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H.B. 162

             1     

MOTOR FUEL MARKETING ACT

             2     
2001 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Sponsor: David Ure

             5      This act modifies the Motor Fuel Marketing Act. The act amends definitions. The act
             6      addresses the requirement to establish and disclose certain prices. The act amends
             7      provisions against unlawful sales. The act addresses sales not considered violations. The act
             8      transfers civil enforcement authority from the Division of Consumer Protection to the
             9      attorney general. The act repeals the rebuttable presumption and the right of a purchaser
             10      to obtain price and cost information. The act provides a sunset date.
             11      This act affects sections of Utah Code Annotated 1953 as follows:
             12      AMENDS:
             13          13-16-2, as last amended by Chapter 260, Laws of Utah 1991
             14          13-16-3, as last amended by Chapter 189, Laws of Utah 1987
             15          13-16-4, as last amended by Chapter 300, Laws of Utah 1992
             16          13-16-6, as last amended by Chapter 279, Laws of Utah 1994
             17          13-16-7, as last amended by Chapter 260, Laws of Utah 1991
             18          13-16-10, as last amended by Chapter 300, Laws of Utah 1992
             19          13-16-11, as enacted by Chapter 260, Laws of Utah 1991
             20      ENACTS:
             21          63-55-213.1, Utah Code Annotated 1953
             22      REPEALS:
             23          13-16-5, as last amended by Chapter 189, Laws of Utah 1987
             24          13-16-8, as last amended by Chapter 189, Laws of Utah 1987
             25          13-16-9, as last amended by Chapter 189, Laws of Utah 1987
             26      Be it enacted by the Legislature of the state of Utah:
             27          Section 1. Section 13-16-2 is amended to read:


             28           13-16-2. Definitions.
             29          As used in this chapter:
             30          (1) "Affiliate" means [an entity] a person that owns or controls, or is owned or controlled
             31      by, another person, whether through stock ownership or otherwise.
             32          (2) "Cost" means an amount calculated as follows:
             33          (a) (i) if motor fuel is not purchased from an affiliate:
             34          (A) the lowest invoice cost that the seller charged to the purchaser for motor fuel of like
             35      grade and quality within five days prior to the date of any alleged unlawful resale by the purchaser;
             36      or
             37          (B) if there was no sale to the purchaser within the preceding five days, the purchaser's last
             38      invoice cost for motor fuel of like grade and quality; or
             39          (ii) if motor fuel is purchased or received from an affiliate:
             40          (A) the lowest transfer price that the affiliate charged to the purchaser or receiver for motor
             41      fuel of like grade and quality within five days prior to the date of any alleged unlawful resale by
             42      the purchaser or receiver; or
             43          (B) if there was no purchase or receipt within the preceding five days, the last transfer
             44      price for motor fuel of like grade and quality; [less]
             45          (b) [trade discounts, allowances, or rebates] less each of the following that the purchaser
             46      receives on the particular invoice or transfer:
             47          (i) a trade discount;
             48          (ii) an allowance; or
             49          (iii) a rebate; [plus] and
             50          (c) [the reasonable cost of doing business as determined by generally accepted accounting
             51      principles, which, with respect to retail sales and in the absence of proof of a lesser cost, is
             52      presumed to be a margin of 6% of the posted retail price;] plus the following if not included in the
             53      invoice cost or transfer price:
             54          [(d)] (i) freight charges [and];
             55          (ii) all applicable federal, state, and local taxes [not already included in the invoice cost
             56      or transfer price]; and
             57          (iii) charges imposed by a federal, state, or local government that are not taxes.
             58          (3) "Motor fuel" means gasoline, diesel fuel, gasohol, and all other fuels of a type


             59      designated for use as a motor fuel in self-propelled vehicles designated primarily for use on public
             60      streets, roads, and highways.
             61          (4) "Person" means any individual, partnership, corporation, or legal entity.
             62          (5) (a) "Posted rack price" means the price at which a refiner or other person offers a grade
             63      of motor fuel for sale at the rack before:
             64          (i) a reduction for:
             65          (A) a trade discount;
             66          (B) an allowance; or
             67          (C) a rebate; or
             68          (ii) the addition of:
             69          (A) a charge for freight;
             70          (B) a federal, state, or local tax; or
             71          (C) a charge imposed by a federal, state, or local government that is not a tax.
             72          (b) Notwithstanding Subsection (5)(a), the posted rack price for a refiner or other person
             73      offering motor fuel for sale at the rack who does not establish a posted rack price shall be the
             74      lowest posted rack price of any person for motor fuel of like grade or quality in the geographic area
             75      served by the refiner or other person.
             76          (6) "Purchase," "purchases," or "purchased" means the acquisition of motor fuel as a result
             77      of a sale or resale.
             78          (7) "Rack" means a deck, platform, or open bay that consists of a series of metered pipes
             79      and hoses for the delivery or removal of motor fuel from the refinery or terminal into:
             80          (a) a motor vehicle;
             81          (b) a rail car; or
             82          (c) a vessel.
             83          (8) "Receipt" or "received" has the same meaning as purchase under Subsection (6).
             84          (9) "Resale" or "resales" has the same meaning as sale under Subsection (11).
             85          [(5)] (10) "Retail sale" means any sale of motor fuel to a member of the motoring public
             86      for consumption.
             87          [(6)] (11) (a) "Sale," "sales," "sell," "sells," or "sold" means [any] the transfer of, [gift,
             88      sale,] or offer [for sale, or advertisement for sale in any manner or by any means, including any
             89      transfer of motor fuel by a person to himself or his affiliate.] to transfer:


