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S.B. 46

             1     

MOTOR FUEL MARKETING AMENDMENTS

             2     
2000 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Sponsor: Parley Hellewell

             5      AN ACT RELATING TO COMMERCE AND THE MOTOR FUEL MARKETING ACT;
             6      AMENDING DEFINITIONS; ADDRESSING REQUIREMENT TO ESTABLISH AND
             7      DISCLOSE CERTAIN PRICES; AMENDING PROVISIONS AGAINST UNLAWFUL SALES;
             8      ADDRESSING SALES NOT CONSIDERED VIOLATIONS; ADDRESSING CIVIL
             9      ENFORCEMENT; ADDRESSING REBUTTABLE PRESUMPTIONS; ADDRESSING
             10      ADMINISTRATIVE REMEDIES; AND MAKING TECHNICAL CHANGES.
             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          13-16-8, as last amended by Chapter 189, Laws of Utah 1987
             19          13-16-9, as last amended by Chapter 189, Laws of Utah 1987
             20          13-16-10, as last amended by Chapter 300, Laws of Utah 1992
             21          13-16-11, as enacted by Chapter 260, Laws of Utah 1991
             22      ENACTS:
             23          13-16-13, Utah Code Annotated 1953
             24      REPEALS:
             25          13-16-5, 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) "Division" means the Division of Consumer Protection.


             59          [(3)] (4) "Motor fuel" means gasoline, diesel fuel, gasohol, and all other fuels of a type
             60      designated for use as a motor fuel in self-propelled vehicles designated primarily for use on public
             61      streets, roads, and highways.
             62          (5) "Opening" means the first retail sale of motor fuel at a new retail station.
             63          [(4)] (6) "Person" means any individual, partnership, corporation, or other legal entity.
             64          (7) (a) "Posted rack price" means the price at which a refiner or other person offers a grade
             65      of motor fuel for sale at the rack before:
             66          (i) a reduction for:
             67          (A) a trade discount;
             68          (B) an allowance; or
             69          (C) a rebate; or
             70          (ii) the addition of:
             71          (A) a charge for freight;
             72          (B) a federal, state, or local tax; or
             73          (C) a charge imposed by a federal, state, or local government that is not a tax.
             74          (b) Notwithstanding Subsection (7)(a), the posted rack price for a refiner or other person
             75      offering motor fuel for sale at the rack who does not establish a posted rack price shall be the
             76      lowest posted rack price of any person for motor fuel of like grade or quality in the geographic area
             77      served by the refiner or other person.
             78          (8) "Purchase," "purchases," or "purchased" means the acquisition of motor fuel as a result
             79      of a sale or resale.
             80          (9) "Rack" means a deck, platform, or open bay that consists of a series of metered pipes
             81      and hoses for the delivery or removal of motor fuel from the refinery or terminal into:
             82          (a) a motor vehicle;
             83          (b) a rail car; or
             84          (c) a vessel.
             85          (10) "Receipt" or "received" has the same meaning as purchase under Subsection (8).
             86          (11) "Resale" or "resales" has the same meaning as sale under Subsection (14).
             87          [(5)] (12) "Retail sale" means any sale of motor fuel to a member of the motoring public
             88      for consumption.
             89          (13) "Retail station" means a station, store, or other outlet from which motor fuel is sold


             90      at retail in this state.
             91          [(6)] (14) (a) "Sale," "sales," "sell," "sells," or "sold" means [any] the transfer of, [gift,
             92      sale,] or offer [for sale, or advertisement for sale in any manner or by any means, including any
             93      transfer of motor fuel by a person to himself or his affiliate.] to transfer:
             94          (i) ownership, title to, or possession of, motor fuel from one person to another; and
             95          (ii) with or without consideration.
             96          (b) "Sale, "sales," "sell," "sells," or "sold" includes any method by which any person
             97      transfers or offers to transfer ownership, title to, or possession of, motor fuel to itself or an affiliate
             98      for resale at another marketing level.
             99          (15) "Terminal" means a facility:
             100          (a) for the storage of motor fuel that is:
             101          (i) part of a refinery; or
             102          (ii) supplied by:
             103          (A) a motor vehicle;
             104          (B) a pipeline; or
             105          (C) a vessel; and
             106          (b) from which motor fuel is removed for distribution at a rack.
             107          [(7)] (16) "Transfer price" means the price used by a refiner [in transferring] in connection
             108      with any sale of motor fuel to itself or an affiliate for resale at another marketing level.
             109          Section 2. Section 13-16-3 is amended to read:
             110           13-16-3. Requirement to establish and disclose "transfer prices" and "posted rack
             111      prices."
             112          [Each] A refiner engaged in commerce in this state is required to:
             113          (1) establish [and publicly disclose upon request]:
             114          (a) its transfer price on all grades of motor fuel [transferred or] sold to itself or an affiliate
             115      for resale in this state at a different marketing level of distribution[.]; and
             116          (b) a posted rack price on all grades of motor fuel the refiner or other person sells at the
             117      rack in this state; and
             118          (2) notwithstanding the provisions of Section 13-16-9 , at the request of S [ any person ] THE
             118a      ATTORNEY GENERAL, DIVISION, OR COUNTY ATTORNEY s discloses
             119      to the requesting S [ person ] ENTITY s :
             120          (a) any transfer price described in Subsection (1)(a); or


