June 16, 2005, Introduced by Reps. Casperson, Caul, Adamini, Brown, Nofs, Emmons, Vander Veen, Polidori, Gleason, Spade, Booher, Green, Meyer, Gaffney, Hune, Sak, Stahl, Ball, Kahn, Garfield, Hansen, Stewart, Jones, Pastor, Proos, Palsrok, Hildenbrand, Hummel, Kooiman, Schuitmaker, Condino and Van Regenmorter and referred to the Committee on Transportation.
A bill to prevent certain unfair methods of competition and
pricing practices in the distribution of motor fuel; to prescribe
powers and duties of certain state officers and agencies and the
courts; and to provide remedies, fines, and penalties for
violations of this act.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. This act shall be known and may be cited as the
"petroleum marketing stabilization act".
Sec. 2. As used in this act:
(a) "Affiliate" means a person who controls, is controlled by,
or is under common control with, any other person, other than by
means of a franchise. The term also includes a person in a business
relationship with any other person related to the retail sale of
motor fuel.
(b) "Average posted terminal price" means the average posted
rack price, by grade of motor fuel, as published by a petroleum
price reporting service, at which motor fuel is offered for sale at
the close of business on the determination date by all refiners,
suppliers, and wholesalers of motor vehicle fuel at a terminal,
plus any excise, sales, or use taxes imposed on the motor fuel or
on its sale, any cost incurred for transportation, and any other
fees or charges that are not otherwise included in the average
posted rack price. As used in this subdivision, "average" means the
arithmetic mean.
(c) "Basic cost" means the lesser of the invoice cost to a
retailer, or the lowest replacement cost to the retailer within 5
days before the date of sale, in the quantity last purchased either
within or before that 5-day period, less customary discounts for
cash, plus the full value of any freight costs, and taxes, if not
already included in the invoice cost to the retailer.
(d) "Competition" includes a person who competes with another
person for retail sales of motor fuel in the same market area.
(e) "Cost of doing business component" means all costs
incurred in the conduct of business, including, but not limited to,
all labor costs, salaries of executives and officers, fair market
rent value, interest on borrowed capital, depreciation, costs for
maintenance of equipment, credit card fees, all license fees,
taxes, insurance, and advertising costs, at a retail location or an
unattended location, determined in accordance with generally
accepted accounting principles.
(f) "Customary discount for cash" includes an allowance made
to a retailer when the retailer pays for motor fuel within a
limited or specified time.
(g) "Determination date" means 1 of the following:
(i) If a retailer sells motor fuel on a day other than the day
on which the retailer last purchased any motor fuel and the sale of
the motor fuel by the retailer occurs no later than 10 days after
its last purchase by the retailer, either the day preceding the day
of the sale of motor fuel by the retailer or the day on which motor
fuel was last purchased by the retailer, as selected by the
retailer.
(ii) If subparagraph (i) does not apply, the day preceding the
day of the sale at retail of motor fuel.
(h) "Existing price of a competitor" means a lawful price that
is simultaneously offered to a buyer for motor fuel of like quality
and quantity by a person who is a competitor of the retailer and
from whom the buyer can practicably purchase the motor fuel.
(i) "Invoice" means either of the following:
(i) A document issued by a refiner or supplier to a wholesaler
or retailer evidencing a sale of motor fuel that contains the
invoice cost of the motor fuel.
(ii) A document issued by a wholesaler to a retailer evidencing
a sale of motor fuel that contains the invoice cost of the motor
fuel from an invoice issued by a refiner or supplier.
(j) "Invoice cost" means 1 of the following:
(i) For a sale of motor fuel from a refiner or supplier to a
wholesaler or retailer, either the sale price shown on an invoice
from a refiner or supplier to a wholesaler or retailer who is not
its affiliate, or the price generally available from the refiner or
supplier to wholesalers and retailers who are not its affiliates
from a terminal at which the refiner or supplier sells or offers to
sell motor fuel to wholesalers and retailers who are not its
affiliates, whichever is greater.
(ii) For a sale of motor fuel by a wholesaler to a retailer,
either the sale price shown on the invoice from the wholesaler to
the retailer, or the price the wholesaler paid the refiner or
supplier for that motor fuel, whichever is greater.
(k) "Maximum cost of doing business component" means 3 times
the cost of doing business component.
