Fuel trader Atlas Oil accused in US court filing of mixing cyanide-releasing compound into gasoline

By Arathy Somasekhar

HOUSTON, Oct 30 (Reuters) - A chemical company has accused Houston-based fuel trader Atlas Oil Company of mixing a toxic, cyanide-releasing compound into gasoline and said in a court filing this month that the fuel appears to have contributed to a worker's death.

Modern Chemical, also known as Commercial Beverage Concepts, alleged in the filing in the Texas Business Court that Atlas secretly mixed propionitrile, a deadly compound that releases cyanide and is not an approved fuel additive, into gasoline.

The allegations, made in a counter petition in a commercial dispute over unpaid fuel shipments to Mexico, accuse Atlas of breaking federal transport rules and violating the Clean Air Act. Modern also alleges that Atlas engaged in a pattern of racketeering activity, including committing bank fraud and money laundering.

The court filing also ties the blended fuel to the death of a worker in Aransas Pass, Texas, whose family is suing Atlas and two other companies separately.

The allegations raise questions about fuel safety, compliance with federal transportation and environmental regulations, and whether the disputed fuel contributed to the death of a Texas railcar worker. Atlas, which has said the allegations are without foundation, plans to seek a dismissal, while the worker's family is pursuing a separate negligence lawsuit.

MODERN'S ALLEGATIONS DETAILED

Modern alleges that Atlas would blend 80% to 85% gasoline with 15% to 20% propionitrile despite knowing as early as May 2, 2025, that the compound was not approved for use as a fuel additive, and that it was a toxic substance that, if inhaled, ingested or absorbed through the skin, could kill a person even in low concentrations.

Companies often blend lower-cost materials into fuel to improve margins, according to traders and people in the industry. Propionitrile, however, is not on the US Environmental Protection Agency's list of approved gasoline additives, according to Modern's petition.

"Atlas’s fraudulent conduct ... violated several criminal statutes and appears to have actually killed a thirty-four year old father working at a railcar transload facility who was splashed with some of the blended fuel and died two days later," the petition alleged, citing a report from the US Occupational Safety and Health Administration and an obituary for Felix Fonseca Jr.

Atlas' lawyers at Baker McKenzie said in a statement to Reuters that Modern's allegations, including its racketeering claims, are without foundation.

"Atlas intends to respond in full in due course with a motion to dismiss and to seek recovery of fees," the lawyers said. "Because this is pending litigation, Atlas will not comment further on the specific allegations at this time."

COMPANIES DISPUTE FUEL TESTING PRACTICES

Modern in its petition has alleged that Atlas transported the adulterated fuel using false placards on the railcars in violation of several federal statutes and regulations.

Modern has also alleged that when Atlas learned that certain fuel tests could detect the blended substance, Atlas directed its vendor to test the blend differently, with an apparent goal of diluting the sample to mask the presence of the compound.

Such blending also violates the Clean Air Act, as propionitrile is not a permissible additive for motor vehicle gasoline, the petition alleges.

All product Atlas sold to Modern was certified through a reputable railcar inspection service in the United States prior to shipment, Atlas said in a filing, while alleging that Modern engaged in "improper, unreliable testing" of the product in Mexico.

Modern did not respond to a request for additional comments.