Z-0876

AN ACT Relating to petroleum distribution; adding a new chapter to Title 19 RCW; and prescribing penalties.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature finds that the marketing of motor fuel and heating oil in the state of Washington has become highly concentrated with a limited number of refiners of crude oil, some of which are integrated into retail operations. Such concentration has the effect of curtailing the normal, healthy benefits of competition, and allowing some suppliers to take unfair advantage of purchasers. This conduct is injurious to the public interest and should be prohibited.

The legislature further finds that motor fuel and heating oil are essential to the welfare of the people of the state and that the inability of purchasers to purchase those products at a competitive price will result in severe hardship to purchasers and to the economy of the state of Washington.

The legislature further finds that as the market for the supply of motor fuel and heating oil becomes more concentrated, the potential for anticompetitive behavior increases. Therefore, the office of the attorney general, consumer and business fair practices division, should be notified whenever significant acquisitions or mergers in the petroleum industry take place.

NEW SECTION. Sec. 2. Unfair petroleum marketing practices are matters affecting the public interest for the purpose of applying chapter 19.86 RCW and are not reasonable in relation to the development and preservation of business. A violation of this chapter constitutes an unfair or deceptive act or practice in trade or commerce for the purpose of applying chapter 19.86 RCW.

NEW SECTION. Sec. 3. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Person" means natural persons, corporations, trusts, unincorporated associations, and partnerships.

(2) "Petroleum products" means products that are obtained from the processing of crude oil, natural gas, and other hydrocarbon compounds including, but not limited to motor fuel and heating oil.

(3) "Refiner" means a person who makes petroleum products in the state of Washington from crude oil, unfinished oils, natural gas plant liquids, or other hydrocarbons.

(4) "Retailer" means a person who purchases motor fuel or heating oil from a wholesaler or a refiner for resale to consumers in the state of Washington.

(5) "Supplier" means a refiner, wholesaler, retailer, or other reseller of motor fuel or heating oil doing business in the state of Washington.

(6) "Ultimate parent authority" means an entity that is not controlled by another entity.

(7) "Wholesaler" means a person who purchases motor fuel or heating oil from a refiner and sells it to a retailer, bulk purchaser, or other wholesaler.

NEW SECTION. Sec. 4. (1) An unfair margin for the sale of motor fuel or heating oil is prohibited.

(2) For purposes of this section the term "margin" means:

(a) For a refiner, the difference between the prior day's high closing price per gallon for Alaskan North Slope crude oil on the Los Angeles spot market and the price per gallon at which the refiner sells the motor fuel or heating oil. The high closing price for Alaskan North Slope crude oil shall be the highest closing price published by trade publications of general circulation;

(b) For a wholesaler or retailer, the difference between the purchase and sales price on a per gallon basis.

(3) An unfair margin for the sale of motor fuel or heating oil occurs when the margin for that sale is twenty-five percent or more higher than the average margin during the preceding twenty-eight days and the selling price is higher than the previous day's final selling price.

(4) Each sale made at an unfair margin by a supplier shall constitute a separate unfair act and violation of this section.

NEW SECTION. Sec. 5. It is an unfair practice for a supplier of motor fuel or heating oil to limit or allocate the quantity of product available to a purchaser purchasing under contract from the supplier, unless the limitations or allocations are applied in a reasonable and nondiscriminatory manner among all wholesalers and retailers, including company-owned and operated retail outlets, on the same level of distribution within the same trade area.

NEW SECTION. Sec. 6. A direct or indirect purchaser who has been injured in the purchaser's business or property, or the attorney general on behalf of consumers who are direct or indirect purchasers and have been injured in their business or property, may bring a civil action in superior court against a supplier to enjoin violations of this chapter or to seek damages, or both, and the costs of bringing the suit, including reasonable attorneys' fees. When a defendant is subjected to claims by both direct and indirect purchasers, the court shall take reasonable steps to avoid duplicate liability for the same injury, including transfer and consolidation of all actions.

NEW SECTION. Sec. 7. The court shall impose a civil penalty for each violation of sections 4 and 5 of this act, in an amount not to exceed one dollar per gallon sold by the supplier in violation of this chapter.

NEW SECTION. Sec. 8. (1) No supplier may acquire, directly or indirectly, from any other supplier, voting securities or assets that have a current market value of more than one million dollars, unless both suppliers notify the office of the attorney general, consumer and business fair practices division at least sixty days prior to the date of the proposed acquisition. This sixty-day waiting period shall commence upon receipt of the notification by the office of the attorney general.

(2) For purposes of this section, an acquisition includes mergers, acquisitions of assets, joint ventures, consolidations, and acquisitions of voting securities. Such notification shall include:

(a) Copies of all materials provided to the federal trade commission pursuant to 15 U.S.C. Sec. 18, if applicable;

(b) If no filing with the federal trade commission is required:

(i) The names and addresses of the ultimate parent entities of the acquiring and acquired person;

(ii) A description of the acquisition, a statement of its purpose, and proposed date of completion;

(iii) Copies of all documents constituting the acquisition agreement;

(iv) A statement of the percentage of assets or voting securities of the acquired person that will be held by each acquiring person as a result of the acquisition and the total dollar value of the assets or voting securities;

(v) Copies of all documents filed with the securities and exchange commission in conjunction with the acquisition;

(vi) The most recent annual reports for the acquiring and acquired persons, including income statements and balance sheets, as well as any related audit reports;

(vii) Any report that analyzes the proposed acquisition's competitive impact in the state of Washington;

(viii) Identification of any industry in which the acquiring and acquired persons are both engaged in the state of Washington and the geographic markets in which they operate;

(ix) Disclosure of any exchange agreements or other supply agreements between the acquired and acquiring persons that substantially affect the supply of petroleum products in the state of Washington; and

(x) Identification by the acquiring person of any other acquisitions or sales of assets or voting securities from or to any other petroleum products supplier during the prior ten years in the state of Washington.

(3) Any person who fails to comply with a provision of this section is liable to the state of Washington for a civil penalty of not more than one-tenth of one percent of the market value of the acquired assets, for each day during which the person is in violation of this section. The attorney general may bring a civil action in superior court to enforce compliance with this section and, upon a determination of noncompliance, the court shall award reasonable attorneys' fees and costs in favor of the attorney general. The court may order compliance and grant such other relief as it determines necessary and appropriate.

(4) If the attorney general determines that good cause exists, the sixty-day waiting period may be terminated early and the acquisition may be allowed to proceed. The attorney general may require the submission of additional information or documentary material relevant to the proposed acquisition. If additional information is requested, the waiting period shall be extended for an additional thirty days unless otherwise agreed by the attorney general.

(5) Nothing in this section shall limit the authority of the attorney general to secure at any time from any person documentary material, and testimony, or other information under RCW 19.86.110, or any other provision of law.

NEW SECTION. Sec. 9. The governor may suspend the operation of this chapter, except section 8 of this act, upon finding and declaring that an energy emergency exists pursuant to RCW 43.21G.040. Such suspension may last for all or part of the duration of the energy emergency, but under no circumstances may it be extended beyond the duration of the energy emergency.

NEW SECTION. Sec. 10. This chapter does not limit any of the provisions of chapter 19.86 RCW or otherwise limit the ability of the courts to declare certain acts or practices as unfair or deceptive.

NEW SECTION. Sec. 11. This chapter shall not repeal, amend, or modify any law now in existence.

NEW SECTION. Sec. 12. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 13. This chapter may be known and cited as the petroleum distribution act.

NEW SECTION. Sec. 14. Sections 1 through 13 of this act shall constitute a new chapter in Title 19 RCW.