PRINTER'S NO. 450
No. 429 Session of 1981
INTRODUCED BY WACHOB, MANDERINO, KUKOVICH, BROWN, DeWEESE,
CALTAGIRONE, PISTELLA, COHEN, WASS, MICHLOVIC, RITTER,
SEVENTY, SALVATORE, GALLAGHER, WHITE, GRAY, O'DONNELL,
KOLTER, SWEET, CLARK, BELFANTI, MURPHY, WAMBACH, PRATT AND
CORDISCO, FEBRUARY 9, 1981
REFERRED TO COMMITTEE ON BUSINESS AND COMMERCE,
FEBRUARY 9, 1981
AN ACT
1 Relating to the marketing of gasoline products and the operation
2 of retail service stations.
3 TABLE OF CONTENTS
4 Section 1. Short title.
5 Section 2. Definitions.
6 Section 3. Legislative finding and declaration.
7 Section 4. Disclosures by distributor to prospective
8 dealer.
9 Section 5. Marketing agreement subject to certain
10 provisions.
11 Section 6. Defenses to action based on termination or
12 cancellation of marketing agreement.
13 Section 7. Notice of intent required to raise defenses.
14 Section 8. Certain operations prohibited.
15 Section 9. Extension of voluntary allowances.
16 Section 10. Application of equipment rentals.
1 Section 11. Uniform apportionment during shortage.
2 Section 12. Remedies.
3 Section 13. Application to prior agreements.
4 Section 14. Repeal.
5 Section 15. Effective date.
6 The General Assembly of the Commonwealth of Pennsylvania
7 hereby enacts as follows:
8 Section 1. Short title.
9 This act shall be known and may be cited as the "Gasoline
10 Products Marketing Act."
11 Section 2. Definitions.
12 The following words and phrases when used in this act shall
13 have the meaning given them in this section unless the context
14 clearly indicates otherwise:
15 "Controlled outlet." An outlet which is operated by a
16 distributor or operated by company employees, a subsidiary
17 company, commissioned agent, or by any person who manages the
18 outlet on a fee arrangement with the distributor.
19 "Dealer." A person engaged in the retail sale of gasoline
20 products under a marketing agreement, at least 30 percent of
21 whose gross revenue is derived from the retail sale of gasoline
22 products; however, the term does not include an employee of a
23 distributor.
24 "Distributor." A person who:
25 (1) Engages in the sale, consignment, or distribution of
26 gasoline products through retail outlets which he owns or
27 leases.
28 (2) Maintains an oral or written contractual
29 relationship with a dealer for the sale of the products.
30 The term includes any subsidiary or affiliated corporation in
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1 which a distributor holds at least 30% voting control.
2 "Gasoline." Gasoline, benzol, benzine, naphtha and any other
3 liquid prepared, advertised, offered for sale, sold for use as,
4 or used for, the generation of power for the propulsion of motor
5 vehicles including any product obtained by blending together any
6 one or more products of petroleum with or without other
7 products, if the resultant product is capable of the same use.
8 "Independent jobber." An individual who purchases gasoline
9 products from a wholesaler for resale to a dealer.
10 "Major brand." The primary trade name or trademark most
11 commonly associated with and identified with a manufacturer and
12 refiner's retail service station.
13 "Manufacturer or refiner." Any person, firm or corporation
14 engaged in producing, blending or compounding motor vehicle
15 fuels.
16 "Marketing agreement." An oral or written agreement between
17 a distributor and a dealer under which the dealer is granted the
18 right, for the purpose of engaging in the retail sale of
19 gasoline products supplied by the distributor, to:
20 (1) use a trademark, trade name, service mark, or other
21 identifying symbol or name owned by the distributor; or
22 (2) occupy premises owned, leased, or controlled by the
23 distributor.
24 "Person." An individual, corporation, business trust,
25 estate, trust, partnership, association, two or more persons
26 having a joint or common interest, or any other legal or
27 commercial entity.
28 "Petroleum products." Motor vehicle fuel, residual oils
29 number 4, 5 and 6, and all grades of jet (turbo fuels).
30 "Retail sale." The sale of a product for purposes other than
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1 resale.
