Establishes petroleum consumers bill of rights that requires oil companies to disclose information to PUC relating to transactions within the State, price schedules, and gross operating revenues, establishes petroleum consumer protection fund, and provides criminal sanctions for violations; sets maximum pre-tax wholesale price for diesel; reduces marketing margin.

A BILL FOR AN ACT

SECTION 1. There is a need to ensure that motor fuel and other petroleum products are readily available at fair prices to all consumers in Hawaii throughout any given year. While oil companies are entitled to receive a fair return on their investments, they should be discouraged from using natural disasters, emergencies, or other events to dramatically increase profitability by raising prices to Hawaii consumers.

The price and availability of petroleum products greatly impact the economy of the State and the quality of life for residents of Hawaii. Consumers are entitled to full disclosure of all factors that effect the price and availability of petroleum products, to allow for long range planning and knowledgeable purchasing decisions. Further, publicly elected officials need greater access to industry information to formulate appropriate public policy regarding the refining, marketing, and distribution of petroleum products within the State.

The legislature further finds that while chapter 486H imposes a maximum pre-tax wholesale price for gasoline, there is no similar provision for diesel fuel. The price of diesel in the State has soared and it is placing an enormous burden on businesses, particularly small businesses.

Finally, the legislature notes that based on monthly figures posted on the United States Department of Energy web-page, the baseline for determining the State's maximum pre-tax wholesale gasoline price from the markets of New York, Los Angeles, and the gulf coast are substantially lower than the maximum price in Hawaii set by chapter 486H. This indicates that the marketing margin set in section 486H-13 may be overly generous.

The purposes of this Act are to:

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

§   -1 Definitions. Unless specifically defined otherwise or unless the context clearly indicates otherwise, as used in this chapter:

"Oil company" means any person, firm, or corporation, including any affiliate of the person, firm, or corporation, that is engaged in the refining of crude oil into petroleum products or in the operation of a terminal facility servicing or exporting bulk quantities of petroleum products in Hawaii outside the boundaries of the State. Each oil company shall be deemed a public service company under this chapter.

"Affiliate of the person, firm, or corporation" means a person, firm, or corporation, that controls or is controlled by an oil company, and includes any subsidiary or affiliated corporation in which the oil company or its shareholders, officers, agents, or employees hold or control more than twenty-five percent of the voting shares.

"Petroleum products" means gasoline, gasoline components, diesel, and residential heating oil, however modified.

"Fund" means the "consumer protection fund" as established in section    -6.

"Class of trade" has the same meaning as used by the industry including, but not limited to, motor fuel retailers and wholesale distributors or jobbers that purchase petroleum products at a price set by the oil company. Retail motor fuel outlets operated by an oil company, its subsidiary, or its affiliate shall be considered in the same class of trade as retailers as defined in section 486H-1. Class of trade does not include end users that are purchasing the petroleum products for their own consumption and not for resale to others.

"Commission" means the public utilities commission.

"Price" means the net purchase price, after adjustment for commission, brokerage, rebate, discount, or any other adjustment. The value of a petroleum product exchanged or transferred between oil companies or motor fuel delivered to a retail motor fuel outlet operated by the same oil company, its subsidiary, or its affiliate shall be considered its price.

"Bulk quantities" means transactions of volumes exceeding the capacity of trucks or vehicles utilizing public roads including, but not limited to petroleum, products transported via rail, ship, barge, pipeline, or other means.

§   -2 Oil company disclosure. Each oil company shall file with the commission and the commission shall expeditiously provide schedules for public inspection, in such form as the commission prescribes, disclosing the following information:

§   -3 Price changes, notice. No change shall be made in any price for petroleum products filed by an oil company in compliance with the requirements of section    -2 without prior notice to the commission. The notice shall plainly state the changes to be made in the schedule then in force. The commission shall provide oil companies with the ability to file notices at any point in time throughout the year. Nothing in this section shall prevent the commission from adopting notice requirements that comply with state or federal antitrust laws.

§   -4 Oil company prohibitions. An oil company shall not:

§   -5 Gross revenues; fees. (a) Every oil company subject to this chapter, on or before the first day of April of each year, shall file with the commission a statement under oath, in a form that the commission prescribes, showing the company's gross operating revenue from intrastate operations for the preceding calendar year.

(b) Every oil company subject to this chapter shall pay to the commission a fee equal to one-tenth of one per cent per $50,000 of gross operating revenue reported, unless decreased as provided in subsection (c). The fee shall in no case be less than $1.