(l) "Maximum selling price" or "maximum sales price" means the
retail sales price measured as the retailer cost, applying the
maximum cost of doing business component.
(m) "Motor fuel" means that term as defined in section 4 of
the motor fuel tax act, 2000 PA 403, MCL 207.1004.
Sec. 3. As used in this act:
(a) "Person" means an individual, partnership, corporation,
association, limited liability company, governmental entity, or
other legal entity.
(b) "Petroleum price reporting service" means a wholesale
petroleum product price reporting service that is recognized
nationwide.
(c) "Rack" means a mechanism for delivering motor fuel from a
refinery, terminal, or marine vessel into a railroad tank car, a
transport truck, a tank wagon, the fuel supply tank of a marine
vessel, or other means of transfer outside of the bulk
transfer/terminal system.
(d) "Refiner" means that term as defined in section 5 of the
motor fuel tax act, 2000 PA 403, MCL 207.1005.
(e) "Replacement cost" means the cost at which a retailer
could have purchased motor fuel on the determination date if
purchased in the same quantity as the retailer's last purchase of
motor fuel.
(f) "Retail location" means a location where a retailer sells
motor fuel and where the presence of an attendant at the time of a
sale is required by law.
(g) "Retailer" means a person that meets all of the following:
(i) Maintains a storage facility for motor fuel.
(ii) Sells motor fuel at a retail location that sells only to
members, at any other retail location, or at an unattended
location.
(iii) Sells motor fuel to the end user of the motor fuel.
(h) "Retailer cost" means 1 of the following:
(i) In a retail sale of motor fuel by a retailer at a retail
location, the lesser of the following:
(A) The invoice cost of the motor fuel to the retailer on the
determination date or the replacement cost of the motor fuel on the
determination date, whichever is lower, less customary discounts
for cash, plus any excise, sales, or use taxes imposed on the motor
fuel or on its sale and any cost incurred for transportation and
any other fees or charges not otherwise included in the invoice
cost or the replacement cost of the motor fuel, plus the cost of
doing business component.
(B) The average posted terminal price on the determination
date at the terminal located closest to the retailer, plus the cost
of doing business component.
(ii) In a retail sale of motor fuel by a retailer at an
unattended location, the lesser of the following:
(A) The invoice cost of the motor fuel to the retailer on the
determination date or the replacement cost of the motor fuel on the
determination date, whichever is lower, less customary discounts
for cash, plus any excise, sales, or use taxes imposed on the motor
fuel or on its sale and any cost incurred for transportation and
any other fees or charges not otherwise included in the invoice
cost or the replacement cost of the motor fuel, plus the cost of
doing business component.
(B) The average posted terminal price on the determination
date at the terminal located closest to the retailer, plus the cost
of doing business component.
Sec. 4. As used in this act:
(a) "Sell", "sale", or "sold" means a transfer of property for
any consideration. The term includes an advertising or offer to
sell or any transfer of property where title is retained by the
retailer as security for the payment of the purchase price. In
determining a selling price of motor fuel by a retailer under this
act, all fractions of a cent shall be carried to the next full
cent.
(b) "Sell at retail", "sale at retail", and "retail sale" mean
a transfer for a valuable consideration, made in the ordinary
course of trade or in the usual conduct of a retailer's business,
of title to tangible personal property to a purchaser for
consumption or use other than resale or further processing or
manufacturing.
(c) "Supplier" means that term as defined in section 5 of the
motor fuel tax act, 2000 PA 403, MCL 207.1005.
(d) "Terminal" means a motor fuel storage and distribution
facility that is supplied by a pipeline or marine vessel, from
which motor fuel may be removed at a rack. If 2 or more terminals
are included in the same geographic area by a petroleum price
reporting service, they are considered 1 terminal for purposes of
this act.
(e) "Unattended location" means a location where a retailer
sells motor fuel and where the presence of an attendant at the time
of a sale is not required by law.
(f) "Wholesaler" means that term as defined in section 6 of
the motor fuel tax act, 2000 PA 403, MCL 207.1006.
Sec. 5. (1) Except as provided in subsection (2), a retailer
engaged in commerce in this state shall not sell or offer to sell
motor fuel below retailer cost at a retail location or unattended
location.
