By: Parker S.B. No. 1412 A BILL TO BE ENTITLED AN ACT 1-1 relating to motor fuel marketing and prohibited business practices, 1-2 providing exemptions. 1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-4 SECTION 1. Title 2, Business & Commerce Code, is amended by 1-5 adding Chapter 20 to read as follows: 1-6 CHAPTER 20. MOTOR FUEL MARKETING 1-7 SUBCHAPTER A. GENERAL PROVISIONS 1-8 Sec. 20.01. DEFINITIONS. In this chapter: 1-9 (1) "Actual cost" means the cost incurred by a refiner 1-10 in acquiring motor fuel for purposes of sale at the refiner's 1-11 retail facility, computed on a per gallon basis, plus: 1-12 (A) applicable taxes and fees paid per gallon by 1-13 the refiner to the state, the United States, or another 1-14 governmental agency or instrumentality; and 1-15 (B) transportation costs paid by the refiner per 1-16 gallon for the motor fuel sold. 1-17 (2) "Affiliate" means any person who (by means of 1-18 direct or indirect authority of a person to vote more than 50% of 1-19 the voting stock or a partnership interest in any other person) 1-20 controls, is controlled by or is under common control with any 1-21 other person. 1-22 (3) "Distribution point" means a facility at which 1-23 petroleum products are sold or transferred to distributors for 2-1 further distribution by transport vehicle or cargo tanker. The 2-2 term includes a pipeline or barge terminal, refinery, and railcar 2-3 loading rack. 2-4 (4) "Distributor" means a person engaged in the sale 2-5 of motor fuel to a retailer at wholesale, a commercial end-user in 2-6 bulk quantities, or another person who engages in those sales. The 2-7 term does not include a refinery selling directly or through a 2-8 broker to a person who sells the motor fuel to the public at a 2-9 retail facility. 2-10 (5) "Motor fuel" means gasoline and diesel fuel of a 2-11 type distributed for use as a fuel in self-propelled vehicles 2-12 designed primarily for use on public streets, roads, and highways. 2-13 (6) "Refiner" means any person engaged in the refining 2-14 of crude oil to produce motor fuel and includes any affiliate of 2-15 such person. 2-16 (7) "Retail price" means the price per gallon at which 2-17 motor fuel is sold to the public at a retail facility. If the 2-18 motor fuel is sold or offered at different prices for a cash 2-19 transaction than for a credit transaction, the retail price is the 2-20 lower of the prices, adjusted for the cost of consumer credit. If 2-21 the motor fuel is sold with another item or service at a combined 2-22 price, the retail price is the price per gallon adjusted to include 2-23 an amount that reflects the price per gallon of the other item or 2-24 service less the cost per gallon of the item or service. 2-25 (8) "Sale" includes a transfer, gift, product 3-1 exchange, and offer or advertisement for sale made in any manner or 3-2 by any means. 3-3 (9) "Retail facility" means a facility at which motor 3-4 fuel is sold to the public, including motorists or other end-users. 3-5 (10) "Transfer price" means a price equal to: 3-6 (A) the price a refiner charges for motor fuel 3-7 sold to a distributor at the distribution point nearest to the 3-8 refiner's retail facility; or 3-9 (B) if a refiner does not sell motor fuel to 3-10 distributors, the average selling price for motor fuel sold to 3-11 distributors at the distribution point nearest to the refiner's 3-12 retail facility, computed without including the highest and lowest 3-13 selling price for distributors at that distribution point. 3-14 (11) "Transportation cost" means the cost of 3-15 transporting motor fuel by a highway vehicle as prescribed by a 3-16 common carrier tariff of the Railroad Commission of Texas. 