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H.R. 130 (95th): Petroleum Marketing Practices Act

The text of the bill below is as of Jun 19, 1978 (Passed Congress).


92 STAT. 322                         PUBLIC LAW 95-297—JUNE 19, 1978


                 Public Law 95-297
                 95th Congress
                                                        An Act
 June 19, 1978   To provide for the protection of franchised distributors and retailers of motor
   [H.R. 130]      fuel and to encourage conservation of automotive gasoline and competition in
                   the marketing of such gasoline by requiring t h a t information regarding the
                   octane rating of automotive gasoline be disclosed to consumers.

                    Be it enacted hy the Senate and Ilov^e of Representatives of the
Petroleum        United States of America in Congress assembled, That this Act may be
Marketing        cited as the "Petroleum Marketing Practices Act".
Practices Act.
15 u s e 2801                                   TABLE OF CONTENTS
note.
                                        TITLE I—FRANCHISE PROTECTION
                 Sec.   101.   Definitions.
                 Sec.   102.   Franchise relationship; termination and nonrenewal.
                 Sec.   103.   Trial franchises and interim franchises; nonrenewaL
                 Sec.   104.   Notification of termination or nonrenewal.
                 Sec.   105.   Enforcement.
                 Sec.   106.   Relationship of this title to State law.
                                          T I T L E II--OCTANE DISCLOSURE
                 Sec.   201.   Definitions.
                 Sec.   202.   Octane testing and disclosure requirements.
                 Sec.   203.   Administration and enforcement.
                 Sec.   204.   Relationship of this title to State law.
                 Sec.   205.   Effective dates.
                 TITLE III—STUDY OF SUBSIDIZATION OF MOTOR FUEL MARKETING
                 Sec. 301. Study of subsidization of motor fuel marketing.

                                   TITLE I—FRANCHISE PROTECTION
                                                      DEFINITIONS

15 use 2801.       SEC. 101. As used in this title:
                    (1) (A) The term "franchise" means any contract—
                         (i) between a refiner and a distributor,
                         (ii) between a refiner and a retailer,
                         (iii) between a distributor and another distributor, or
                         (iv) between a distributor and a retailer,
                 under which a refiner or distributor (as the case may be) 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 such refiner or by a refiner which supplies
                 motor fuel to the distributor which authorizes or permits such use.
                    (B) The term "franchise" includes—
                         (i) any contract under which a retailer or distributor (as the
                      case may be) is authorized or permitted to occupy leased market-
                      ing premises, which premises are to be employed in connection
                      with the sale, consignment, or distribution of motor fuel under a
                      trademark which is owned or controlled by such refiner or by a
                      refiner which supplies motor fuel to the distributor which author-
                      izes or permits such occupancy;

PUBLIC LAW 95-297—JUNE 19, 1978 92 STAT. 323 (ii) any contract pertaining to the supply of motor fuel which is to be sold, consigned or distributed— (I) under a trademark owned or controlled by a refiner; or ( I I ) 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 such date by a refiner; and (iii) the unexpired portion of any franchise, as defined by the preceding provisions of this paragraph, which is transferred or assigned as authorized by the provisions of such franchise or by any applicable provision of State law which permits such transfer or assignment without regard to any provision of the franchise. (2) The term "franchise relationship" means the respective motor fuel marketing or distribution obligations and responsibilities of a franchisor and a francliisee which result from the marketing of motor fuel under a franchise. (3) The term "franchisor'' means a refiner or distributor (as the case may be) who authorizes or permits, under a franchise, a retailer or distributor to use a trademark in connection with the sale, consign- ment, or distribution of motor fuel. (4) The term "franchisee" means a retailer or distributor (as the case may be) AVIIO is authorized or permitted, under a franchise, to use a trademark in connection with the sale, consignment, or distribu- tion of motor fuel. (5) The term "refiner" means any person engaged in the refining of crude oil to produce motor fuel, and includes any affiliate of such person. (6) The term "distributor" means any person, including any affiliate of such person, who— (A) purchases motor fuel for sale, consignment, or distribution to another; or (B) receives motor fuel on consignment for consignment or distribution to his own motor fuel accounts or to accounts of his 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. •'-J i i (7) The term "retailer" means any person who purchases motor fuel for sale to the general public for ultimate consumption. (8) The term "marketing premises" means, in the case of any franchise, premises which, under such franchise, are to be employed by the franchisee in connection with the sale, consignment, or distri- bution of motor fuel. (9) The term "leased marketing premises" means marketing prem- ises owned, leased, or in any way controlled by a franchisor and which the franchisee is authorized or permitted, under the franchise, to employ in connection with the sale, consignment, or distribution of motor fuel. (10) The term "contract" means any oral or written agreement. For supply purposes, delivery levels during the same month of the previous year shall be prima facie evidence of an agreement to deliver such levels. (11) The term "trademark" means any trademark, trade name, service mark, or other identifying symbol or name. (12) The term "motor fuel" means gasoline and diesel fuel of a type distributed for use as a fuel in self-propelled vehicles designed primarily for use on public streets, roads, and highways.