             121          (b) any posted rack price described in Subsection (1)(b).
             122          Section 3. Section 13-16-4 is amended to read:
             123           13-16-4. Unlawful sale by persons engaged in commerce.
             124          (1) It is unlawful for any person engaged in commerce within this state to sell [or offer to
             125      sell] motor fuel in this state below cost as defined in Subsection 13-16-2 (2) if[: (a)] the intent or
             126      effect of the sale [or offer] is to:
             127          (a) injure competition; [or]
             128          (b) [the intent and purpose of the sale or offer is to] induce the [purchase] buying of other
             129      merchandise[, to];
             130          (c) unfairly divert trade from a competitor[,]; or
             131          (d) otherwise [to] injure a competitor.
             132          (2) It is unlawful for any person engaged in commerce [within] in this state, in the course
             133      of such commerce, either directly or indirectly, to:
             134          (a) sell motor fuel S [ to itself or ] THROUGH s an affiliate for S [ resale ] RETAIL SALE s in
             134a      this state on a different marketing
             135      level of distribution at a S [ transfer ] s price lower than the price it charges a person who purchases
             136      motor fuel of like grade and quality at reasonably the same time for S [ resale ] RETAIL SALE s in
             136a      this state on the same
             137      level of distribution S [ , if the intent or effect of the sale is to injure competition ] s ; or
             138          (b) sell [or offer to sell] motor fuel for resale in this state at a price lower than the seller
             139      charges other persons [at the same time and] purchasing motor fuel of like grade and quality at
             140      reasonably the same time for resale in this state on the same level of distribution, if the intent or
             141      effect of the sale [or offer] is to injure competition.
             142          Section 4. Section 13-16-6 is amended to read:
             143           13-16-6. Sales not considered violations.
             144          (1) It is not a violation of [Section] Subsection 13-16-4 (2) [or 13-16-5 ] if:
             145          (a) a difference exists at the same level of distribution between the transfer price or sales
             146      price of motor fuel of like grade and quality and the price charged to a person who purchases for
             147      resale, including any discount, rebate, allowance, service, or facility granted to any person,
             148      including any of a supplier's own marketing operations, who purchases for resale, in excess of
             149      those provided to [a] any other person who purchases for resale if the difference [is] makes only
             150      due [to a difference] allowance for differences in the cost of:
             151          (i) manufacturing;


             152          (ii) transportation, shipping, or other delivery method, [transportation,]; or
             153          (iii) marketing[,] or sale[, or] resulting from the method or quantity in which the motor
             154      fuel is sold or delivered.
             155          [(2)] (b) [It is not a violation of Section 13-16-4 or 13-16-5 if] a difference exists in
             156      transfer price and sales price or between sales prices at the same marketing level if the difference
             157      exists because of a good faith effort to meet the equally low price of a competitor or if the sale is
             158      exempt under Section 13-5-12 .
             159          [(3)] (2) (a) It is not a violation of Subsection 13-16-4 (1) if [the] a sale below cost is:
             160          (i) the result of a good faith effort to meet the equally low price of a competitor [or if the];
             161          (ii) a sale [is] exempt under Section 13-5-12 [.]; or
             162          (iii) in connection with the opening of a retail station if:
             163          (A) the below cost sale occurs only from the retail station that is opening;
             164          (B) the first sale of motor fuel at a price below cost in connection with the opening occurs
             165      within 60 days from the day of the retail station's opening;
             166          (C) the below cost sale of motor fuel at the retail station in connection with the opening
             167      occurs no later than 72 hours from the first sale of motor fuel at a price below cost in connection
             168      with the opening; and
             169          (D) the opening occurs only once.
             170          (b) Notwithstanding Subsection (2)(a)(iii)(D), a sale described in Subsection (2)(a)(iii) is
             171      not a violation of Subsection 13-16-4 (1) if:
             172          (i) the retail station at which an opening previously occurred is reopening after:
             173          (A) the retail station stopped the sale of motor fuel at the retail station for a period of not
             174      less than 72 continuous hours because of remodeling; or
             175          (B) the transfer of the retail station to a new owner who is not an affiliate;
             176          (ii) the below cost sale occurs only from the retail station that is reopening;
             177          (iii) the first sale of motor fuel at a price below cost in connection with the reopening
             178      occurs within 60 days from the day the retail station makes its first sale of motor fuel after the
             179      reopening; and
             180          (iv) the below cost sale of motor fuel at the retail station in connection with the reopening
             181      occurs no later than 72 hours from the first sale of motor fuel at a price below cost in connection
             182      with the reopening.


