H.R. NO. 174
H.D. 2 HOUSE RESOLUTION

REQUESTING THE LEGISLATIVE REFERENCE BUREAU TO CONDUCT A STUDY TO

     OBTAIN USEFUL DATA AND VIEWS OF PARTICIPANTS IN THE
     PETROLEUM INDUSTRY IN HAWAII TO ASSIST THE LEGISLATURE IN
     FORMULATING POLICIES THAT PROTECT THE SHORT-TERM AND LONG-
     TERM INTERESTS OF HAWAII'S GASOLINE CONSUMERS.



     WHEREAS, the Legislature finds that the distribution of
motor vehicle fuel vitally affects the public health, safety,
and welfare as well as the general welfare of the State; and

     WHEREAS, the continued viability of independent retailers
and distributors is essential to the preservation of a fair and
competitive motor vehicle fuel market; and

     WHEREAS, unfair wholesale pricing policies threaten the
viability of independent retailers and distributors as
competitors essential to a healthy motor vehicle fuel market; and

     WHEREAS, in an attempt to develop solutions with respect to
the competitiveness of selling motor vehicle fuel in Hawaii, Act
295, Session Laws of Hawaii (SLH) 1991, was enacted; and

     WHEREAS, Act 295, SLH 1991, imposed a moratorium that
prohibited refiners and distributors of petroleum products from
opening any new direct operated service stations or retail motor
fuel outlets; and

     WHEREAS, Act 295, SLH 1991, also required the Attorney
General to gather and assess authoritative reports on the subject
of the impact on motor fuel prices to consumers of a prohibition
(also known as divorcement) on direct retailing of motor fuel by
refiners and distributors in competition with franchised and
independent service stations; and

     WHEREAS, in an attempt to further address and promote the
competitiveness of selling motor vehicle fuel, Act 329, Session
Laws of Hawaii (SLH) 1993, was enacted to extend the moratorium
two additional years; and

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     WHEREAS, the reason for the extension, as stated by the
Conference Committee Report to S.B. No. 124, Regular Session of
1993 (which was enacted as Act 329, SLH 1993), was that "the
effects of manufacturers and jobbers operating retail service
stations is unclear, and this extension would allow the Attorney
General to complete the Attorney General's investigation on the
petroleum industry's practices"; and

     WHEREAS, although the Attorney General submitted reports in
1993 and 1994 to the Legislature regarding gasoline prices,
these
reports are not broad enough to provide the Legislature with
comprehensive data necessary to formulate sound policies that
protect the short-term and long-term interests of Hawaii's
gasoline consumers; now, therefore,

     BE IT RESOLVED by the House of Representatives of the
Eighteenth Legislature of the State of Hawaii, Regular Session
of
1995, that the Legislative Reference Bureau is requested to
conduct a study to report relevant data from and the views of
participants in the petroleum industry in Hawaii.  The data and
views are intended to provide the Legislature with useful
information and data that the Legislature may consider in
formulating policies that protect the short-term and long-term
interests of Hawaii's gasoline consumers by ensuring the:

     (1)  Lowest possible gasoline prices;

     (2)  Availability of automotive services; and

     (3)  Convenient access to retail gasoline outlets;

and

     BE IT FURTHER RESOLVED that the report shall consist of
information obtained by the Legislative Reference Bureau from
the
Hawaii Retail Gasoline Dealers Association (representing lessee
and open dealers), Chevron USA and BHP Hawaii Inc., the Hawaii
Petroleum Marketers Association, the Western States Petroleum
Association, the attorney general, the Department of Commerce
and
Consumer Affairs, the Department of Business, Economic
Development, and Tourism, and the Public Utilities Commission
(provided that any person or entity consulted by the Bureau may
submit data, responses, arguments, or other statements prepared
by appropriate experts or consultants hired by those individuals
or entities) with respect to each of the following:

     (1)  The effects of prohibiting franchise agreements from
          requiring franchisees to purchase all of their gasoline
          from the franchisor or restraining franchisees from
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          dealing with the franchisors' competitors;

     (2)  The effects of limiting the amount of gasoline
          franchisors require franchisees to purchase from the
          franchisor;