92 STAT. 324 PUBLIC LAW 95-297—JUNE 19, 1978 (13) The term "failure" does not include— (A) any failure which is only technical or unimportant to the franchise relationship; or (B) any failure for a cause beyond the reasonable control of the franchisee. (14) The terms "fail to renew" and "nonrenewal'' mean, with respect to any franchise relationship, a failure to reinstate, continue, or extend the franchise relationship— (A) at the conclusion of the term, or on the expiration date, stated in the relevant franchise; (B) at any time, in the case of the relevant franchise which does not state a term of duration or an expiration date; or (C) following a termination (on or after the date of enact- ment of this Act) of the relevant franchise which was entered into prior to such date of enactment and has not been renewed after such date. (15) The term "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, (16) The term "relevant geographic market area" includes a State or a standard metropolitan statistical area as periodically established by the Office of Management and Budget. (17) The term "termination" includes cancellation. (18) The term "commerce" means any trade, traffic, transportation, exchange, or other commerce— (A) between any State and any place outside of such State; or (B) which affects any trade, transportation, exchange, or other commerce described in subparagraph (A). (19) The term "State" means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, American Samoa, Guam, and any other commonwealth, ter- ritory, or possession of the United States. FRANCHISE R E L A T I O N S H I P ; TERMINATION AND NONRENEWAL 15 DSC 2802. SEC. 102. (a) Except as provided in subsection (b) and section 103, no franchisor engaged in the sale, consignment, or distribution of motor fuel in commerce may— (1) terminate any franchise (entered into or renewed on or after the date of enactment of this Act) prior to the conclusion of the term, or the expiration date, stated in the franchise; or (2) fail to renew any franchise relationship (without regard to the date on which the relevant fianchise was entered into or renewed). (b) (1) Any franchisor may terminate any franchise (entered into or renewed on or after the date of enactment of this Act) or may fail to renew any franchise relationship, if— (A) the notification rec^uirements of section 104 are met; and (B) such termination is based upon a ground described in paragraph (2) or such nonrenewal is based upon a ground described in paragraph (2) or (3). (2) For purposes of this subsection, the following are grounds for termination of a franchise or nonrenewal of a franchise relationship: (A) A failure by the franchisee to comply with any provision of the franchise, which provision is both reasonable and of
PUBLIC LAW 95-297—JUNE 19, 1978 92 STAT. 325 material significance to the franchise relationship, if the franchisor first acquired actual or constructive knowledge of such failure— (i) not more than 120 days prior to the date on which notification of termination or nonrenewal is given, if notifica- tion is given pursuant to section 104 ( a ) ; or (ii) not more than 60 days prior to the date on which notification of termination or nonrenewal is given, if less than 90 days notification is given pursuant to section 104(b) (1). (B) A failure by the franchisee to exert good faith efforts to carry out the provisions of the franchise, if— (i) the franchisee was apprised by the franchisor in writing of such failure and was afforded a reasonable opportunity to exert good faith efforts to carry out sucli provisions; and (ii) such failure thereafter continued within the period which began not more than 180 days before the date notifica- tion of termination or nonrenewal was given pursuant to section 104. (C) The occurrence of an event which is relevant to the fran- chise relationship and as a result of which termination of the franchise or nonrenewal of the franchise relationship is reason- able, if such event occure during the period the franchise is in effect and the franchisor first acquired actual or constructive knowledge of such occurrence— (i) not more than 120 days prior to the date on which notification of termination or nonrenewal is given, if noti- fication is given pursuant to section 104(a) ; or (ii) not more than 60 days piior to the date on which noti- fication of termination or nonrenewal is given, if less than 90 days notification is given pursuant to section 104(b) (1). (D) An agreement, in writing, between the franchisor and the franchisee to terminate the franchise or not to renew the franchise ^ relationship, if— (i) such agreement is entered into not more than 180 days prior to the date of such termination or, in the case of non- renewal, not more than 180 days prior to the conclusion of the term, or the expiration date, stated in the franchise; (ii) the franchisee is promptly provided wdth a copy of such agreement,, together with the summary statement described in section 104(d) ; and (iii) within 7 days after the date on which the franchisee is provided a copy of such agreement, the franchisee has not posted by certified mail a written notice to the franchisor repudiating such agreement. (E) In the case of any franchise entered into prioi- to the date of the enactment of this Act and in the case of any franchise entered into or renewed on or after such date (the tenn of which is 3 years or longer, or with respect to which the franchisee was offered a term of 3 years or longer), a determination made by the franchisor in good faith and in the normal course of business to withdraw from the marketing of motor fuel through retail outlets in the relevant geographic market area in which the marketing premises are located, if— (i) such determination— (I) was made after the date such franchise was entered into or renewed, and