             90          (i) ownership, title to, or possession of, motor fuel from one person to another; and
             91          (ii) with or without consideration.
             92          (b) "Sale," "sales," "sell," "sells," or "sold" includes any method by which any person
             93      transfers or offers to transfer ownership, title to, or possession of, motor fuel to itself or an affiliate
             94      for resale at another marketing level.
             95          (12) "Terminal" means a facility:
             96          (a) for the storage of motor fuel that is:
             97          (i) part of a refinery; or
             98          (ii) supplied by:
             99          (A) a motor vehicle;
             100          (B) a pipeline; or
             101          (C) a vessel; and
             102          (b) from which motor fuel is removed for distribution at a rack.
             103          [(7)] (13) "Transfer price" means the price used by a refiner [in transferring] in connection
             104      with any sale of motor fuel to itself or an affiliate for resale at another marketing level.
             105          Section 2. Section 13-16-3 is amended to read:
             106           13-16-3. Requirement to establish and disclose "transfer prices" and "posted rack
             107      prices."
             108          [Each] (1) A refiner engaged in commerce in this state is required to:
             109          (a) establish [and publicly disclose upon request]:
             110          (i) its transfer price on all grades of motor fuel [transferred or] sold to itself or an affiliate
             111      for resale in this state at a different marketing level of distribution[.]; and
             112          (ii) a posted rack price on all grades of motor fuel the refiner or other person sells at the
             113      rack in this state; and
             114          (b) at the request of the attorney general, disclose to the attorney general:
             115          (i) any transfer price described in Subsection (1)(a)(i); or
             116          (ii) any posted rack price described in Subsection (1)(a)(ii).
             117          (2) Information disclosed to the attorney general under Subsection (1)(b) shall be
             118      considered protected records for purposes of Section 63-2-304 .
             119          Section 3. Section 13-16-4 is amended to read:
             120           13-16-4. Unlawful sale by persons engaged in commerce.


             121          (1) It is unlawful for any person engaged in commerce within this state to sell [or offer to
             122      sell] motor fuel in this state below cost as defined in Subsection 13-16-2 (2) if[: (a)] the intent or
             123      effect of the sale [or offer] is to:
             124          (a) injure competition; [or]
             125          (b) [the intent and purpose of the sale or offer is to] induce the [purchase] buying of other
             126      merchandise[, to];
             127          (c) unfairly divert trade from a competitor[,]; or
             128          (d) otherwise [to] injure a competitor.
             129          (2) It is unlawful for any person engaged in commerce [within] in this state, in the course
             130      of such commerce, either directly or indirectly, to:
             131          (a) sell motor fuel through an affiliate for retail sale in this state on a different marketing
             132      level of distribution at a price lower than the price it charges a person who purchases motor fuel
             133      of like grade and quality at reasonably the same time for retail sale in this state on the same level
             134      of distribution, if the intent or effect of the sale is to injure competition; or
             135          (b) sell [or offer to sell] motor fuel for resale in this state at a price lower than the seller
             136      charges other persons [at the same time and] purchasing motor fuel of like grade and quality at
             137      reasonably the same time for resale in this state on the same level of distribution, if the intent or
             138      effect of the sale [or offer] is to injure competition.
             139          Section 4. Section 13-16-6 is amended to read:
             140           13-16-6. Sales not considered violations.
             141          (1) It is not a violation of [Section] Subsection 13-16-4 (2) [or 13-16-5 ] if:
             142          (a) a difference exists at the same level of distribution between the transfer price or sales
             143      price of motor fuel of like grade and quality and the price charged to a person who purchases for
             144      resale, including any discount, rebate, allowance, service, or facility granted to any person,
             145      including any of a supplier's own marketing operations, who purchases for resale, in excess of
             146      those provided to [a] any other person who purchases for resale if the difference [is] makes only
             147      due [to a difference] allowance for differences in the cost of:
             148          (i) manufacturing;
             149          (ii) transportation, shipping, or other delivery method[, transportation,]; or
             150          (iii) marketing[,] or sale[, or] resulting from the method or quantity in which the motor
             151      fuel is sold[.] or delivered; or


