Ex-Iowa gasoline regulator alleges he was fired after industry complaints about investigation

EnergyAssociated Press

A former Iowa gas pump regulator is suing the state for wrongful termination, claiming he was fired after questioning a company's marketing practices and industry officials complained to his bosses about it.

In a lawsuit filed this week, Michael Manahl says the Iowa Department of Agriculture and Land Stewardship fired him after complaints from Dubuque-based Molo Petroleum and an industry association about his enforcement and interpretation of the law. Manahl had accused Molo — the parent company of Big 10 Mart Convenience Stores, in eastern Iowa and western Illinois — of potential wrongdoing for charging different prices for the same gas product.

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"He was simply trying to do his job to enforce the laws to the best of his ability. For doing so, he lost his job," his lawyer Nate Willems said Thursday, saying industry officials "went over his head" to derail Manahl's enforcement.

Molo and the Petroleum Marketers and Convenience Stores of Iowa confirmed Thursday that they disputed Manahl's allegations, saying he was unfairly accusing the company of wrongdoing.

"Our reputation was being unfairly muddied by a guy who was new to his job and really didn't understand the workings of our industry," company president Mark Molo said, adding that he didn't ask for Manahl to be fired.

Agriculture Secretary Bill Northey hired Manahl in 2012 as chief of the weights and measures bureau, which inspects gas pumps to ensure the accuracy of the quality and quantity of fuel sold. Manahl, an Ames resident and Iraq War veteran, previously worked at the Iowa Department of Public Health.

A Northey spokesman had no immediate comment on the lawsuit.

Manahl learned that Big 10 Mart stores periodically put the same 89 octane fuel into pumps advertised as 89 and the less-expensive 87, according to the lawsuit. Industry officials say that practice is legal because 89 is higher quality and exceeds the requirements for 87. Molo said to do the reverse — sell lower-quality gas at a higher price — would be fraud.

"If you sell 89 at an 87 price, it's like giving you a one-pound snickers bar for the price of a half-pound bar," he said. "It didn't hurt anybody except the company."

Manahl argued that it was a gray area, questioning whether it misleads customers who paid more per gallon for 89 octane that they could buy at the lower 87 price. Molo told him it ceased the practice, but Manahl sent a letter warning that it may violate Federal Trade Commission rules, the lawsuit alleges. State law also makes it illegal to "falsely advertise the quality or kind of any motor fuel."

Separately, the bureau opened an investigation into a Big 10 Mart in Bettendorf, where water had inadvertently contaminated gasoline. Several drivers reported that their cars stalled immediately after filling their tanks. During his investigation into that problem, Manahl learned that station was using the same 89 fuel for 89 and 87 octane — which became the focus of media reports.

Upset about the accusations and negative publicity, a Molo manager complained to Northey about Manahl and his bureau, the lawsuit says. Northey discussed the issue with Manahl's supervisor, Steve Moline, who met with Molo and industry representatives to discuss their concerns, it says. Moline sent Molo a letter in February 2013 clarifying that the state was not alleging a violation of federal law and fired Manahl the same day, the lawsuit says.

The lawsuit alleges that the firing violated state laws that protect whistleblowers and Manahl's free speech rights. It also contends he should've been given a hearing to challenge under a hiring law for veterans. He's seeking reinstatement and unspecified monetary damages.