(c) The percentage rates of fees as set forth in subsection (b) may be decreased by the commission for the remainder of a calendar year, by general order entered before March 1 of that year.

(d) The statement filed with the commission under subsection (a) shall be made available for public review by the commission as soon as possible, but no later than           .

(e) All moneys collected under this section shall be paid within thirty days into the petroleum consumer protection fund established by section    -6.

§   -6 Petroleum consumer protection fund. There is created in the commission a special fund to be designated the "petroleum consumer protection fund" and shall be used as a revolving fund for carrying out the purposes of this chapter. Fees collected under section    -5 shall be deposited into the fund. Only the commission or the attorney general may authorize expenditures from the petroleum consumer protection fund for purposes set forth in section    -7. The petroleum consumer protection fund shall be subject to management and allotment procedures under chapters 36 and 37; provided that no legislative appropriation shall be required for expenditures.

§   -7 Allocation and use of fund. (a) Moneys in the petroleum consumer protection fund shall be used for the following purposes and no others:

(b) The money remaining after disbursements made under this section shall be allocated to be used for fulfilling the purposes of this chapter with seventy-five per cent of the moneys allocated to the commission and twenty-five per cent allocated to the attorney general.

§   -8 Powers and duties. (a) The commission and the attorney general shall:

(b) Except as provided in this chapter, the commission shall not have the power to set or establish prices, rates, charges, or compensation for an oil company.

§   -9 Criminal penalties imposed. (a) Any oil company, or any or its employees, who knowingly violates any of the provisions of this chapter, except for those violations enumerated in subsection (b), shall be guilty of a misdemeanor and, upon conviction, shall be punished as provided by law.

(b) Any oil company, or any of its employees, who intentionally commits any of the following shall be guilty of a class C felony and, upon conviction, shall be punished as provided by law:

Each day upon which a violation of any of the provisions of this chapter occurs may be deemed a separate and additional violation. For the purposes of this section, "intentionally" and "knowingly" shall be as defined in section 702-206.

§   -10 Attorney general empowered to restrain prohibited acts-costs-restoration of property. (a) The attorney general may bring an action in the name of the State against any oil company to restrain and prevent any act prohibited or declared unlawful under this chapter. The attorney general, in the discretion of the court, may recover the costs of an action including reasonable attorneys' fees.

The court may make such additional orders of judgment as may be necessary to restore to any person in interest any moneys or property, real or personal, that may have been acquired by means of an act herein prohibited or declared to be unlawful.

(b) Nothing in this chapter shall limit the power of the State to punish any oil company for any conduct that constitutes a crime by statute or at common law."

SECTION 3. Section 486H-1, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

""Diesel" means a clear low sulfur distillate fuel sold and used for the propulsion of motor vehicles."

SECTION 4. Section 486H-13, Hawaii Revised Statutes, is amended as follows:

1. By amending its title and subsections (a) to (c) to read:

"§486H-13 Maximum pre-tax wholesale price for the sale of gasoline[;] and diesel; civil actions. (a) Notwithstanding any law to the contrary, no manufacturer, wholesaler, or jobber may sell regular unleaded, mid-grade, or premium gasoline or diesel to a dealer retail station, an independent retail station, or to another jobber or wholesaler at a price above the maximum pre-tax wholesale prices established pursuant to subsection (b). The commission shall publish the maximum pre-tax wholesale prices by means that shall include the Internet website for the State of Hawaii.

(b) On a weekly basis, the commission shall determine the maximum pre-tax wholesale price of regular unleaded, mid-grade, and premium gasoline and diesel as follows: the maximum pre-tax wholesale price of regular unleaded gasoline and diesel shall consist of the baseline price for regular unleaded gasoline[,] or diesel plus the location adjustment factor, the marketing margin factor, and the zone price adjustment, and for mid-grade and premium gasoline, the applicable mid-grade and premium adjustment factor, such that the maximum pre-tax wholesale gasoline prices reflect and correlate with competitive market conditions.

(c) The baseline price for regular unleaded gasoline and diesel referred to in subsection (b) shall be determined on a weekly basis and shall be equal to the average of:

as reported and published by the Oil Price Information Service for the five business days of the preceding week; provided that the commission, in its discretion, may determine a more appropriate baseline or a more appropriate price information reporting service."

2. By amending subsection (e) to read:

"(e) The marketing margin factor referred to in subsection (b) shall be [$.18] $.08 per gallon or as otherwise determined by the commission and shall thereafter be subject to adjustment pursuant to section 486H-16(a)."