             152          [(2)] (b) [It is not a violation of Section 13-16-4 or 13-16-5 if] a difference exists in
             153      transfer price and sales price or between sales prices at the same marketing level if the difference
             154      exists because of a good faith effort to meet the equally low price of a competitor or if the sale is
             155      exempt under Section 13-5-12 .
             156          [(3)] (2) It is not a violation of Subsection 13-16-4 (1) if [the] a sale below cost is:
             157          (a) the result of a good faith effort to meet the equally low price of a competitor [or if the];
             158      or
             159          (b) a sale [is] exempt under Section 13-5-12 .
             160          [(b) In determining whether a person has set the price at which motor fuel is sold or
             161      offered for sale to meet the price of a competitor, the court shall consider only whether the seller
             162      or offeror has set the price of motor fuel to match the price at which a competitor has sold or
             163      offered motor fuel without regard to any other items sold or offered in conjunction with the sale
             164      or offer for sale of the motor fuel.]
             165          Section 5. Section 13-16-7 is amended to read:
             166           13-16-7. Civil actions authorized -- Expenses -- Jurisdiction and venue.
             167          (1) (a) If the [Division of Consumer Protection] attorney general has reason to believe that
             168      a person has engaged in acts or practices that violate Section 13-16-4 [or 13-16-5 ], the [division]
             169      attorney general may [request the attorney general or a county attorney to] commence a civil action
             170      to enjoin the acts or practices, seek civil penalties as provided in Subsection (1)(b), and upon a
             171      proper showing, a temporary restraining order, preliminary injunction, or permanent injunction
             172      shall issue without the necessity of a bond.
             173          (b) Any person who violates Section 13-16-4 [or 13-16-5 ] is liable to the state for a civil
             174      penalty, assessed by a court, not to exceed $5,000 per day for each business location where a
             175      violation occurred.
             176          (2) (a) Any person injured as a result of an act or practice that violates Section 13-16-4 [or
             177      13-16-5 ] may bring a civil action for appropriate relief, including an action for a declaratory
             178      judgment, injunctive relief, a treble award of actual damages, and exemplary damages.
             179          (b) Any action under this Subsection (2) shall be brought within two years after the alleged
             180      violation occurred.
             181          (3) The court, in making an award under Subsection (1) or (2), may award court costs and
             182      a reasonable attorney's fee to the prevailing party, except that the court may not award attorney's


             183      fees or court costs against the state, a state agency, or a political subdivision of the state.
             184          (4) If the state, a state agency, or a political subdivision of the state prevails in an action
             185      under this chapter, it is entitled to an award for reasonable investigative expenses in addition to
             186      any other relief granted.
             187          (5) (a) The district courts of this state may hear and determine all cases brought under this
             188      section.
             189          (b) Venue lies in any county where the defendant is doing business or in the county where
             190      the plaintiff resides.
             191          Section 6. Section 13-16-10 is amended to read:
             192           13-16-10. Recordkeeping -- Civil penalty.
             193          (1) Persons engaged in commerce within this state who sell [or offer to sell] motor fuel
             194      in this state shall maintain records accurately indicating the date and the time of day of each change
             195      in the sale price of motor fuel and the identity of the person who recorded the price change. In the
             196      event the change in price is to meet a lower price of a competitor, the record shall set forth the
             197      competitor by name and address, specifying the price which was met. These records shall be
             198      maintained for a period of two years.
             199          (2) The records shall be made available to [the Division of Consumer Protection and] the
             200      attorney general on request and shall be considered protected records for purposes of Section
             201      63-2-304 .
             202          (3) A person who fails to comply with Subsection (1) is liable to the state for a civil
             203      penalty, assessed by a court, of $500 per day for each business location where a violation occurred.
             204          Section 7. Section 13-16-11 is amended to read:
             205           13-16-11. Applicability.
             206          [(1)] Section 13-16-4 applies equally to all persons engaged in commerce in the marketing
             207      of motor fuel, regardless of the size of a marketing operation.
             208          [(2) Section 13-16-5 applies equally to all refiners engaged in commerce in the marketing
             209      of motor fuel, regardless of the size of a marketing operation.]
             210          Section 8. Section 63-55-213.1 is enacted to read:
             211          63-55-213.1. Repeal dates, Title 13.
             212          Title 13, Chapter 16, Motor Fuel Marketing Act, is repealed July 1, 2006.
             213          Section 9. Repealer.


             214          This act repeals:
             215          Section 13-16-5, Unlawful sale by refiner.
             216          Section 13-16-8, Burden of proof in civil action.
             217          Section 13-16-9, Right of purchaser to obtain price and cost information from
             218      marketer.




Legislative Review Note
    as of 12-18-00 8:19 AM


A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel


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