92 STAT. 326 PUBLIC LAW 95-297—JUNE 19, 1978 (II) was based upon the occurrence of changes in relevant facts and circumstances after such date; (ii) the termination or nonrenewal is not for the purpose of converting the premises, which are the subject of the fran- chise, to operation by employees or agents of the franchisor for such franchisor's own account; and (iii) in the case of leased marketing premises— (I) the franchisor, during the 180-day period after notification was given pursuant to section 104, either made a bona fide offer to sell, transfer, or assign to the franchisee such franchisor's interests in such premises, or, if applicable, offered the franchisee a right of first refusal of at least 45 days duration of an offer, made by another, to purchase such franchisor's interest in such premises; or (II) in the case of the sale, transfer, or assignment to another person of the franchisor's interest in such prem- ises in connection wnth the sale, transfer, or assignment to such other p e r ^ n of the franchisor's interest in one or more other marketing premises, if such other person offers, in good faith, a franchise to the franchisee on terms and conditions which are not discriminatory to the franchisee as compared to franchises then currently being offered by such other person or franchises then in effect and with respect to w^hich such other person is the franchisor. Grounds for (3) For purposes of this subsection, the following are grounds for nonrenewal. nonrenewal of a franchise relationship: (A) The failure of the franchisor and the franchisee to agree to changes or additions to the provisions of the franchise, if— (i) such changes or additions are the result of determina- tions made by the franchisor in good faith and in the normal course of business; and (ii) such failure is not the result of the franchisor's insist- ence upon such changes or additions for the purpose of pre- venting the renewal of the franchise relationship. (B) The receipt of numerous bona fide customer complaints by the franchisor concerning the franchisee's operation of the marketing premises, if— (i) the franchisee was promptly apprised of the existence and nature of such complaints following receipt of such com- plaints by the franchisor; and (ii) if such complaints related to the condition of such premises or to the conduct of any employee of such franchisee, the franchisee did not promptly take action to cure or correct the basis of such complaints. (C) A failure by the franchisee to operate the marketing prem- ises in a clean, safe, and healthful manner, if the franchisee failed to do so on two or more previous occasions and the franchisor notified the franchisee of such failures. (D) In the case of any franchise entered into prior to the date of the enactment of this Act (the unexpired term of which, on such date of enactment, is 3 years or longer) and, in the case of any franchise entered into or renewed on or after such date (the term of which was 3 years or longer, or with respect to which the franchisee was offered a term of 3 years or longer), a determina-
PUBLIC LAW 95-297—JUNE 19, 1978 92 STAT. 327 tion made by the franchisor in good faith and in the normal course of business, if— (i) such determination is— (I) to convert the leased marketing premises to a use other than the sale or distribution of motor fuel, ( I I ) to materially alter, add to, or replace such premises, ( I I I ) to sell such premises, or (IV) that renewal of the franchise relationship is likely to be uneconomical to the franchisor despite any reasonable changes or reasonable additions to the pro- visions of the franchise which may be acceptable to the franchisee; (ii) with respect to a determination referred to in sub- clause (II) or ( l Y ) , such determination is not made for the purpose of converting the leased marketing premises to opera- tion by employees or agents of the franchisor for such franchisor's own account; and (iii) in the case of leased marketing premises such fran- chisor, during the 90-day period after notification was given pursuant to section 104, either— (I) made a bona fide offer to sell, transfer, or assign to the franchisee such franchisor's interests in such prem- ises; or (II) if applicable, offered the franchisee a right of first refusal of at least 45-days duration of an offer, made by another, to purchase such franchisor's interest in such premises. (c) As used in subsection (b) (2) (C), the term "an event which is Definition, relevant to the franchise relationship and as a result of which ter- mination of the franchise or nonrenewal of the franchise relationship is T'easonable" includes events such as— (1) fraud or criminal misconduct by the franchisee relevant to the operation of the marketing premises; (2) declaration of bankruptcy or judicial determination of insolvency of the franchisee; ('8) continuing severe physical or mental disability of the fran- chisee of at least 3 months duration which renders the franchisee unable to provide for the continued proper operation of the marketing premises; (4) loss of the franchisor's right to grant possession of the leased marketing premises through expiration of an underlying lease, if the franchisee was notified in writing, prior to the com- mencement of the term of the then existinsi- franchise— (A) of the duration of the underlying lease, and (B) of the fact that such underlying lease might expire and not be renewed during the term of such franchise (in the case of termination) or at the end of such term (in the case of nonrenewal); (5) condemnation or other taking, in whole or in part, of the marketing premises pursuant to the power- of eminent domain; (6) loss of the franchisor's right to grant the right to use the trademark which is the subject of the franchise, unless such loss was due to trademark abuse, violation of Federal or State law, or other fault or nesfligence of the franchisor, which such abuse, vio-
92 STAT. 328 PUBLIC LAW 95-297—JUNE 19, 1978 lation, or other fault or negligence is related to action taken in bad faith by the franchisor; (7) destruction (other than by the franchisor) of all or a sub- stantial part of the marketing premises; (8) failure by the franchisee to pay to the franchisor in a timely manner when due all sums to which the franchisor is legally entitled; (9) failure by the franchisee to operate the marketing premises for— (A) 7 consecutive days, or (B) such lesser period which under the facts and circum- stances constitutes an unreasonable period of time; (10) willful adulteration, mislabeling or misbranding of motor fuels or other trademark violations by the franchisee; (11) knowing failure of the franchisee to comply with Federal, State, or local laws or regulations relevant to the operation of the marketing premises; and (12) conviction of the franchisee of any felony involving moral turpitude. (d) In the case of any termination of a franchise (entered into or renewed on or after the date of enactment of this Act), or in the case of any nonrenewal of a franchise relationship (without regard to the date on which such franchise relationship was entered into or renewed) — (1) if such termination or nonrenewal is based upon an event described in subsection (c) (5), the franchisor shall fairly appor- tion between the franchisor and the franchisee compensation, if any, received by the franchisor based upon any loss of business opportunity or good will; and (2) if such tennination or nonrenewal is based upon an event described in subsection (c) (7) and the leased marketing premises are subsequently rebuilt or replaced by the franchisor and operated under a franchise, the franchisor shall, within a reason- able period