2 "Retail service station dealer." Any person, firm or
3 corporation maintaining a place of business where motor vehicle
4 fuel is sold and delivered into the tanks of motor vehicles.
5 "Secondary brand." A trade name or trademark, other than a
6 major brand, used to identify a manufacturer and refiner's
7 retail service station.
8 "Special fuels." Diesel oils, kerosene, and heating oils or
9 liquids used in diesel engines or in internal combustion engines
10 for the propulsion of motor vehicles, including any product
11 obtained by blending together any one or more products of
12 petroleum with or without other products, if the resultant
13 product is capable of the same use.
14 "Unbranded." An independent retail service station dealer
15 marketing gasoline or other petroleum products under its own
16 brand, trade name or trademark other than those of a
17 manufacturer and refiner or any subsidiary thereof.
18 Section 3. Legislative finding and declaration.
19 The General Assembly finds and declares that since the
20 distribution and sale through marketing arrangements of
21 petroleum products in this Commonwealth vitally affect the
22 economy of the Commonwealth, and its public interest, welfare,
23 and transportation, it is necessary to define the relationships
24 and responsibilities of the parties to certain agreements
25 pertaining to these marketing arrangements.
26 Section 4. Disclosures by distributor to prospective dealer.
27 Before any marketing agreement is concluded, a distributor
28 shall disclose fully to a prospective dealer the following
29 information:
30 (1) Any gallonage history of the location under
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1 negotiation for the shorter of:
2 (i) the three-year period immediately past; or
3 (ii) the entire period during which the location has
4 been supplied by the distributor.
5 (2) The name, last known address, and reason for the
6 termination of the marketing agreement of each person who was
7 a dealer at the location during:
8 (i) the five-year period immediately past; or
9 (ii) the entire period during which the location has
10 been supplied by the distributor.
11 (3) Any commitment for the sale, demolition, or other
12 disposition of the location.
13 (4) Any training program and any specific goods and
14 services which the distributor will provide for and to the
15 dealer.
16 (5) Any obligation which will be required of the dealer.
17 (6) Any restriction on the sale, transfer, and
18 termination of the agreement.
19 (7) The total amount of any cash deposit required, any
20 amount of interest to be paid on the deposit, and the
21 conditions for the return of the deposit.
22 Section 5. Marketing agreement subject to certain provisions.
23 (a) In general.--Every marketing agreement is subject to the
24 provisions of this section, whether or not expressly set forth
25 in the agreement.
26 (b) Dealer's right to cancel.--
27 (1) Until midnight of the seventh business day after the
28 day a marketing agreement is signed or entered into, the
29 dealer may cancel it by giving written notice of cancellation
30 to the distributor in person or by registered or certified
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1 mail.
2 (2) Within 10 days after delivery of the notice of
3 cancellation, the dealer shall return to the distributor full
4 possession of any service station, location, money,
5 equipment, or merchandise loaned, sold, or delivered under
6 the marketing agreement to the dealer by the distributor.
7 (3) The distributor shall give the dealer full credit or
8 its cash equivalent for all money, equipment, and merchandise
9 returned.
10 (c) Price setting.--The distributor may not set or maintain
11 or attempt to set or maintain the price at which the dealer
12 sells any product, and the price of any product may not be
13 subject to enforcement or coercion by the distributor in any
14 way. However, the distributor may counsel with the dealer
15 concerning prices and may suggest prices to him.
16 (d) Hours of business.--A distributor may only require a
17 dealer to keep his retail outlet open for business for a
18 specified number of hours per day or days per week when this
19 requirement is negotiated in good faith by both parties and
20 arrived at in mutual agreement and it is on the basis of a bona
21 fide business need.
22 (e) Promotions.--The distributor may not require the dealer
23 to use any promotion, premium, coupon, give-away, or rebate in
24 the operation of the business. However, if not otherwise
25 prohibited by law, the dealer may participate in a promotional,
26 premium, coupon, give-away, or rebate program sponsored by the
27 distributor.
28 (f) Notice of intent not to renew.--A distributor who
29 intends not to renew a marketing agreement shall give notice of
30 his intent to the retail service station dealer at least 90 days
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1 before the expiration of the term of the marketing agreement,
2 whether or not the marketing agreement contains a provision for
3 automatic renewal or, by its terms, expires at a fixed time.
