BILL NUMBER: SB 304 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 7, 2003
AMENDED IN SENATE MARCH 28, 2003
AMENDED IN SENATE MARCH 25, 2003
INTRODUCED BY Senator Morrow
(Principal coauthor: Assembly Member Kehoe)
FEBRUARY 19, 2003
An act relating to service stations. An
act to add Article 2 (commencing with Section 21210) to Chapter 8 of
Division 8 of, and to add an article heading immediately preceding
Section 21200 of, the Business and Professions Code, relating to
petroleum.
LEGISLATIVE COUNSEL'S DIGEST
SB 304, as amended, Morrow. Service
Petroleum: refiners: service stations.
Under existing law, a refiner, distributor, or transporter of
motor vehicle fuels is prohibited from discriminating in price
between different purchasers if the effect of the discrimination is
harmful to competition, as defined.
This bill would prohibit a refiner, on and after January 1, 2005,
from converting a service station operated by an independent service
station dealer to a company operated service station. The bill would
authorize a refiner to operate a service station for a period not to
exceed 90 days if an independent service station dealer voluntarily
decides to terminate or not renew a franchise or if the franchise is
otherwise terminated or not renewed in accordance with state or
federal laws.
This bill would also prohibit a refiner from engaging in various
pricing and delivery practices.
Existing law generally regulates service stations, as defined.
This bill would state the intent of the Legislature to reform all
provisions governing or affecting the ownership and management of
service stations, as defined, that impact the retail pricing of
gasoline.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. It is the intent of the Legislature to
SECTION 1. The Legislature finds and declares that the marketing
of motor fuel in the state has become highly concentrated among a
limited number of refiners of crude oil, some of which are integrated
with retail operations. That concentration and the use of certain
marketing practices by refiners have resulted in artificially high
wholesale and retail prices. Additionally, under the guise of
meeting California's mandate for cleaner burning motor fuel, refiners
have utilized practices that encourage reduced production, low
inventories, and the formation of import barriers, resulting in
higher consumer prices and inflated profits for the refiners. This
conduct is harmful to consumers and the economy in this state, and
therefore should be prohibited. The measures in this act are
intended to protect the interests of consumers by promoting
competition in the California motor fuel market.
SEC. 2. An article heading is added to Chapter 8 of Division 8 of
the Business and Professions Code, immediately preceding Section
21200, to read:
Article 1. Price Discrimination
SEC. 3. Article 2 (commencing with Section 21210) is added to
Chapter 8 of Division 8 of the Business and Professions Code, to
read:
Article 2. Competition
21210. Unless the context otherwise requires, the definitions in
this section govern this article:
(a) "Affiliate" means a person who directly or indirectly
controls, is controlled by, or is under common control with, any
other person.
(b) "Control" means the direct or indirect power to direct or
cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract, or
otherwise.
(c) "Cost of doing business" means the expenses, on a per gallon
sold basis, incurred by a refiner, to sell motor fuel at a
company-operated retail service station. "Cost of doing business"
includes, but is not limited to, the value of all goods or
commodities, the costs of delivery of those goods or commodities,
services, facilities, real property and improvements, labor, and
overhead used, consumed, expended, or reasonably allocated by a
refiner in connection with that retail activity. "Cost of doing
business" does not include the cost of extracting or purchasing raw
crude oil, the cost of refining crude oil into motor fuel, or the
cost of delivering motor fuel to the truck-loading terminal.
(d) "Grade of motor fuel" means motor fuel for a particular
quality or class and sold under a particular trademark, trade name,
or brand.
(e) "Independent service station dealer" means a person, firm, or
corporation that is not an affiliate of a refiner and that buys motor
fuel exclusively for resale to end users and ultimate consumers at a
retail service station.
(f) "Market retail price" means the per gallon price at which a
refiner sells or offers to sell to the public a grade of motor fuel
at a company-owned retail station, less the cost of doing business at
that service station.
(g) "Motor fuel" means a liquid petroleum product used for the
propulsion of motor vehicles, but does not include fuel used in
airplanes, trains, or marine vessels, or propane.
(h) "Person" means a natural person, partnership, corporation,
limited liability company, trust, or unincorporated association.
(i) "Price" means the price of a gallon of motor fuel paid to a
refiner by an independent service station dealer, less the value, on
a per gallon basis, of all rebates, discounts, credits, incentives,
and other benefits extended by the refiner to the independent service
station dealer.
(j) "Refiner" means a person or affiliate thereof that is engaged
in the refining of petroleum into motor fuel, whether the refining
occurs in this state or elsewhere.
(k) "Retail service station" or "service station" means a
facility, including land and improvements, where motor fuel is sold
at retail to the motoring public.
(l) "Company operated station" means a service station owned or
controlled by a refiner and operated with company personnel, a
subsidiary company, or a commissioned agent, or under contract with
any person managing that outlet on a fee arrangement or on any
fee-for-service arrangement with the refiner.
(m) "Set or attempt to set" includes, but is not limited to,
actions that place an independent service station dealer at an
economic disadvantage if the dealer fails to comply with a suggested
price or margin.
21211. (a) On and after January 1, 2005, no refiner may convert a
service station operated by an independent service station dealer to
a company operated station.
(b) A refiner may open and temporarily operate a retail service
station for a period not to exceed 90 days in circumstances in which
an independent service station dealer voluntarily decides to
terminate or not renew the motor fuel franchise, or in which the
franchise is terminated or not renewed by the refiner in accordance
with applicable state and federal laws.
21212. No refiner may do any of the following:
(a) Offer to sell motor fuel to an independent service station
dealer at a price that exceeds the then-current market retail price
of motor fuel of the same grade being sold at any company operated
station that is supplied from the same truck loading terminal.
(b) Set, or attempt to set, control, or economically influence,
either directly or indirectly, the retail process or margins of
profit of motor fuel at any retail service station other than a
company-operated service station.
(c) Deliver motor fuel from different truck loading terminals to
company-operated service stations and independent service stations,
or restrict the truck loading terminals from which independent
service station dealers may purchase motor fuel, if the effect of
that action is to circumvent subdivision (a), unless that delivery or
restriction serves a legitimate business purpose.
SEC. 4. If any provision of this act or its application to any
person or circumstance is held invalid, the remainder of the act or
application of the provision to other persons or circumstances shall
not be affected. reform all provisions governing or
affecting the ownership and management of service stations, as
defined in Section 13650 of the Business and Professions Code, that
impact the retail pricing of gasoline.