance with all the terms of the settlement for two years, the release says. The reports will confirm the companies have not delivered any 85 octane gas to retail locations to any area in South Dakota where the sale of 85 octane gas is illegal.

The companies will also collaborate with the state to prepare brochures detailing fuel pump labeling requirements that take effect July 1, and will pay the cost of sending the brochures to each gasoline retailer in the South Dakota, the release says.

M.G. Oil was alleged to have illegally sold 85 octane gas and mislabeled it at its five Corner Pantry stations in Huron. Another gasoline retailer, 281 Travel Center in Wolsey, is also alleged to have sold mislabeled gas it bought from M.G. Oil.

No one was immediately available Monday to comment on the status of a class-action lawsuit filed against the two companies last summer by six people, including state Rep. Mitch Fargen , D-Flandreau, and Wessington Springs resident Gary Bradley.