             183          (3) Notwithstanding Subsection (2), any below cost price for the sale of motor fuel made
             184      by any person to meet the price at which a competitor has made a sale of motor fuel in connection
             185      with an opening or reopening may not occur after the 72 hour period described in:
             186          (a) Subsection (2)(a)(iii)(C); or
             187          (b) Subsection (2)(b)(iv).
             188          [(b)] (4) In determining whether a person has set the price at which motor fuel is sold [or
             189      offered for sale] to meet the price of a competitor, the court shall consider only whether the seller
             190      [or offeror] has set the price of motor fuel to [match] meet the price at which a competitor has sold
             191      [or offered] motor fuel without regard to any other items sold [or offered] in conjunction with the
             192      sale [or offer for sale] of the motor fuel.
             193          (5) Notwithstanding Section 13-16-2 , for purposes of Subsection (2)(a)(iii)(C) and
             194      Subsection (2)(b)(iv) the term "sale" does not include an offer to sale.
             195          Section 5. Section 13-16-7 is amended to read:
             196           13-16-7. Civil actions authorized -- Expenses -- Jurisdiction and venue.
             197          (1) (a) If the [Division of Consumer Protection] division has reason to believe that a
             198      person has engaged in acts or practices that violate Section 13-16-4 [or 13-16-5 ], the division may
             199      request the attorney general or a county attorney to commence a civil action to enjoin the acts or
             200      practices, seek civil penalties as provided in Subsection (1)(b), and upon a proper showing, a
             201      temporary restraining order, preliminary injunction, or permanent injunction shall issue without
             202      the necessity of a bond.
             203          (b) Any person who violates Section 13-16-4 [or 13-16-5 ] is liable to the state for a civil
             204      penalty, assessed by a court, not to exceed $5,000 per day for each business location where a
             205      violation occurred.
             206          (2) (a) Any person injured as a result of an act or practice that violates Section 13-16-4 [or
             207      13-16-5 ] may bring a civil action for appropriate relief, including an action for a declaratory
             208      judgment, injunctive relief, a treble award of actual damages, and exemplary damages.
             209          (b) Any action under this subsection shall be brought within two years after the alleged
             210      violation occurred.
             211          (3) The court, in making an award under Subsection (1) or (2), may award court costs and
             212      a reasonable attorney's fee to the prevailing party, except that the court may not award attorney's
             213      fees or court costs against the state, a state agency, or a political subdivision of the state.


             214          (4) If the state, a state agency, or a political subdivision of the state prevails in an action
             215      under this chapter, it is entitled to an award for reasonable investigative expenses in addition to
             216      any other relief granted.
             217          (5) (a) The district courts of this state may hear and determine all cases brought under this
             218      section.
             219          (b) Venue lies in any county where the defendant is doing business or in the county where
             220      the plaintiff resides.
             221          Section 6. Section 13-16-8 is amended to read:
             222           13-16-8. Rebuttable presumption in a civil or administrative action.
             223          (1) In [any] a civil action brought under Section 13-16-7 [, the burden of proof, upon a
             224      prima facie showing of a violation, shall shift to the defendant to show justification. Unless
             225      justification is shown, the court shall award judgment for the plaintiff.] or an administrative action
             226      brought under Section 13-16-13 :
             227          (a) a rebuttable presumption described in Subsection (2)(a) is created if the person bringing
             228      the action shows that the defendant:
             229          (i) engages in commerce within this state; and
             230          (ii) sells motor fuel in this state below cost; or
             231          (b) a rebuttable presumption described in Subsection (2)(b) is created if the person
             232      bringing the action shows that the defendant engages in commerce within this state and in the
             233      course of such commerce, either directly or indirectly:
             234          (i) sells motor fuel for resale in this state at a price lower than the price it charges other
             235      persons purchasing motor fuel of like grade and quality at reasonably the same time for resale in
             236      this state on the same level of distribution; or
             237          (ii) sells motor fuel:
             238          (A) to itself or an affiliate;
             239          (B) for resale in this state on a different marketing level of distribution; and
             240          (C) at a transfer price lower than the price it charges a person that purchases motor fuel
             241      of like grade and quality at reasonably the same time for resale in this state on the same level of
             242      distribution.
             243          (2) (a) If the showing described in Subsection (1)(a) is made, there is a rebuttable
             244      presumption that the intent or effect of the sale is to:


