SENATE BILL REPORT

SB 5672

BYSenators Peterson, DeJarnatt, Conner, Bottiger and Bauer

Prohibiting motor fuel producers or refiners from operating a retail outlet and allowing retail dealers to sell more than one brand of fuel.

Senate Committee on Transportation

Senate Hearing Date(s):March 3, 1987

Senate Staff:Brad Lovaas (786-7307)

AS OF MARCH 3, 1987

BACKGROUND:

In 1972 there were 226,500 retail service stations compared to the 120,000 stations which existed in 1986 according to the U.S. Department of Commerce.  This marketing shakeout has eliminated 102,000 conventional stations (full-serve, self-serve, service bays) from the marketplace.  In their place, new or remodeled units have appeared.  These new units, most of which are pumpers (gas only), are capable of doing from 100,000 to 500,000 gallons a month or more, or two to ten times the average of the conventional station.

There are approximately 3,000 gas stations in this state, of which 128 are major refiner company operated stations.  There are approximately 1,200 independent dealers, and 1,700 jobber operated outlets statewide.

There are two types of independent gasoline retailer:  1) a lessee dealer operates under a lease or franchise and supply contract with a refiner, and 2) an open dealer who owns the premises or leases them from a third party, but obtains gasoline from a refiner through a supply contract.

The major refiners-suppliers maintained that the restricting of the marketplace was due to market forces which are taking place following more than seven years of federal regulation.  These market forces include a more streamlined approach to marketing gas and the public's acceptance of self-serve gasoline stations.

SUMMARY:

A large integrated refiner is defined as one producing more than 30 percent of the crude supplied to its refinery, and whose capacity exceeds 175,000 barrels a day.

No producer or refiner shall require any dealer to purchase more than 70 percent of the monthly retail sales, or prohibit the use or conversion of storage tanks and dispensers for fuel refined by another refiner or producer.

Any dealer selling fuel not refined under the trademark or other identifying symbol under which he markets, must provide reasonable notice at the point of sale that the motor fuel is not produced by the producer or refiner.

A large integrated refiner may continue to operate any motor fuel service station which is operating on the effective date of this act.

The Attorney General may commence a civil action to prevent violation of this act.  The Attorney General shall prescribe regulations to enforce this act.

Fiscal Note:      none requested