of time, grant to the franchisee a right of first refusal of the franchise under which such premises are to be operated. TRIAL FRANCHISES AND I N T E R I M F R A N C H I S E S ; NONRENEWAL 15 use 2803. SEC. 103. (a) The provisions of section 102 shall not apply to the nonrenewal of any franchise relationship— (1) under a trial franchise; or (2) under an interim franchise. Definitions. (b) For purposes of this section— (1) The term "trial franchise" means any franchise— (A) which is entered into on or after the date of enact- ment of this Act; (B) the franchisee of which has not previously been a party to a franchise with the franchisor; (C) the initial term of which is for a period of not more than 1 year; and (D) which is in writing and states clearly and conspicu- ously— (i) that the franchise is a trial franchise; (ii) the duration of the initial term of the franchise; (iii) that the franchisor may fail to renew the fran- chise relationship at the conclusion of the initial term stated in the franchise by notifying the franchisee, in
PUBLIC LAW 95-297—JUNE 19, 1978 92 STAT. 329 accordance with the provisions of section 104, of the franchisor's intention not to renew the franchise rela- tionship; and (iv) that the provisions of section 102, limiting the right of a franchisor to fail to renew a franchise relation- ship, are not applicable to such trial franchise. (2) The term "trial franchise" does not include any unexpired period of any term of any franchise (other than a trial franchise, as defined by paragraph (1)) which was transferred or assigned by a franchisee to the extent authorized by the provisions of the franchise or any applicable provision of State law which permits such transfer or assignment, without regard to any provision of the franchise. (3) The term "interim franchise" means any franchise— (A) which is entered into on or after the date of the enact- ment of this Act; (B) the term of which, when combined with the terms of all prior interim franchises between the franchisor and the franchisee, does not exceed 3 years; (C) the effective date of which occurs immediately a,fter the expiration of a prior franchise, applicable to the market- ing premises, which was not renewed if such nonrenewal— (i) was based upon a determination described in sec- tion 102(b) (2) ( E ) , and (ii) the requirements of section 102(b)(2)(E) were satisfied; and (D) which is in writing and states clearly and ' conspicuously— ^i) that the franchise is an interim franchise; (ii) the duration of the franchise; and (iii) that the franchisor may fail to renew the fran- chise at the conclusion of the term stated in the franchise based upon a determination made by the franchisor in good faith and in the normal course of business to with- draw from the marketing of motor fuel through retail outlets in the relevant geographic market area m which the marketing premises are located if the requirements of action 102(b) (2) (E) (ii) and (iii) are satisfied, (c) If the notification requirements of section 104 are met, any franchisor may fail to renew any franchise relationship— (1) under any trial franchise, at the conclusion of the initial term of such trial franchise; and (2) under any interim franchise, at the conclusion of the term of such interim franchise, if— (A) such nonrenewal is based upon a determination described in section 102(b) (2) ( E ) ; and (B) the requirements of section 102(b)(2)(E) (ii) and (iii) are satisfied. , NOTIFICATION OF TERMINATION OR NONRENEWAL SEC. 104. (a) Prior to termination of any franchise or nonrenewal 15 USC 2804, of any franchise relationship, the franchisor shall furnish notification of such termination or such nonrenewal to the franchisee who is a party to such franchise or such franchise relationship— (1) in the manner described in subsection (c) ; and
92 STAT. 330 PUBLIC LAW 95-297—JUNE 19, 1978 (2) except as provided in subsection (b), not less than 90 days prior to the date on which such termination or nonrenewal takes effect. (b) (1) In circumstances in which it would not be reasonable for the franchisor to furnish notification, not less than 90 days prior to the date on which termination or nonrenewal takes effect, as required by subsection (a) (2)— (A) such franchisor shall furnish notification to the franchisee affected thereby on the earliest date on which furnishing of such notification is reasonably practicable; and (B) in the case of leased marketing premises, such franchisor— (i) may not establish a new franchise relationship with respect to such premises before the expiration of the 30-day period which begins— (I) on the date notification was posted or personally delivered, or (II) if later, on the date on which such termination or nonrenewal takes effect; and (ii) may, if permitted to do so by the franchise agree- ment, repossess such premises and, in circumstances under which it would be reasonable to do so, operate such premises through employees or agents. (2) In the case of any termination of any franchise or any non- renewal of any franchise relationship pursuant to the provisions of section 102(b) (2) (E) or section 103(c) (2), the franchisor shall— (A) furnish notification to the franchisee not less than 180 days prior to the date on which such termination or nonrenewal takes effect; and (B) promptly provide a copy of such notification, together with a plan describing the schedule and conditions under which the franchisor will withdraw from the marketing of motor fuel through retail outlets in the relevant geographic area, to the Governor of each State which contains a portion of such area. (c) Notification under this section— (1) shall be in writing; (2) shall be posted by certified mail or personally delivered to the franchisee; and (3) shall contain— (A) a statement of intention to terminate the franchise or not to renew the franchise relationship, together with the reasons therefor; (B) the date on which such termination or nonrenewal takes effect; and (C) the summary statement prepared under subsection (d). Publication in (d) (1) Not later than 30 days after the date of enactment of this Federal Register. Act, the Secretary of Energy shall prepare and publish in the Federal Register a simple and concise summary of the provisions of this title, including a statement of the respective responsibilities of, and the remedies and relief available to, any franchisor and franchisee under this title. (2) In the case of summaries required to be furnished under the provisions of section 102(b) (2) (D) or subsection (c) (3) (C) of this section before the date of publication of such summary in the Federal Register, such summary may be furnished not later than 5 days after it is so published rather than at the time required under such provisions.