             245          (i) injure competition;
             246          (ii) induce the buying of other merchandise;
             247          (iii) unfairly divert trade from a competitor; or
             248          (iv) otherwise injure a competitor.
             249          (b) If the showing described in Subsection (1)(b) is made, there is a rebuttable presumption
             250      that the intent or effect of the sale is to injure competition.
             251          (3) (a) The defendant may rebut the presumption described in Subsection (2)(a) by:
             252          (i) producing evidence that proves by a preponderance of the evidence that it is more
             253      probable than not that the sale was made without the intent or effect described in Subsection (2)(a);
             254      or
             255          (ii) showing that the sale is not a violation under Section 13-16-6 .
             256          (b) The defendant may rebut the presumption described in Subsection (2)(b) by:
             257          (i) producing evidence that proves by a preponderance of the evidence that it is more
             258      probable than not that the sale was made without the intent or effect described in Subsection (2)(b);
             259      or
             260          (ii) showing that the sale is not a violation under Section 13-16-6 .
             261          Section 7. Section 13-16-9 is amended to read:
             262           13-16-9. Right of purchaser to obtain price and cost information from marketer.
             263          A person who purchases motor fuel for resale and who has cause to believe that another
             264      person marketing motor fuel has violated Section 13-16-4 [or 13-16-5 ] may, upon motion to the
             265      court and a proper showing of cause, obtain an order requiring the marketer to provide the
             266      following information:
             267          (1) the price or transfer price at which [he transfers] the marketer sells each grade of motor
             268      fuel to each level of distribution in [his] the marketer's marketing operations in this state;
             269          (2) information relevant to the market area to which [he transfers] the marketer sells the
             270      motor fuel in this state; and
             271          (3) the cost of, amount, and the nature of all discounts, rebates, allowances, services, or
             272      facilities connected with the handling[,] or sale[, or offering for sale] of any motor fuel [he] the
             273      marketer provides to:
             274          (a) each level of [his] the marketer's marketing operations in this state; and [to]
             275          (b) the local market area of the complainant.


             276          Section 8. Section 13-16-10 is amended to read:
             277           13-16-10. Recordkeeping -- Civil penalty.
             278          (1) Persons engaged in commerce within this state who sell [or offer to sell] motor fuel
             279      in this state shall maintain records accurately indicating the date and the time of day of each change
             280      in the sale price of motor fuel and the identity of the person who recorded the price change. In the
             281      event the change in price is to meet a lower price of a competitor, the record shall set forth the
             282      competitor by name and address, specifying the price which was met. These records shall be
             283      maintained for a period of two years.
             284          (2) The records shall be made available to the Division of Consumer Protection and the
             285      attorney general on request.
             286          (3) A person who fails to comply with Subsection (1) is liable to the state for a civil
             287      penalty, assessed by a court or by the division in an administrative action, of $500 per day for each
             288      business location where a violation occurred.
             289          Section 9. Section 13-16-11 is amended to read:
             290           13-16-11. Applicability.
             291          [(1)] Section 13-16-4 applies equally to all persons engaged in commerce in the marketing
             292      of motor fuel, regardless of the size of a marketing operation.
             293          [(2) Section 13-16-5 applies equally to all refiners engaged in commerce in the marketing
             294      of motor fuel, regardless of the size of a marketing operation.]
             295          Section 10. Section 13-16-13 is enacted to read:
             296          13-16-13. Administrative actions.
             297          (1) In addition to other penalties and remedies provided in this chapter, if a person violates
             298      this chapter, the division may do one or more of the following:
             299          (a) issue a cease and desist order;
             300          (b) impose an administrative fine not to exceed $5,000 for each day on which a violation
             301      of this chapter occurs for each business location where a violation of this chapter occurs; or
             302          (c) take any action permitted under Section 13-2-6 .
             303          (2) All money received through administrative fines imposed under this section shall be
             304      deposited in the Consumer Protection Education and Training Fund created by Section 13-2-8 .
             305          Section 11. Repealer.
             306          This act repeals:


             307          Section 13-16-5, Unlawful sale by refiner.




Legislative Review Note
    as of 1-21-99 7:02 AM


This legislation raises the following constitutional or statutory concerns:

State and federal constitutional issues concerning due process limits may be raised when the state
restricts below cost sales of or discriminatory market activities involving a commodity such as
motor fuel and creates rebuttable presumptions in establishing unlawful those acts. The Utah
Supreme Court, while upholding as constitutional the Motor Fuel Marketing Act (as it read prior
to 1987) against a due process challenge, reserved ruling on the issue of whether a showing of
intent is required by due process. State v. Rio Vista Oil, 786 P.2d 1343 (Utah 1990). A limited
examination of case law in other states is not conclusive in determining what is required by due
process.

Office of Legislative Research and General Counsel


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