To prohibit certain discriminatory pricing policies in wholesale motor fuel sales, and for other purposes.

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

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.

END