CONTENTS Ferrara, Jerry, National Coalition of Petroleum Retailers, Inc... McDonald, S. L., vice president, distribution, Atlantic Richfield Co.. Rasheed, Vic, executive director, Service Station Dealers of America.. Florio, Hon. James J., chairman, Subcommittee on Commerce, Transpor- Tauke, Hon. Thomas J., a Representative in Congress from the State of (III) PETROLEUM MARKETING PRACTICES THURSDAY, DECEMBER 5, 1985 HOUSE OF REPRESENTATIVES, COMMITTEE ON ENERGY AND COMMERCE, SUBCOMMITTEE ON FOSSIL AND SYNTHETIC FUELS, Washington, DC. The subcommittee met, pursuant to notice, at 10:18 a.m., in room 2325, Rayburn House Office Building, Hon. Philip R. Sharp (chairman) presiding. Mr. SHARP. The subcommittee will please come to order. Today's hearing will examine two legislative proposals to amend the Petroleum Marketing Practices Act. The PMPA was adopted in 1978 to give gasoline marketers greater protection against arbitrary or discriminatory franchise practices. This hearing gives us a chance to examine how well the PMPA has worked, and whether any changes are necessary to ensure that its original purposes are achieved. We also hope to learn more about how changes in the gasoline marketing industry are affecting franchise relationships, and whether fundamental changes in PMPA are warranted. There are two bills to amend the PMPA before the subcommittee. H.R. 2406, sponsored by Mr. Synar and Mr. Tauke, is similar to a bill this subcommittee held hearings on last session. The bill's sponsors have made some changes to their proposal in response to concerns voiced at last year's hearings. The second bill is H.R. 3338, a new proposal sponsored by Mr. Florio. Due to a conflict with floor action today on Superfund legislation, Mr. FLorio is not able to attend this morning's hearing, though he expressed his intense interest in this topic to me and to others of the committee. He has provided a written statement explaining his proposal, which will be made available to members and included in the hearing record. [Testimony resumes on p. 19.] [The prepared statement of Mr. Florio and the text of H.R. 2406 and H.R. 3338 follow:] STATEMENT OF HON. JAMES J. FLORIO, CHAIRMAN, SUBCOMMITTEE ON COMMERCE, TRANSPORTATION, AND TOURISM Chairman Sharp and members of the Subcommittee, I appreciate this opportunity to make a statement regarding H.R. 3338, my bill to amend the Petroleum Marketing Practices Act. My bill is very simple. It amends the portion of the Act relating to nonrenewal to make clear that a dealer or other franchisee's failure to agree to changes in the franchise agreement that are unfair or unreasonable is not a grounds for termination. The bill also would revise the way the Act deals with a situation where the (1) refiner fails to renew a lease it has from a third party for the premise of the franchisee. For example, the bill provides for continuation of the franchise if the dealer remains in possession and for payment to the dealer by the refiner if the dealer is unable to remain in possession. H.R. 3338 is needed in order to provide better guidance for the courts under PMPA. The protections of the Act are more important than ever, as we witness a major restructuring in the petroleum industry. The giant mergers, market withdrawals, and plant closings are causing widespread disruption of local economies, communities, and small businesses. The standard of fairness embodied in H.R. 3338 should be the minimum ground rule for the marketplace if we are to weather the current economic storm without doing permanent damage to small business and the public. Finally, I want to stress that my sponsorship of H.R. 3338 should not be taken as suggesting that no other strengthening of the law is needed. I simply say that what is in this bill is one step that needs to be taken to clarify the rights of the nation's gasoline retailers and other franchisees. We need to return to the fundamental purpose of PMPA, which was to give the dealer or other franchisee his day in court. I am also the sponsor of legislation (H.R. 2777) to improve the procedures under which the antitrust enforcement agencies consider peteroleum company mergers, and there are no doubt other legal safeguards that others will advocate that should also be enacted. The problems created by the current shakeup in the oil industry are far-reaching and will require a variety of responses. |