Over the last couple of years there have been several reports of refining companies, such as CITGO, sending letters to their branded gasoline retailers reminding and warning them not to commingle unbranded fuel with branded supplies. “Commingling” is an age-old problem for the retail petroleum industry, and one that branded retailers may often find to be frustratingly restrictive. If less expensive fuel is available, one might ask, ‘Why shouldn’t a branded retailer be able to acquire that product and sell fuel at a more competitive price?’
The answer lies largely in a nearly 35-year-old federal statute known as the Petroleum Marketing Practices Act (PMPA), which is designed to protect branded retailers and distributors from having their supply agreements unjustifiably terminated by the major oil companies. Without the PMPA’s protections retailers could be vulnerable to unfair market tactics on the part of their supplier.
The PMPA lists the exclusive grounds for termination or nonrenewal of a “franchise,” which is the word the PMPA uses to describe the license to use a motor fuel trademark that is owned or controlled by a refiner, between a branded retailer and a distributor. A “franchise” must authorize the retailer to use a “refiner” trademark, such as Exxon, Mobil, Shell or BP, in connection with the sale of motor fuels.
Thus, some brands, such as the “Gulf” brand, which are not owned or controlled by a “refiner,” are not “refiner” brands, and retailers that sell gasoline or diesel fuel under such brands are not covered by the PMPA. In setting forth the exclusive grounds for termination and nonrenewal, the PMPA provides significant protections to PMPA-covered retailers.
To help break down the complexity of the PMPA, NATSO has created a detailed overview of the Act, highlighting some of the more important rights and obligations that it imposes on the branded motor fuel retailer. The document is available at www.natso.com/PMPAtoolkit.
The overview covers the benefits of being a branded gasoline retailer, including guaranteed supply, brand recognition, and retail expertise and guidance, and details the limits and restrictions it imposes on oil companies’ ability to unjustly terminate its agreements with branded retailers and distributors. The overview also digs into common issues retailers face, such as fuel commingling and selling renewable fuel blends.
// NATSO Members: Get the Full Regulatory Toolkit. NATSO has prepared a document outlining these issues and more. The full document is available to NATSO members here.
(The regulatory toolkit is available for NATSO Members only. If you need any assistance logging in, please contact NATSO Member Services at (703) 549-2100 between the hours of 9:00 a.m. and 5:00 p.m. EST, Monday through Friday, or e-mail us at membership@natso.com.)
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