3-17 Sec. 20.02. PRESUMED COST. (a) The presumed cost per 3-18 gallon of motor fuel is an amount equal to: 3-19 (1) the transfer price per gallon of motor fuel of the 3-20 same or similar grade or quality as the motor fuel for which the 3-21 presumption is made at the distribution point closest to the retail 3-22 facility from which, and on the date that, the motor fuel for which 3-23 the presumption is made was sold; 3-24 (2) applicable taxes and fees paid per gallon required 3-25 to be paid to the state, the United States, or another governmental 4-1 agency or instrumentality; and 4-2 (3) the transportation cost per gallon for the motor 4-3 fuel. 4-4 (b) For the purpose of this section, motor fuel is of the 4-5 same or similar grade or quality if one motor fuel contains an 4-6 additive that does not change its octane or cetane rating to more 4-7 than one point above the rating of the other. 4-8 Sec. 20.03. LIBERAL CONSTRUCTION. This chapter is remedial 4-9 legislation and shall be liberally construed to promote its purpose 4-10 of enhancing competition in motor fuel markets in the State of 4-11 Texas by making unlawful certain sales below cost. 4-12 (Sections 20.04-20.10 reserved for expansion 4-13 SUBCHAPTER B. PROHIBITED MARKETING 4-14 PRACTICES; ENFORCEMENT 4-15 Sec. 20.11. PROHIBITED MARKETING PRACTICES; DEFENSES. 4-16 (a) A refiner may not engage in the sale of motor fuel at a retail 4-17 facility operated by such refiner at a retail price that is less 4-18 than the refiner's presumed cost if the refiner's intent or the 4-19 effect of the sale is to injure a competitor or destroy 4-20 competition. 4-21 (b) It is a defense to an action brought under this chapter 4-22 that the sale was made: 4-23 (1) as part of a promotional activity ending not later 4-24 than the 30th day after the date of the refiner's initial market 4-25 area entry; 5-1 (2) in an isolated transaction and not in the usual 5-2 course of business; 5-3 (3) as part of a complete final liquidation of a 5-4 business; 5-5 (4) for charitable purposes; 5-6 (5) in a good faith effort to meet the equally low or 5-7 lower legal price of a competitor; or 5-8 (6) at a retail price greater than the refiner's 5-9 actual cost. 5-10 (c) A refiner asserting a defense set forth in Subsection 5-11 (b)(5) of this section shall bear the burden of establishing by a 5-12 preponderance of the evidence that any other person is a competitor 5-13 for purposes of the defense. Where, however, the refiner asserting 5-14 the defense establishes that it sold motor fuel at a price 5-15 established to meet the equally low or lower retail price of a 5-16 retail facility located within a radius of two miles of such sale, 5-17 the defense set forth in Subsection (b)(5) of this section shall be 5-18 conclusively established as a matter of law. 5-19 Sec. 20.12. PRIVATE ACTION FOR DAMAGES. A refiner who 5-20 violates this chapter is liable to a person, including a 5-21 competitor, injured in the person's business or property for: 5-22 (1) actual damages; 5-23 (2) an amount equal to three times the actual damages 5-24 sustained by the claimant for willful violations; 5-25 (3) court costs; and 6-1 (4) reasonable attorney's fees and expert witness 6-2 fees. 6-3 Sec. 20.13. ADDITIONAL EQUITABLE RELIEF. A person 6-4 threatened with loss or damage by a violation of this chapter may 6-5 sue for and obtain injunctive relief under this chapter. The court 6-6 may grant equitable relief as the court determines necessary to 6-7 remedy the effects of a violation, including a declaratory 6-8 judgment, mandatory or prohibitive injunctive relief, and interim 6-9 equitable relief. 6-10 SECTION 2. This Act applies only to sales of motor fuel that 6-11 occur on or after the effective date of this Act. 6-12 SECTION 3. The importance of this legislation and the 6-13 crowded condition of the calendars in both houses create an 6-14 emergency and an imperative public necessity that the 6-15 constitutional rule requiring bills to be read on three several 6-16 days in each house be suspended, and this rule is hereby suspended, 6-17 and that this Act take effect and be in force from and after its 6-18 passage, and it is so enacted.