(2) It is not a violation of subsection (1) to establish a
sale price for motor fuel in good faith to meet an equally low
lawful price of a competitor that is subject to this act, located
in the same market area, and selling the same or a similar product
of like grade and quality.
Sec. 6. A retailer engaged in commerce in this state shall not
sell or offer to sell motor fuel for a price above the maximum sale
price at a retail location or unattended location.
Sec. 7. A retailer shall not directly or indirectly give a
rebate, allowance, concession, or benefit of any kind in connection
with a sale of motor fuel at a retail location or an unattended
location that permits any person to obtain motor fuel from the
retailer below the retailer cost.
Sec. 8. A retailer or an affiliate of a retailer shall not
engage in any of the following:
(a) An advertisement, offer for sale, or sale involving motor
fuel and 1 or more other items at a combined price, if the combined
selling price is below the retailer cost of the motor fuel and the
basic cost of the other item or items.
(b) An advertisement, offer of sale, or sale involving motor
fuel that includes the giving of 1 or more coupons for free or
discounted items, or gifts of any kind, if the combined selling
price of the motor fuel and all items for which a coupon or gift is
given is below the sum of the retail cost of the motor fuel, the
face value of any coupons given, and the basic cost of any item
given as a gift.
Sec. 9. This act does not apply to a retail sale of motor fuel
that meets any of the following:
(a) It is made in an isolated transaction that is not in the
usual course of business.
(b) Motor fuel is advertised, offered for sale, or sold in a
bona fide clearance sale for the purpose of discontinuing trade in
that motor fuel, and both of the following are met:
(i) The advertising, offer to sell, or sale states the reason
for the sale and the quantity of the motor fuel available for sale.
(ii) The motor fuel is kept separate from other motor fuel
stocks, and clearly and legibly marked with the reason for the
sale.
(c) Motor fuel is advertised, offered for sale, or sold as
imperfect or damaged, and both of the following are met:
(i) The advertising, offer of sale, or sale states the reason
for the sale and the quantity of motor fuel available for sale.
(ii) The motor fuel is kept separate from other motor fuel
stocks and clearly and legibly marked with the reason for the sale.
(d) Motor fuel is sold as part of the final liquidation of a
business.
(e) Motor fuel is advertised, offered for sale, or sold by a
fiduciary under the order or direction of a court.
(f) Motor fuel is advertised, offered for sale, or sold during
a grand opening to introduce a new or remodeled retail location if
the grand opening meets both of the following:
(i) Is held for 3 days or less.
(ii) Is held within 60 days after the new or remodeled retail
location begins operations.
Sec. 10. An express or implied agreement that violates this
act is void and unenforceable.
Sec. 11. An action for violation of this act shall be brought
in a circuit court where venue is proper without regard to the
amount in controversy.
Sec. 12. (1) If a prosecuting attorney has reasonable cause to
believe that a person has information or is in possession, custody,
or control of any document or other tangible object relevant to an
investigation for violation of this act, the prosecuting attorney
may serve upon the person, before bringing any action in the
circuit court, a written demand to appear and be examined under
oath, and to produce the document or object for inspection and
copying. The demand shall meet all of the following:
(a) Be served upon the person in the manner required for
service of process in this state.
(b) Describe the nature of the conduct constituting the
violation under investigation.
(c) Describe the document or object with sufficient
definiteness to permit it to be fairly identified.
(d) If demanded, contain a copy of the written
interrogatories.
(e) Prescribe a reasonable time at which the person must
appear to testify, within which to answer the written
interrogatories, and within which the document or object must be
produced, and advise the person that objections to or reasons for
not complying with the demand may be filed with the prosecuting
attorney on or before that time.
(f) Specify a place for the taking of testimony or for
production within the county in which the person resides or
maintains a principal place of business in this state and designate
the person who shall be custodian of the document or object.
(g) Contain a copy of subsection (2).
(2) If a person objects to or otherwise fails to comply with
the written demand served upon him or her under subsection (1), the
prosecuting attorney may file in the circuit court in the county in
which the person resides or in which the person maintains a
principal place of business within this state an action to enforce
the demand. Notice of hearing the action and a copy of all
pleadings shall be served upon the person, who may appear in
opposition. If the court finds that the demand is proper, that
there is reasonable cause to believe that there may have been or is
presently occurring a violation of this act, and that the
information sought or document or object demanded is relevant to
the investigation, the court shall order the person to comply with
the demand, subject to modification the court may prescribe. Upon
motion by the person and for good cause shown, the court may make
any further order in the proceedings that justice requires to
protect the person from unreasonable annoyance, embarrassment,
oppression, burden, or expense.