PUBLIC LAW 95-297—JUNE 19, 1978 92 STAT. 331 ENFORCEMENT SEC. 105. (a) If a franchisor fails to comply with the requirements 15 use 2805. of section 102 or 103, the franchisee may maintain a civil action against such franchisor. Such action may be brought, without regard to the Jurisdiction, amount in controversy, in the district court of the United States in any judicial district in which the principal place of business of such franchisor is located or in which such franchisee is doing business, except that no such action may be maintained unless commenced within 1 year after the later of— (1) the date of termination of the franchise or nonrenewal of the franchise relationship; or (2) the date the franchisor fails to comply with the require- ments of section 102 or 103. (b) (1) In any action under subsection (a), the court shall grant such equitable relief as the court determines is necessary to remedy the effects of any failure to comply with the requirements of section 102 or 103, including declaratory judgment, mandatory or prohibitive injunc- tive relief, and interim equitable relief. (2) Except as provided in paragraph (3), in any action under sub- Preliminary section (a), the court shall grant a preliminary injunction if— injunction. (A) the franchisee shows— (i) the franchise of which he is a party has been terminated or the franchise relationship of which he is a party has not been renewed, and (ii) there exist sufficiently serious questions going to the merits to make such questions a fair ground for litigation; and (B) the court determines that, on balance, the hardships imposed upon the franchisor by the issuance of such preliminary injunctive relief will be less than the hardship which would be imposed upon such franchisee if such preliminary injunctive relief were not granted. (3) Nothing in this subsection prevents any court from requiring the franchisee in any action under subsection (a) to post a bond, in an amount established by the court, prior to the issuance or continuation of any equitable relief. (4) In any action under subsection (a), the court need not exercise its equity powers to compel continuation or renewal of the franchise relationship if such action was commenced— (A) more than 90 days after the date on which notification pursuant to section 104(a) was posted or personally delivered to the franchisee; (B) more than 180 days after the date on which notification pursuant to section 104(b) (2) was posted or personally delivered to the franchisee; or (C) more than 30 days after the date on which the termination of such franchise or the nonrenewal of such franchise relationship takes effect if less than 90 days notification was provided pursuant to section 104(b)(1). (c) In any action under subsection (a), the franchisee shall have the burden of proving the termination of the franchise or the non- renewal of the franchise relationship. The franchisor shall bear the burden of going forward with evidence to establish as an affirmative defense that such termination or nonrenewal was permitted under section 102(b) or 103, and, if applicable, that such franchisor complied with the requirements of section 102 (d). 39-194 O-80-pt. 1 25 : QL3
92 STAT. 332 PUBLIC LAW 95-297—JUNE 19, 1978 Damages. (d) (1) If the franchisee prevails in any action under subsection (a), such franchisee shall be entitled— (A) consistent with the Federal Rules of Civil Procedure, to actual damages; •' ' (B) in the case of any such action which is based upon conduct of the franchisor which was in willful disregard of the require- ments of section 102 or 103, or the rights of the franchisee there- under, to exemplary damages, where appropriate; and (C) to reasonable attorney and expert witness fees to be paid by the f ranchisoi*, unless the court determines that only nominal damages are to be awarded to such franchisee, in which case the court, in its discretion, need not direct that such fees be paid by the franchisor. (2) The question of whether to award exemplary damages and the amount of any such award shall be determined by the court and not by a jury. (3) In any action under subsection (a), the court may, in its discre- tion, direct that reasonable attorney and expert witness fees be paid by the franchisee if the court finds that such action is frivolous. (e) (1) In any action under subsection (a) with respect to a failure of a franchisor to renew a franchise relationship in compliance with the requirements of section 102, the court may not compel a continua- tion or renewal of the franchise relationship if the franchisor demon- strates to the satisfaction of the court that— (A) the basis for such nonrenewal is a determination made by the franchisor in good faith and in the normal course of business— (i) to convert the leased marketing premises to a use other than the sale or distribution of motor fuel, (ii) to materially alter, add to, or replace such premises, (iii) to sell such premises, (iv) to withdraw from the marketing of motor fuel through retail outlets in the relevant geographic market area in which the marketing premises are located, or (v) that renewal of the franchise relationship is likely to 'be uneconomical to the franchisor despite any reasonable ' changes or reasonable additions to the provisions of the fran- chise which may be acceptable to the franchisee; and (B) the requirements of section 104 have been complied with. (2) The provisions of paragraph (1) shall not affect any right of any franchisee to recover actual damages and reasonable attorney and expert witness fees under subsection (d) if such nonrenewal is pro- hibited by section 102. RELATIONSHIP OF THIS TITLE TO STATE LAW 15 use 2806. SEC. 106. (a) To the extent that any provision of this title applies to the termination (or the furnishing of notification with respect thereto) of any franchise, or to the nonrenewal (or the furnishing of notification with respect thereto) of any franchise relationship, no State or any political subdivision thereof may adopt, enforce, or con- tinue in effect any provision of any law or regulation (including any remedy or penalty applicable to any violation thereof) with respect to termination (or the furnishing of notification with respect thereto) of any such franchise or to the nonrenewal (or the furnishing of notifica- ': tion with respect thereto) of any such franchise relationship unless such provision of such law or regulation is the same as the applicable provision of this title.
