Act 295, Session Laws of Hawaii 1991


                                                    S.B. NO. 1757


A Bill for an Act Relating to Prohibition Against Retailing of Motor
Fuel by Refiners.

Be It Enacted by the Legislature of the State of Hawaii:

SECTION 1.  As used in this Act:

"Affiliate" means any person who, other than by means of a franchise,
controls, is controlled by, or is under common control with any other
person. "Direct operation" or "directly operated" means operating
through employees, through an affiliate, or through persons under any
contract which is not a franchise. "Distributor" means any person,
including any affiliate of such person, who either purchases motor fuel
for sale, consignment, or distribution to another, or receives motor
fuel on consignment for consignment or distribution to his or her own
motor fuel accounts or to accounts of his or her supplier, but shall
not include a person who is an employee of, or merely serves as a
common carrier providing transportation service for, such supplier.
"Franchise" means any contract between a refiner and a distributor,
between a distributor and a retailer, under which a refiner or
distributor authorizes or permits a retailer or distributor to use, in
connection with the sale, consignment, or distribution of motor fuel, a
trademark which is owned or controlled by the refiner or by a refiner
which supplies motor fuel to the distributor which authorizes or
permits the use. The term "franchise" includes any of the following:      (1)  Any contract under which a retailer or distributor is
          authorized or permitted to occupy leased marketing
          premises, which premises are to be employed in
          connection with the sale, consignment, or distribution
          of motor fuel under a trademark owned or controlled by
          the refiner or by a refiner which supplies motor fuel
          to the distributor which authorizes or permits the
          occupancy.
     (2)  Any contract pertaining to the supply of motor fuel
          which is to be sold, consigned, or distributed under a
          trademark owned or controlled by a refiner, or under a
          contract which has existed continuously since May 15,
          1973, and pursuant to which, on May 15, 1973, motor
          fuel was sold, consigned, or distributed under a
          trademark owned or controlled on that date by a
          refiner.
     (3)  The unexpired portion of any franchise, as defined by
          paragraph (1) and (2) of this subsection, which is
          transferred or assigned as authorized by the franchise
          or by any applicable law which permits the transfer or
          assignment without regard to any provision of the
          franchise.
"Motor fuel" means gasoline, diesel, and any other fuel of a type
distributed for use as a fuel in self-propelled vehicles primarily for
use on public streets, roads, and highways. "Refiner" means any person
engaged in the refining of crude oil to produce motor fuel, and
includes any affiliate of such person. "Retail motor fuel outlet" means
any location where motor fuel is distributed for purposes other than
resale. "Retailer" means any person who purchases motor fuel for sale
to the general public for ultimate consumption. "Service station" means
any establishment where motor fuel is sold to the general public for
ultimate consumption.

SECTION 2.  The attorney general shall gather and assess authoritative
reports on the subject of the impact on motor fuel prices to consumers
of a prohibition (better known as "divorcement") on direct retailing of
motor fuel by refiners and distributors in competition with franchised
and independent service stations.  The attorney general shall also
collect and analyze Hawaii data on the impact of divorcement on the
price of motor fuel to customers in Hawaii.  The attorney general shall
submit a final report no later than fifteen days prior to the convening
of the 1993 session of the legislature.

SECTION 3.  The department of commerce and consumer affairs shall
gather data and study the impact of direct retailing of motor fuel by
refiners and distributors in competition with franchised and
independent service stations.  The department shall review information
and data related to the preservation of a mixed marketplace in terms of
the level of customer service provided, the maintenance of geographical
dispersed "neighborhood" stations, the level of consumer problems
associated with the various types of stations, and any alternatives
that consumers have for services which are otherwise lost through
market changes.  The department shall submit its final report no later
than fifteen days prior to the convening of the 1993 session of the
legislature.  The department shall submit an interim report setting
forth its research methods and progress to date no later than fifteen
days prior to the convening of the 1992 session of the legislature.

SECTION 4.  This chapter shall not be applied in a manner that would
render such application preempted by the Petroleum Marketing Practices
Act (15 U.S.C. §2801, et. seq.) or other applicable federal or state
law.

SECTION 5.  For a period beginning on the effective date of this Act,
and ending August 1, 1993, refiners and distributors are prohibited
from opening any new direct operated service stations or retail motor
fuel outlets except where:

     (1)  A refiner or distributor has executed a binding lease
          or has acquired real property in fee simple;
     
     (2)  The land involved has been zoned appropriately to
          permit service station use or retail motor fuel outlet
          use and has received a shoreline management area
          permit, if applicable, as of the effective date of this Act; and
     
     (3)  A refiner or distributor has obtained all of the other
          necessary permits to commence construction of real
          property improvements for the purpose of constructing a
          service station or retail motor fuel outlet, prior to
          the effective date of this Act.

Provided, however, a refiner shall be allowed to replace two service
stations or retail motor fuel outlets within the same county where the
refiner or distributor has had to close a station or outlet due to the
termination of the real property lease.

	SECTION 6.  If any provision of this chapter or the application
thereof to any person or circumstances is held invalid, that invalidity
shall not affect other provisions or applications of the chapter which
can be given effect without the invalid provision or application, and
to this end the provisions of this chapter are severable.
	
	SECTION 7.  This Act shall not apply to existing retailing operations
of any refiner or distributor as of the effective date of this Act, but
shall apply to any refiner or distributor establishing a retail
operation on or after the effective date of this Act.
	
	SECTION 8.  This Act shall take effect upon its approval and be
repealed August 1, 1993.

	(Approved June 20, 1991.)
	

	Appendix E	Table of Contents