NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A979
SPONSOR: Thiele (MS) TITLE OF BILL:
An act to amend the general business law, in relation to zone pricing of
gasoline, and to amend chapter 579 of the laws of 2008, amending the
general business law relating to zone pricing of gasoline, in relation
to zone pricing for retail motor fuel based on geographic location
PURPOSE:
To amend the current law, Chapter 579 of the Laws of 2008, to put an end
to unfair zone pricing based on geographical location.
SUMMARY OF PROVISIONS:
Section 1. Paragraph (a) of subdivision 1 of Section 399-ee of the
general business law is re-lettered 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 geograph-
ic market, without regard to the posted terminal price and 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 399-33 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 the 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, of resample, were not a result of price goug-
ing by gasoline retailers or wholesales; 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 his 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 enact-
ment 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 effec-
tive enforcement by the New York State Attorney General.
LEGISLATIVE HISTORY:
2015-16 S.332/A.103;
2013-14 S.2124/A.2290;
2011 S.4170
FISCAL IMPLICATIONS:
None
EFFECTIVE DATE:
This act shall take effect immediately.