PUBLIC LAW 95-297—JUNE 19, 1978 92 STAT. 333 (b) Nothing in this title authorizes any transfer or assignment of any franchise or prohibits any transfer or assignment of any fran- chise as authorized by the provisions of such franchise or by any appli- cable provision of State law which permits such transfer or assignment without regard to any provision of the franchise. T I T L E II—OCTANE DISCLOSURE DEriNITIONS SEC. 201. As used in this title: 15 USC 2821. (1) The term "octane rating" means the rating of the anti- knock characteristics of a grade or type of automotive gasoline as determined by dividing by 2 the sum of the research octane number plus the motor octane number, unless another procedure is prescribed under section 203 (c) (3), in which case such term means the rating of such characteristics as determined under the pro- cedure so prescribed. (2) The terms "research octane number" and "motor octane number" have the meanings given such terms in the specifications of the American Society for Testing and Materials (ASTM) entitled "Standard Specifications for Automotive Gasoline" des- ignated D 439 (as in effect on the date of the enactment of this Act) and, with respect to any grade or type of automotive gaso- line, are determined in accordance with test methods set forth in ASTM standard test methods designated D 2699 and D 2700 (as in effect on such date). ' ''' (3) The term "knock" means the combustion of a fuel spon- taneously in localized areas of a cylinder of a spark-ignition engine, instead of the combustion of such fuel progressing from the spark. (4) The term "gasoline retailer" means any person who markets automotive gasoline to the general public for ultimate consumption. (5) The term "refiner" means any person engaged in— (A) the refining of crude oil to produce automotive gaso- line; or (B) the importation of automotive gasoline. (6) The term "automotive gasoline" means gasoline of a type distributed for use as a fuel in any motor vehicle. (7) The term "motor vehicle" means any self-propelled four- wheeled vehicle, of less than 6,000 pounds gross vehicle weight, which is designed primarily for use on public streets, roads, and highways. (8) The term "new motor vehicle" means any motor vehicle the equitable or legal title to which has not previously been trans- ferred to an ultimate purchaser. (9) The term "ultimate purchaser" means, with respect to any item, the first person who purchases such item for purposes other than resale. (10) The term "manufacturer" means any person who imports, manufactures, or assembles motor vehicles for sale. (11) The term "octane requirement" means, with respect to automotive gasoline for use in a motor vehicle or a class thereof, imported, manufactured, or assembled by a manufacturer, the minimum octane rating of such automotive gasoline which such .L manufacturer recommends for the efficient operation of siich
92 STAT. 334 PUBLIC LAW 95-297—JUNE 19, 1978 motor vehicle, or a substantial portion of such class, without knocking. (12) The teiin "model year" means a manufacturer's annual production period (as determined by the Federal Trade Commis- sion) for motor vehicles or a class of motor vehicles. If a manu- facturer has no annual production period, the term "model year" ^ means the calendar year. (13) The term "commerce" means any trade, traffic, transporta- tion, exchange, or other commerce— (A) between any State and any place outside of such laj State; or (B) which affects any trade, transportation, exchange, or other commerce described in subparagraph (A). (14) Tlie term "State" means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, American Samoa, Guam, and any other common- wealth, territory, or possession of the United States. (15) the term "person", for purposes of applying any provi- sion of the Federal Trade Commission Act with respect to any provision of this title, includes a partnership and a corporation. (16) The term "distributor" means any person who receives gasoline and distributes such gasoline to another person other than the ultimate purchaser. OCTANE TESTING AND DISCLOSURE REQUIREMENTS 15 use 2822. SEC. 202. (a) Each refiner who distributes automotive gasoline in commerce shall— (1) determine the octane rating of any such gasoline; and (2) if such refiner distributes such gasoline to any person other than the ultimate purchaser, certify, consistent with the deter- mination made under paragraph (1), the octane rating of such gasoline. (b) Each distributor who receives automotive gasoline, the octane rating of which is certified to him under this section, and distributes such gasoline in commerce to another person other than the ultimate purchaser shall certify to such other person the octane rating of such gasoline consistent with— (1) the octane rating of such gasoline certified to such distributor; or (2) if such distributor elects (at such time and in such manner as the Federal Trade Commission may, by rule, prescribe), the octane rating of such gasoline determined by such distributor. (c) Each gasoline retailer shall display in a clear and conspicuous manner, at the point of sale to ultimate purchasers of automotive gaso- line, the octane rating of such gasoline, which octane rating shall be consistent with— (1) the octane rating of such gasoline certified to such retailer under subsection (a) (2) or ( b ) ; (2) if such gasoline retailer elects (at such time and in such ,, , manner as the Federal Trade Commission may, by rule, prescribe), the octane rating of such gasoline determined by such retailer for ,' such gasoline; or (3) if such gasoline retailer is a refiner, the octane rating of such gasoline determined under subsection (a) (1). Rules. (d) The Federal Trade Commission shall, by rule, prescribe require- ments, applicable to any manufacturer of new motor vehicles, with
