Over the 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 comingle 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 thirty-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.
The PMPA lists the exclusive grounds for termination or nonrenewal of a “franchise” between a branded retailer and a distributor. A “franchise” must authorize the retailer to use a “refiner” trademark (e.g., Exxon, Mobil, Shell or BP) in connection with the sale of motor fuels (gasoline and diesel fuel). 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.
Most NATSO members view themselves primarily as “unbranded” retailers because they tend to be unbranded on the diesel side, which is the truckstop industry’s bread-and-butter. However, NATSO members often sell refiner branded gasoline and thus are well-advised to understand the Petroleum Marketing Practices Act.
In this toolkit, NATSO provides its members with a brief overview of the Petroleum Marketing Practices Act, highlighting some of the more important rights and obligations that it imposes on the branded motor fuel retailer...