4 Failure to give notice constitutes a renewal of the marketing
5 agreement for a term of one year from its stated expiration
6 date.
7 (g) Distributor may not unreasonably withhold certain
8 consents; reasons for nonrenewal to be set forth in notice.--The
9 distributor may not unreasonably withhold his consent to any
10 assignment, transfer, sale, or renewal of a marketing agreement,
11 whether or not the marketing agreement contains a provision for
12 automatic renewal or, by its terms, expires at a fixed time.
13 Notice of intent not to renew a marketing agreement shall set
14 forth, in specific detail, the reasons relied upon by the
15 distributor for the nonrenewal.
16 (h) Repurchase on termination or cancellation.--
17 (1) Except with respect to a cancellation to which
18 subsection (b) applies, within 30 days after the date a
19 marketing agreement is terminated or cancelled, whether by
20 mutual agreement or otherwise, the distributor shall
21 repurchase from the dealer at the then current wholesale
22 price all merchantable products purchased by the dealer from
23 the distributor.
24 (2) The distributor may apply the proceeds of any
25 repurchased product against any existing debt owned by the
26 dealer to the distributor.
27 (3) The obligation to repurchase under this subsection
28 is enforceable only to the extent that there are not other
29 valid claims or liens against the products by or on behalf of
30 other creditors of the dealer.
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1 (i) Payment for goodwill.--
2 (1) In addition to the provisions of subsection (h), if,
3 without the written consent of the dealer, the distributor
4 terminates, cancels, or unreasonably refuses to renew the
5 marketing agreement, the distributor shall pay to the dealer
6 the full value of any business goodwill which the dealer
7 enjoys at the time he is notified of the termination,
8 cancellation, or refusal to renew.
9 (2) The distributor shall make the payment required by
10 this subsection within 30 days from the effective date of the
11 termination, cancellation, or refusal to renew.
12 (3) This subsection does not apply if the dealer
13 materially breaches the marketing agreement.
14 (j) Agreement may not waive certain rights.--The marketing
15 agreement may not waive the right of either party to trial by
16 jury or interposition of counter-claims or cross-claims.
17 (k) Service station lease providing for minimum monthly
18 rental.--A clause in any lease or contract from a producer or
19 refiner to a dealer for the use of a retail service station
20 providing for a minimum monthly rental based on a certain volume
21 of sales is not enforceable to the extent the minimum rent
22 exceeds a sum equal to the minimum rent provided for in the
23 lease or contract times a fraction, the denominator of which is
24 the number of gallons of gasoline on which the minimum rent is
25 based and the numerator of which is the number of gallons of
26 gasoline made available by the producer or refiner to the dealer
27 for that month.
28 (l) Wholesale price of gasoline to noncontrolled outlets.--
29 (1) A distributor who sets the retail price of gasoline
30 through controlled outlets shall provide those noncontrolled
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1 outlets that it supplies with gasoline products at a
2 wholesale price of at least 4¢ per gallon under the lowest
3 price posted for each grade of gasoline at any controlled
4 outlet.
5 (2) The provisions of this act shall not apply to
6 independent jobbers and farm cooperatives.
7 Section 6. Defenses to action based on termination or
8 cancellation of marketing agreement.
9 Subject to the notice requirements of section 7, in any
10 action filed under this act which is based on a termination or
11 cancellation of a marketing agreement, it is a defense that the
12 marketing agreement was terminated or cancelled:
13 (1) by mutual agreement of the parties. However, the
14 mutual agreement is void and unenforceable unless it clearly
15 states that it is not effective until the seventh business
16 day after the date of its execution during which time either
17 the dealer or the distributor have the absolute right to
18 rescind such mutual agreement by written notice to the other
19 party;
20 (2) because of the bankruptcy or insolvency of the
21 dealer;
22 (3) because the dealer failed to comply with an express
23 requirement of the marketing agreement; or
24 (4) because the dealer failed to act in good faith in
25 carrying out the terms of the marketing agreement.