PUBLIC LAW 95-297—JUNE 19, 1978 92 STAT. 335 respect to the display on each such motor vehicle (or representation in connection with the sale of each such motor vehicle) of the octane requirement of such motor vehicle. (e) No person who distributes automotive gasoline in commerce may make any representation respecting the antiknock characteristics of such gasoline unless such representation fairly discloses the octane rating of such gasoline consistent with such gasoline's octane rating as certified to or determined by such person under the foregoing provi- sions of this section. (f) For purposes of this section, the octane rating of any automotive gasoline shall be considered to be certified, displayed, or represented by any person consistent with the rating certified to, or determined by, such person— (1) in the case of automotive gasoline which consists of a blend of two or more quantities of automotive gasoline of differing octane ratings, only if the rating certified, displayed, or repre- sented by such person is the average of the octane ratings of such quantities, weighted by volume; or (2) in the case of gasoline which does not consist of such a blend, only if the octane rating such person certifies, displays, or represents is the same as the octane rating of such gasoline certi- fied to, or determined by, such person. (g) The foregoing provisions of this section shall not apply— (1) to any representation (by display at the point of sale or by other means) of any characteristics of any automotive gasoline other than its octane rating; or (2) to the identification of automotive gasoline at the point of sale (or elsewhere) by the trademark, trade name, or other iden- tifying symbol or mark used in connection with the sale of such gasoline. (h) Any display or representation, with respect to the octane requirement of any motor vehicle, required to be made under any rule prescribed under subsection (d) shall not create an express or implied warranty under State or Federal law that any automotive gasoline the octane rating of which equals or exceeds such octane requirement— (1) may be used as a fuel in all motor vehicles of the same class as that motor vehicle without knocking; or (2) may be used as a fuel in such motor vehicle under all operating conditions without knocking. ADMINISTRATION^ AND ENFORCEMENT SEC. 203. (a) The Federal Trade Commission shall have procedural, Rules. investigative, and enforcement powers, including the power to issue Reports. procedural rules in enforcing compliance with the requirements of 15 use 2823. this title and rules prescribed pursuant to the requirements of this title, to further define terms used in this title, and to require the filing of reports, the production of documents, and the appearance of wit- nesses, as though the applicable terms and conditions of the Federal Trade Commission Act were part of this title. 15 use 58. (b)(1) The Environmental Protection Agency shall— Tests. (A) conduct field testing of the octane rating of automotive gasoline, comparing the tested octane rating of gasoline at retail outlets with the octane rating posted at those outlets ; (B) certify the results of such tests and comparisons to the Federal Trade Commission; and
92 STAT. 336 PUBLIC LAW 95-297—JUNE 19, 1978 (C) notify the Federal Trade Commission of any failure to post the octane rating discovered in the course of such field testing. Interagency (2) The Federal Trade Commission may enter into interagency agreements. agreements with the Environmental Protection Agency and such other agencies of the United States as the Commission determines appropri- ate for the purpose of assuring enforcement of the provisions of this title in a manner which is consistent with— (A) minimizing the cost of field inspection and related com- pliance activities; and (B) reducing duplication of similar or related field compliance activities performed by agencies of the United States. Rules, (c) (1) Not later than 6 months after the date of the enactment of this Act, the Federal Trade Commission shall, by rule, prescribe and make effective— (A) a uniform method by which a person may certify to another the octane rating of automotive gasoline; and (B) a uniform method of displaying the octane rating of auto- motive gasoline at the point of sale to ultimate purchasers. (2) Effective on and after the effective date of the rule prescribed under paragraph (1), any person— (A) shall be considered to satisfy the requirements of subsec- tion (a) or (b) of section 202, as the case may be, only if such person complies with the requirements established pursuant to paragraph (1) (A) ; and (B) shall be considered to satisfy the requirements of section 202(c) only if such person complies with the requirements estab- lished pursuant to paragraph (1) (B). (3) The Federal Trade Commission may, by rule, prescribe pro- cedures for determination of the octane rating of automotive gasoline which varies from that prescribed in section 201(1). In prescribing such rule, the Commission— (A) shall consider— (i) ease of administration and enforcement, and (ii) industry practices in the distribution and marketing of automotive gasoline; and (B) may permit adjustments in such octane rating to take into account the effects of altitude, temperature, and humidity. (4) The Federal Trade Commission may, by rule, prescribe and make effective a method of determining the octane rating of auto- motive gasoline which consists of a blend of two or more quantities of automotive gasoline of different octane ratings if the Federal Trade Commission finds that the method prescribed more accurately reflects the octane rating of such blend than the weighted-average method set forth in section 202(f) (1). Effective on and after the effective date of such rule, any person shall be considered to satisfy the require- ments of section 202(f) (1) only if such person utilizes the method prescribed in such rule (in lieu of the method set forth in section 202(f)(1)). (d) (1) Except as provided in paragraph (2), rules under this title shall be prescribed in accordance with section 553 of title 5, United States Code, except that interested persons shall be afforded an oppor- tunity to present written and oral data, views, and arguments with respect to any proposed rule. (2) Rules prescribed under subsection (c) (3) and section 202(d) shall be prescribed on the record after opportunity for an agency hearing.
