I

107TH CONGRESS

1ST SESSION H. R. 2039

To prohibit certain discriminatory pricing policies in wholesale motor fuel

sales, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MAY 25, 2001

Mr. THOMPSON of California (for himself, Mrs. CAPPS, Mr. MCGOVERN, Mrs.

DAVIS of California, Mr. BACA, Ms. ESHOO, Mr. MATSUI, Ms. PELOSI,

Mr. WEINER, Mr. CAPUANO, Mr. FILNER, Mr. STARK, Mr. CROWLEY,

Ms. BERKLEY, Ms. WOOLSEY, Mrs. NAPOLITANO, Mr. GUTIERREZ, Mr.

HONDA, Mr. KUCINICH, and Ms. SOLIS) introduced the following bill;

which was referred to the Committee on Energy and Commerce

A BILL

To prohibit certain discriminatory pricing policies in

wholesale motor fuel sales, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Wholesale Motor Fuel

5 Fairness and Competition Restoration Act’’.

6 SEC. 2. FINDINGS.

7 The Congress finds that—
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1 (1) both wholesale and retail motor fuel prices

2 are the result of a number of complex factors, in3 cluding those related to supply, refining, consumer

4 demand, and oil company cost, pricing, and mar5 keting practices;

6 (2) certain cost, pricing, and marketing prac7 tices employed by the oil companies are unfair and

8 anticompetitive, and contribute to the unjustified

9 price of retail motor fuel charged the American con10 sumer;

11 (3) among the unfair and anticompetitive oil

12 company practices are price zoning, redlining, dis13 criminatory wholesale motor fuel pricing, and a com14 plex system of cost allocation that hides the factors

15 on which wholesale costs are based;

16 (4) the oil companies’ practice known as price

17 zoning is one by which prices for motor fuel are set

18 solely because of the retail station’s geographic loca19 tion unrelated to cost-of-business factors;

20 (5) price zoning allows an oil company to artifi21 cially increase or depress retail motor fuel prices in

22 order to secure an unfair market advantage against

23 competitors;

24 (6) the oil companies engage in a practice

25 known as redlining, whereby a refiner refuses to sell
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1 motor fuel to distributors or particular geographic

2 markets;

3 (7) redlining allows an oil company to force

4 concessions from a distributor and affords the com5 pany the opportunity to exert undue influence in a

6 particular area or region;

7 (8) the oil companies engage in a practice of

8 discriminatory wholesale pricing of motor fuel based

9 on the relationship of the purchaser to the oil com10 pany and the degree of competition they provide;

11 (9) discriminatory pricing allows oil companies

12 to charge different wholesale prices to company

13 owned and operated retail stations, franchisees, and

14 independent retailers though all may be situated in

15 the same community and face the same competitive

16 and operating factors;

17 (10) the oil companies engage in a complex sys18 tem of cost allocations by which they employ rebates,

19 incentives, credits, and market enhancement allow20 ances that hide the factors on which wholesale prices

21 are based or published;

22 (11) the complex system of cost allocation al23 lows oil companies to post a ‘‘wholesale price’’ that

24 is far different from the actual wholesale price that
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1 would be revealed if the cost factors were publicly

2 identified and appropriately allocated; and

3 (12) it is appropriate for the Federal Govern4 ment to prohibit these unfair oil company cost, pric5 ing, and marketing practices, to restore fair and

6 competitive practices to the wholesale sale of motor

7 fuel, and to allow American consumers to assess for

8 themselves the factors that contribute to the price

9 changes they pay at the retail pump.

10 SEC. 3. PRICE DISCRIMINATION PROHIBITION.

11 (a) PROHIBITION.—

12 (1) IN GENERAL.—It shall be a violation of this

13 Act for an owner or operator of a terminal facility

14 to sell motor fuel from the terminal facility to any

15 person at a price in excess of the price it charges

16 any other person, including a distributor or retailer

17 which it owns or with which it is affiliated.

18 (2) PRICE DETERMINATION.—For purposes of

19 this subsection, the price an owner or operator of a

20 terminal facility charges a distributor or retailer

21 which it owns or with which it is affiliated shall be

22 the price determined pursuant to the regulations

23 issued under section 4(a).

24 (3) EXCEPTION.—A sale shall not be in viola25 tion of this subsection if it is made pursuant to the
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1 terms of a franchise or sales contract entered into

2 before October 17, 2000.

3 (b) CIVIL PENALTY.—The Federal Trade Commis4 sion may assess a civil penalty, not to exceed $1,000,000,

5 for each violation described in subsection (a).

6 (c) CRIMINAL PENALTY.—Whoever knowingly vio7 lates subsection (a) shall be fined under title 18, United

8 States Code, or imprisoned not more than 5 years.

9 (d) EFFECTIVE DATE.—This section shall take effect

10 6 months after the date of the enactment of this Act.

11 SEC. 4. FULL DISCLOSURE.

12 (a) REQUIREMENT.—The Federal Trade Commis13 sion, in consultation with the Secretary of Energy, shall

14 issue regulations requiring full disclosure by refiners and

15 distributors of their wholesale motor fuel pricing policies,

16 with a separate listing of each component contributing to

17 prices, including the cost of crude oil (with exploration,

18 extraction, and transportation costs shown separately if

19 the refiner or distributor is also the producer of the crude

20 oil), refining, marketing, transportation, equipment, over21 head, and profit, along with a description of any rebates,

22 incentives, and market enhancement allowances. Such reg23 ulations shall establish procedures for determining the

24 price an owner or operator of a terminal facility charges
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1 a distributor or retailer which it owns or with which it

2 is affiliated.

3 (b) EFFECTIVE DATE.—The regulations issued under

4 subsection (a) shall take effect 6 months after the date

5 of the enactment of this Act.

6 (c) PUBLIC DISSEMINATION.—

7 (1) REQUIREMENTS.—Except as provided in

8 paragraph (2), the Federal Trade Commission shall

9 ensure that all information acquired pursuant to the

10 regulations issued under subsection (a) is made

11 available to the public as follows:

12 (A) Such information may be disseminated

13 to the public through the Energy Information

14 Administration.

15 (B) Such information shall be required by

16 the Federal Trade Commission to be—

17 (i) conspicuously posted at all retail

18 motor fuel facilities in a manner so as to

19 be clearly available and understandable to

20 retail consumers; and

21 (ii) included in or with each invoice

22 for the wholesale sale of motor fuel.

23 (2) EXCEPTION.—The requirements of para24 graph (1) shall not apply to trade secrets and com25 mercial or financial information protected from dis-
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1 closure under subsection (b)(4) of section 552 of

2 title 5, United States Code (commonly referred to as

3 the Freedom of Information Act).

4 SEC. 5. DEFINITIONS.

5 For purposes of this Act, any term defined in section

6 101 of the Petroleum Marketing Practices Act (15 U.S.C.

7 2801) shall have the meaning given the term in that Act.

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