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108th CONGRESS
1st Session
H. R. 1039
To prohibit certain discriminatory pricing policies in wholesale motor
fuel sales, and for other purposes.
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IN THE HOUSE OF REPRESENTATIVES
February 27, 2003
Mr. Thompson of California (for himself, Ms. Woolsey, Mrs. Capps, Mr.
Case, Mr. McIntyre, Mr. Berman, Mr. DeFazio, Ms. Carson of Indiana, Mr.
Filner, Mr. Weiner, Mrs. Davis of California, Mr. Lipinski, Ms. Norton,
Mrs. Napolitano, Mr. McGovern, Mr. Kucinich, Mr. Gutierrez, Mr. Honda,
Ms. Berkley, and Mr. Capuano) introduced the following bill; which was
referred to the Committee on Energy and Commerce
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A BILL
To prohibit certain discriminatory pricing policies in wholesale motor
fuel sales, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Wholesale Motor Fuel Fairness and
Competition Restoration Act''.
SEC. 2. FINDINGS.
The Congress finds that--
(1) both wholesale and retail motor fuel prices are the
result of a number of complex factors, including those related
to supply, refining, consumer demand, and oil company cost,
pricing, and marketing practices;
(2) certain cost, pricing, and marketing practices employed
by the oil companies are unfair and anticompetitive, and
contribute to the unjustified price of retail motor fuel
charged the American consumer;
(3) among the unfair and anticompetitive oil company
practices are price zoning, redlining, discriminatory wholesale
motor fuel pricing, and a complex system of cost allocation
that hides the factors on which wholesale costs are based;
(4) the oil companies' practice known as price zoning is
one by which prices for motor fuel are set solely because of
the retail station's geographic location unrelated to cost-of-
business factors;
(5) price zoning allows an oil company to artificially
increase or depress retail motor fuel prices in order to secure
an unfair market advantage against competitors;
(6) the oil companies engage in a practice known as
redlining, whereby a refiner refuses to sell motor fuel to
distributors or particular geographic markets;
(7) redlining allows an oil company to force concessions
from a distributor and affords the company the opportunity to
exert undue influence in a particular area or region;
(8) the oil companies engage in a practice of
discriminatory wholesale pricing of motor fuel based on the
relationship of the purchaser to the oil company and the degree
of competition they provide;
(9) discriminatory pricing allows oil companies to charge
different wholesale prices to company owned and operated retail
stations, franchisees, and independent retailers though all may
be situated in the same community and face the same competitive
and operating factors;
(10) the oil companies engage in a complex system of cost
allocations by which they employ rebates, incentives, credits,
and market enhancement allowances that hide the factors on
which wholesale prices are based or published;
(11) the complex system of cost allocation allows oil
companies to post a ``wholesale price'' that is far different
from the actual wholesale price that would be revealed if the
cost factors were publicly identified and appropriately
allocated; and
(12) it is appropriate for the Federal Government to
prohibit these unfair oil company cost, pricing, and marketing
practices, to restore fair and competitive practices to the
wholesale sale of motor fuel, and to allow American consumers
to assess for themselves the factors that contribute to the
price changes they pay at the retail pump.
SEC. 3. PRICE DISCRIMINATION PROHIBITION.
(a) Prohibition.--
(1) In general.--It shall be a violation of this Act for an
owner or operator of a terminal facility to sell motor fuel
from the terminal facility to any person at a price in excess
of the price it charges any other person, including a
distributor or retailer which it owns or with which it is
affiliated.
(2) Price determination.--For purposes of this subsection,
the price an owner or operator of a terminal facility charges a
distributor or retailer which it owns or with which it is
affiliated shall be the price determined pursuant to the
regulations issued under section 4(a).
(3) Exception.--A sale shall not be in violation of this
subsection if it is made pursuant to the terms of a franchise
or sales contract entered into before the date of the enactment
of this Act.
(b) Civil Penalty.--The Federal Trade Commission may assess a civil
penalty, not to exceed $1,000,000, for each violation described in
subsection (a).
(c) Criminal Penalty.--Whoever knowingly violates subsection (a)
shall be fined under title 18, United States Code, or imprisoned not
more than 5 years.
(d) Effective Date.--This section shall take effect 6 months after
the date of the enactment of this Act.
SEC. 4. FULL DISCLOSURE.
(a) Requirement.--The Federal Trade Commission, in consultation
with the Secretary of Energy, shall issue regulations requiring full
disclosure by refiners and distributors of their wholesale motor fuel
pricing policies, with a separate listing of each component
contributing to prices, including the cost of crude oil (with
exploration, extraction, and transportation costs shown separately if
the refiner or distributor is also the producer of the crude oil),
refining, marketing, transportation, equipment, overhead, and profit,
along with a description of any rebates, incentives, and market
enhancement allowances. Such regulations shall establish procedures for
determining the price an owner or operator of a terminal facility
charges a distributor or retailer which it owns or with which it is
affiliated.
(b) Effective Date.--The regulations issued under subsection (a)
shall take effect 6 months after the date of the enactment of this Act.
(c) Public Dissemination.--
(1) Requirements.--Except as provided in paragraph (2), the
Federal Trade Commission shall ensure that all information
acquired pursuant to the regulations issued under subsection
(a) is made available to the public as follows:
(A) Such information may be disseminated to the
public through the Energy Information Administration.
(B) Such information shall be required by the
Federal Trade Commission to be--
(i) conspicuously posted at all retail
motor fuel facilities in a manner so as to be
clearly available and understandable to retail
consumers; and
(ii) included in or with each invoice for
the wholesale sale of motor fuel.
(2) Exception.--The requirements of paragraph (1) shall not
apply to trade secrets and commercial or financial information
protected from disclosure under subsection (b)(4) of section
552 of title 5, United States Code (commonly referred to as the
Freedom of Information Act).
SEC. 5. DEFINITIONS.
For purposes of this Act, any term defined in section 101 of the
Petroleum Marketing Practices Act (15 U.S.C. 2801) shall have the
meaning given the term in that Act.
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