PUBLIC LAW 95-297—JUNE 19, 1978 92 STAT. 337 (3) Section 18 of the Federal Trade Commission Act (15 U.S.C. 57a) shall not apply with respect to any rule prescribed under this title. (e) It shall be an unfair or deceptive act or practice in or affecting commerce (within the meaning of section 5(a)(1) of the Federal Trade Commission Act) for any person to violate subsection (a), (b), 15 USC 45. (c), or (e) of section 202, or a rule prescribed under subsection (d) of such section. For purposes of the Federal Trade Commission Act 15 USC 58. (including any remedy or penalty applicable to any violation thereof) such a violation shall be treated as a violation of a rule under such Act respecting unfair or deceptive acts or practices; except that for pur- poses of section 5 ( m ) ( l ) ( A ) of such Act, the term "or knowledge 15 USC 45. fairly implied on the basis of objective circumstances" shall not apply to any violation by any gasoline retailer of the requirements of section 202 (c) or (e). RELATIONSHIP OF T H I S TITLE TO STATE LAW SEC. 204. To the extent that any provision of this title applies to 15 USC 2824. any act or omission, no State or any political subdivision thereof may adopt, enforce, or continue in effect any provision of any law or regula- tion (including any remedy or penalty applicable to any violation thereof) with respect to such act or omission, unless such provision of such law or regulation is the same as the applicable provision of this title. EFFECTIVE DATES SEC. 205. (a) Sections 202(a) (1) and 208(b) shall take effect on the 15 USC 2822 first day of the first calendar month beginning more than 6 months °°*®- after the date of the enactment of this Act. (b) Subsections (a) (2), (b), (c), and (e) of section 202 shall take effect on the first day of the first calendar month beginning more than 9 months after such date of enactment. (c) Rules under section 202(d) may not take effect earlier than the beginning of the first motor vehicle model year which begins more than 9 months after such date of enactment. T I T L E III—STUDY OF SUBSIDIZATION OF MOTOR F U E L MARKETING SEC. 301. (a) The Secretary of Energy, in consultation with the 15 USC 2841. Chairman of the Federal Trade Commission and the Attorney General and other agencies as the Secretary deems appropriate, shall conduct a study of the extent to which producers, refinere, and other suppliers of motor fuel subsidize the sale of such motor fuel at retail or whole- sale with profits obtained from other operations. (b) Such study shall examine— (1) the role of vertically integrated operations in facilitating subsidization of sales of motor fuel at wholesale or retail; (2) the extent to which such subsidization is predatory and presents a threat to competition; (3) the profitability of various segments of the petroleum industry; (4) the irnpact of prohibiting such subsidization on the com- petitive viability of various segments of the petroleum industry, on prices of motor fuel to consumers and on the health and struc- ture of the petroleum industry as a whole; and (5) such other matters as the Secretary considers appropriate.
92 STAT. 338 PUBLIC LAW 95-297—JUNE 19, 1978 Notice. (c) In conducting the study required by this section, the Secretary shall give appropriate notice and afford interested persons an oppor- tunity to present written and oral data, views and arguments con- cerning such study. Report to (d) (1) The Secretary shall report the results of the study required Congress. by this section, together with such recommendations for legislative action and such statistical evidence as he deems appropriate to the Congress on or before the expiration of the eighteenth month after the date of enactment of this section. Rules. (2) If the President determines that interim measures are necessary and appropriate to maintain the competitive viability of the marketing sector of the petroleum industry during Congressional consideration of the recommendations contained in the report submitted under para- graph (1), he shall prescribe, by rule, in accordance with the pro- cedures set forth in section 523(a) of the Energy Policy and Conservation Act (42 U.S.C. 6393) such interim measures. (3) No interim measure proposed by the President under this section may be submitted after January 1, 1980, and the effect of such meas- ure if approved by the Congress under paragraph (4) may not extend beyond 18 months after such Congressional approval. (4) Such interim measure shall not take effect unless approved by both Houses of Congress as if it were a contingency plan under section 552 of the Energy Policy and Conservation Act (42 U.S.C. 6422) : Provided, That the 60-day period referred to in such section shall be extended to 90 days for purposes of this section. Appropriation (e) There are hereby authorized to be appropriated such sums as authorization. may be necessary to carry out the pix)visions of this section. Approved June 19, 1978. )? LEGISLATIVE HISTORY: HOUSE REPORT No. 95-161 (Comm. on Interstate and Foreign Commerce). SENATE REPORTS: No. 95-731, and No. 95-732 accompanying S. 743 (Comm. on Energy and Natural Resources). CONGRESSIONAL RECORD: Vol. 123 (1977): Apr. 5, considered and passed House. Vol. 124 (1978): May 5, 9, considered and passed Senate, amended, in lieu of S. 743. June 6, House agreed to Senate amendments.