Relates to zone pricing of gasoline

Summary of provisions

Section 1. Paragraph (a) of subdivision 1 of Section 399-ee of the general business law is relettered paragraph (a-1) and a new paragraph (a) is added to define 'Additional costs" to mean all replacement and transportation costs and taxes incurred.

Section 2. Paragraph (g) of subdivision 1 of Section 399-ee of the general business law is amended to redefine "Relevant geographic market" to mean the geographic area which is supplied by the same terminal facility.

Section 3. The definition of "Zone pricing" as defined by paragraph

(m) of subdivision 1 of Section 399-ee of the general business law is amended to mean the establishment of price differences based on geographical location of the retail outlet within the relevant geographic market, without regard to the posted terminal price any additional costs where the effect is to injure competition.

Section 4. Subdivision 2 of Section 399-ee of the general business law is amended to provide that no wholesaler or dealer shall engage in zone pricing with respect to any motor fuel of like grade or quality which is supplied to dealer operated retail outlets.

Section 5. Subdivision 3 of Section 399-ee of the general business law is amended by adding a new undesignated paragraph to allow a wholesaler or dealer who has been injured by reason of a violation of this section to bring an action in his or her name to enjoin such unlawful act, however no damages of any nature shall be recoverable in such action.

Section 6. The Legislative Findings set forth in Section 2 of Chapter 579 of the Laws of 2008 are amended to state that zone pricing is the setting of different wholesale prices for retail motor fuel based on geographic location.

Section 7. Establishes the effective date.

Justification

Over the past several years motor fuel prices have greatly fluctuated and in some cases unfairly so based on geographical location. Natural market occurrences may lead to price fluctuations; however zone pricing is an inequitable and harmful act that is devastating to consumers who are already financially overburdened during these difficult economic times. in 2008, New York State enacted the first law in the nation to outlaw the practice of zone pricing for

gasoline (Chapter 579 of the Laws of 2008). Since that time, however, compliance has been sporadic and enforcement has been difficult.

In March 2011, the Attorney General of the State of New York began conducting a comprehensive review of gasoline prices across the State in an effort to examine how prices are determined at various levels and to protect residents from gas price gouging. The State of New York Attorney General Eric T. Schneiderman released a report on December 28, 2011 entitled "Report on New York Gasoline Prices" which revealed that the surges in gas prices as unrest spread throughout the Middle East did not lead to price gouging in New York. The increases in gasoline prices during the spring of 2011, for example, were not a result of price gouging by gasoline retailers or wholesalers; but were primarily driven by changes in the price of crude oil. The Attorney General's study found that price gouging by gas stations was not behind the price spikes.

However, during Tropical Storm Irene in August 2011, gas gouging did occur and the report revealed that the Attorney General has since taken enforcement action against two downstate retailers. Investigations on price gouging during other major storms that hit New York in 2011 are ongoing.

Finally, the report concluded that some wholesalers continue to charge different prices to different retail gas locations even after the enactment of Chapter 579 of the Laws of 2008. The Attorney General indicated several flaws in the current statute and recommended various amendments in order to have an effective zone pricing law in New York State. This legislation incorporates such recommendations by providing a meaningful definition of the "relevant geographic market" and addresses the issue of "arbitrary" price differences. The weak definition of these terms in current law, among others, has resulted in no enforcement actions being brought forth pursuant to the zone pricing law since its enactment.

It is clear that consumers need further protection from this unfair business practice. This legislation is necessary to strengthen the zone pricing law by correcting several flaws which currently preclude effective enforcement by the New York State Attorney General.

Legislative history

2012: A.7775-B/S.41170-B -- Passed Assembly

Fiscal implications

None.

Effective date

This act shall take effect on the thirtieth day after it shall have become a law.