     (3)  The effects of prohibiting gasoline allotment under
          exchange agreements on the basis of historical market
          share;

     (4)  Measures to ensure the lowest retail gasoline prices
          for the consumer in the short and long-term;

     (5)  Whether price inversion has occurred or is currently
          occurring in the distribution of gasoline in Hawaii;

     (6)  The effects of encouraging the establishment of a
          public bulk gasoline terminal facility, which could
          make the importation of gasoline cost effective and
          could also lead to a reduction in wholesale gasoline
          prices;

     (7)  The effects of establishing a petroleum regulatory
          commission having general supervision over all
          petroleum manufacturers and jobbers in the State with
          the authority to:

          (A)  Authorize new retail service stations and
               determine whether they may be operated by a
               petroleum manufacturer or jobber;

          (B)  Restrict price increases when prices rise above a
               certain percentage over a benchmark market, as
               determined by rules adopted by the commission
               under chapter 91;

          (C)  Decide when a petroleum manufacturer or jobber may
               convert a retail service station from one operated
               by a gasoline dealer to one operated by a
               petroleum manufacturer or jobber, and vice versa;

          (D)  Decide when a petroleum refiner may close a retail
               service station, to prevent communities from being
               underserved;

          (E)  Review management decisions of petroleum
               manufacturers and jobbers regarding

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               infrastructure, strategic planning, and other
               areas to ensure market compliance; and

          (F)  Review profits for reasonableness in light of the
               need for petroleum utilities to promote a safe
               workplace and ensure environmental protection;

     (8)  The effects of regulating retail gasoline prices of
          company-operated retail service stations;

     (9)  The effects of requiring manufacturers, terminal
          operators, and jobbers of petroleum products to file
          with the State, a tariff listing all prices at which
          the manufacturer or jobber offers goods or services for
          sale or lease;

    (10)  The effects of prohibiting any terminal operator having
          excess capacity from refusing to provide terminalling
          services to any person at the prices published in the
          tariff that the terminal operator filed with the State;

    (11)  The effects of prohibiting manufacturers of petroleum
          products not only from directly operating retail
          service stations, but also from franchising them or
          owning and leasing them to branded dealers
          (divestiture);

    (12)  The effects of establishing a public petroleum products
          storage authority with power to import, store, and
          market petroleum products;

    (13)  The effects of active enforcement of the Petroleum
          Industry Information Reporting Act of 1991 and Act 291,
          Session Laws of Hawaii 1991 (codified as chapter 486I,
          Hawaii Revised Statutes);

    (14)  Measures that could be initiated to reduce the cost of
          conducting business for independent dealers (i.e.,
          lease rent and environmental regulations);

    (15)  The effects of the provision contained in section
          486H-10(a), Hawaii Revised Statutes, that allows
          manufacturers and jobbers to open one company operated
          retail service station for each dealer operated service
          station owned by that manufacturer or jobber, up to a
          maximum of two company owned retail service stations; 

(16) Whether laws in other states prohibit or limit the
          number of retail service stations that may be opened or
          operated by wholesalers, producers, or refiners of
          petroleum products, or their subsidiaries; and

     (17) Whether or not the existing moratorium has resulted in
          lower gasoline prices for consumers;
and

     BE IT FURTHER RESOLVED that the Legislative Reference Bureau
is requested to submit the report to the Legislature no later
than twenty days prior to the convening of the regular session of
1996.  The Legislative Reference Bureau is requested to direct
the various parties to submit all responses in a timely manner to
ensure the ability of the Bureau to compile and print the report
by the date requested; provided that while the Bureau may require
portions of the responses to be submitted earlier, the Bureau is
requested not to require the respondents to submit responses on
all items prior to July 31, 1995; and

     BE IT FURTHER RESOLVED that certified copies of this
Resolution be transmitted to the Director of the Legislative
Reference Bureau, the Attorney General, the Director of Commerce
and Consumer Affairs, the Director of Business, Economic
Development, and Tourism, the Public Utilities Commission, the
Hawaii Retail Gasoline Dealers Association, Chevron USA, BHP
Hawaii Inc., the Hawaii Petroleum Marketers Association, and the
Western States Petroleum Association.

	Appendix B	Table of Contents