(3) Any procedure, testimony taken, or material produced shall
be kept confidential by a prosecuting attorney before bringing an
action against a person under this act for the violation under
investigation, unless confidentiality is waived by the person being
investigated and the person who has testified, answered
interrogatories, or produced material, or disclosure is authorized
by the court.
Sec. 13. A prosecuting attorney may bring an action for
appropriate injunctive or other equitable relief and civil
penalties in the name of the state for a violation of this act. The
court may assess for benefit of the state a civil penalty of not
more than $2,500.00 for each violation of this act, subject to a
maximum of $10,000.00 per day if multiple sales violations occur
during any 1 day.
Sec. 14. Any person threatened with injury or injured directly
or indirectly in his or her business or property by a violation of
this act may bring an action for appropriate injunctive or other
equitable relief, 3 times the amount of actual damages sustained by
reason of a violation of this act, interest on the damages from the
date of the complaint, taxable costs, and actual attorney fees. All
of the following apply to an action under this section:
(a) The court shall grant the equitable relief it determines
is necessary to remedy the effects of any violation of this act,
which may include a declaratory judgment, mandatory or prohibitive
injunctive relief, and interim equitable relief.
(b) The court shall grant a temporary restraining order and
preliminary injunction if the plaintiff shows that all of the
following are met:
(i) There is reasonable cause to believe that a violation of
the act has occurred.
(ii) There exist sufficiently serious questions going to the
merits to make those questions a fair ground for litigation.
(iii) The court determines that, on balance, the hardships
imposed upon the defendant by the issuance of a temporary
restraining order or preliminary injunction will be less than the
hardship that would be imposed upon the plaintiff in the absence of
that relief.
(c) If the action seeks injunctive or other equitable relief,
the court shall not require the plaintiff to provide a bond.
(d) If the action seeks injunctive or other equitable relief,
it is not a defense that the plaintiff's injury or threatened
injury may be adequately remedied by an award of damages.
(e) In an action under section 13 or 14, the defendant shall
bear the burden of proof in establishing its cost of doing business
components.
Sec. 15. A person who knowingly prepares a false invoice or
causes a false invoice to be prepared or knowingly submits false
information in response to a demand issued under section 12 of this
act is guilty of a misdemeanor punishable by imprisonment of not
more than 6 months or a fine of not more than $500.00, or both.
Sec. 16. A final judgment or decree determining that a person
has violated this act in an action brought by the state under
section 13, other than a consent judgment or decree entered before
any testimony has been taken, is prima facie evidence against the
person in any other action against the person under section 14 as
to all matters with respect to which the judgment or decree would
be an estoppel between the parties to the action.
Sec. 17. (1) An action under section 13 or 14 is barred if not
commenced within 1 year after the claim for relief or cause of
action accrues.
(2) An action to recover damages under section 14 is barred if
not commenced within 1 year after the claim for relief or cause of
action accrues, or within 1 year after the conclusion of any timely
action brought by the state under section 13 which is based in
whole or in part on any matter complained of in the action for
damages, whichever is later.
Sec. 18. The remedies provided in this act are cumulative and
in addition to any other remedy available under state law.
Sec. 19. If a witness has been or may be called to testify or
provide other information at any proceeding relating to or under
this act, the circuit court for the county in which the proceeding
is or may be held may issue, upon application of a prosecuting
attorney that asserts that in his or her judgment the testimony or
other information may be necessary to the public interest and the
witness has or is likely to refuse to testify, an order requiring
the witness to give testimony or provide other information which
the witness refuses to give or provide on the basis of the
privilege against self-incrimination, if the court provides in its
order that the witness shall not be prosecuted or subjected to any
penalty or forfeiture for, or on account of, any transaction,
occurrence, matter, or thing to which the witness testifies or
provides other information or evidence, documentary or otherwise,
and that the testimony, information, or evidence shall not be used
against the witness, in any criminal investigation, proceeding, or
trial, except a prosecution for perjury for giving a false
statement or for otherwise failing to comply with the order.