3. By amending subsection (i) to read:

"(i) The commission shall establish zone price adjustments to the maximum pre-tax wholesale regular unleaded, mid-grade, and premium gasoline and diesel prices on a zone by zone basis."

4. By amending subsections (k) and (l) to read:

"(k) The maximum pre-tax wholesale gasoline price imposed by this section shall take effect on September 1, 2005, and the maximum pre-tax wholesale price of diesel imposed by this section shall take effect on September 1, 2006, notwithstanding the lack of the adoption of rules pursuant to this section.

(l) Any manufacturer, wholesaler, or jobber who knowingly violates any requirement imposed or rule adopted under this section, except for subsection (j), shall be subject to a civil penalty, for each violation, equal to three times the amount of the overcharge or $250,000, whichever is greater, and shall be liable for the costs of the action and reasonable attorney's fees as determined by the court. Within two years from the date the commission obtains actual knowledge of the violation, the commission may institute a civil action in a court of competent jurisdiction to collect the civil penalty, the costs, and attorney's fees. In the case of ongoing violation, the two-year period shall start from the date of the last violation. The commission may refer any such action to the attorney general as it deems appropriate. As used in this subsection, "overcharge" means the number of gallons of gasoline or diesel sold, times the wholesale price at which the manufacturer or jobber sold regular unleaded, mid-grade, or premium gasoline or diesel to a dealer retail station, an independent retail station, or another jobber or wholesaler, less taxes assessed, less the maximum pre-tax wholesale [price] prices for gasoline and diesel established pursuant to subsection (b)."

5. By amending subsection (n) to read:

"(n) The commission shall report to the governor and the legislature, in a timely manner, on any significant aberrations, trends, or conditions that may adversely impact the gasoline and diesel consumers in the State."

SECTION 5. Section 486H-15, Hawaii Revised Statutes, is amended by amending subsections (b) and (c) to read as follows:

"(b) Except as provided in subsection (c), the suspension under subsection (a) shall remain in effect until the earlier of:

provided that if the legislature has passed legislation to address the major adverse impact, and the governor vetoes the presented legislation, the suspension shall terminate on the date of that veto, and the maximum pre-tax wholesale gasoline and diesel prices in effect immediately prior to the issuance of the written determination by the governor shall take effect on the day after the date of the veto; and provided further that if no action is taken by the legislature during the regular or special session to address the major adverse impact, then the maximum pre-tax wholesale gasoline and diesel prices in effect immediately prior to the issuance of the written determination by the governor shall take effect on the day after adjournment sine die of the regular or special session.

(c) If the written determination is issued while the legislature is in session, the suspension under subsection (a) shall remain in effect until the earlier of:

provided that if the legislature has passed legislation to address the major adverse impact, and the governor vetoes the presented legislation, the suspension shall terminate on the date of that veto, and the maximum pre-tax wholesale gasoline and diesel prices in effect immediately prior to the issuance of the written determination by the governor shall take effect on the day after the date of the veto; and provided further that if no action is taken by the legislature during the regular or special session to address the major adverse impact, then the maximum pre-tax wholesale gasoline and diesel prices in effect immediately prior to the issuance of the written determination by the governor shall take effect on the day after adjournment sine die of the regular or special session."

SECTION 6. Section 486H-16, Hawaii Revised Statutes, is amended to read as follows:

"§486H-16 Adjustments. (a) A manufacturer, wholesaler, or jobber may petition the commission to adjust the maximum pre-tax wholesale price of regular unleaded, mid-grade, or premium gasoline or diesel in the event of a change in the value of the baseline price for regular unleaded gasoline[,] or diesel, the location adjustment factor, the marketing margin factor, the mid-grade adjustment factor, the premium adjustment factor, or a zone price adjustment. The petitioner shall bear the burden of proof to establish by clear and convincing evidence the need for and the amount of any adjustment. The adjustments shall be determined as follows:

(b) If the commission adjusts the maximum pre-tax wholesale gasoline or diesel prices, the commission shall publish its findings and the adjusted prices by means that shall include the Internet website for the State of Hawaii.

(c) Regardless of whether a petition has been filed and notwithstanding a determination of the adjustments made pursuant to subsection (a), the commission, in its discretion, may make such other and further adjustments deemed necessary and appropriate to establish maximum pre-tax wholesale gasoline and diesel prices that reflect and correlate with competitive market conditions."

SECTION 7. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

SECTION 8. If any provision of this Act, or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act, which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 9. This Act shall take effect upon its approval.