26 Section 7. Notice of intent required to raise defenses.
27 (a) Notice required to raise defense.--A party to a
28 marketing agreement may not raise any defense set out in section
29 6 unless he gives written notice to the other party of his
30 intent to terminate or cancel the agreement. This notice shall
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1 be given in person or by registered or certified mail at least
2 60 days before the date on which he intends to terminate or
3 cancel it.
4 (b) When notice not required.--The 60-day notice is not
5 required if at the time of termination or cancellation of the
6 marketing agreement any of the following is proven:
7 (1) Criminal misconduct.
8 (2) Fraud.
9 (3) Abandonment.
10 (4) Bankruptcy or insolvency of the dealer.
11 (5) Adulteration of product;
12 (6) Giving a check which is dishonored for insufficient
13 funds.
14 (c) Notice by registered or certified mail.--If notice is
15 given by registered or certified mail, it shall be effective on
16 the date of mailing.
17 Section 8. Certain operations prohibited.
18 (a) Certain openings prohibited.--After January 1, 1982, no
19 manufacturer or refiner of petroleum products shall open a major
20 brand, secondary brand or unbranded retail service station in
21 this Commonwealth and operate it with company personnel, a
22 subsidiary company, commissioned agent, or under a contract with
23 any person, firm or corporation managing a service station on a
24 fee arrangement with the manufacturer or refiner. The station
25 must be operated by an independent retail service station
26 dealer.
27 (b) Certain operations prohibited.--After January 1, 1983,
28 no manufacturer or refiner of petroleum products shall operate a
29 major brand, secondary brand or unbranded retail service station
30 in this Commonwealth, with company personnel, a subsidiary
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1 company, commissioned agent or under a contract with any person,
2 firm or corporation managing a service station on a fee
3 arrangement with the manufacturer or refiner. The station must
4 be operated by an independent retail service station dealer.
5 (c) Rules authorizing temporary operation.--The Department
6 of Commerce may adopt rules or regulations defining the
7 circumstances in which a manufacturer or refiner temporarily may
8 operate a previously dealer-operated station.
9 (d) Divestiture exceptions.--The Department of Commerce may
10 permit reasonable exceptions to the divestiture dates specified
11 by this section after considering all of the relevant facts and
12 reaching reasonable conclusions based upon those facts.
13 Section 9. Extension of voluntary allowances.
14 Every manufacturer or refiner, or wholesaler of petroleum
15 products supplying gasoline and special fuels to retail service
16 station dealers shall extend all voluntary allowances uniformly
17 to all retail service station dealers supplied.
18 Section 10. Application of equipment rentals.
19 Every manufacturer or refiner, or wholesaler of petroleum
20 products supplying gasoline and special fuels to retail service
21 station dealers shall apply all equipment rentals uniformly to
22 all retail service station dealers supplied.
23 Section 11. Uniform apportionment during shortage.
24 Every manufacturer or refiner or wholesaler of petroleum
25 products shall apportion uniformly all gasoline and special
26 fuels to all retail service station dealers during periods of
27 shortages on an equitable basis, and shall not discriminate
28 among the dealers in their allotments.
29 Section 12. Remedies.
30 Any person who violates any provision of this act is liable
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1 for damages caused by the violation and is subject to the other
2 legal or equitable remedies available to the party injured by
3 the violation.
4 Section 13. Application to prior agreements.
5 This act shall not apply to any agreement entered into prior
6 to the effective date of this act, except that a renewal of such
7 agreement shall be subject to the provisions herein provided.
8 The provisions of the act of November 26, 1975 (P.L.454,
9 No.126), entitled "An act regulating the practices of suppliers,
10 distributors and dealers of gasoline, petroleum products and
11 accessories for motor vehicles and providing remedies for
12 violations," which is repealed by section 14 of this act are
13 hereby saved insofar as they are otherwise applicable to
14 agreements in effect prior to the effective date of this act.
15 Section 14. Repeal.
16 The act of November 26, 1975 (P.L.454, No.126), entitled "An
17 act regulating the practices of suppliers, distributors and
18 dealers of gasoline, petroleum products and accessories for
19 motor vehicles and providing remedies for violations," is hereby
20 repealed absolutely except to the extent it is temporarily saved
21 by section 13.
22 Section 15. Effective date.
23 This act shall take effect in 30 days.
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