Jobber Bill Cmte Report

1
Council of the District of Columbia

Committee on Government Operations and the Environment

Draft Report
1350 Pennsylvania Avenue, N.W., Washington, D.C. 20004

To: Members of the Council of the District of Columbia

From: Mary M. Cheh, Chairperson

Date: July 11, 2011

Subject: Bill 19-299, the Retail Service Station Amendment Act of 2011

The Committee on Government Operations and the Environment, to which Bill 19-299,
the Retail Service Station Amendment Act of 2011 was referred, reports favorably on the
legislation, which the committee revised to better achieve the aims of the original act, and
recommends its approval by the Council of the District of Columbia.

Statement of Purpose and Effect Page 2

Legislative History Page 2

Background and Committee Reasoning Page 2

Section-by-Section Analysis
CONTENTS
_____ Page 14

Fiscal Impact _____________ _____ Page 14

Analysis of Impact on Existing Law _____ Page 15

Committee Action _____________ _____ Page 15

Attachments ____________ _____ Page 15

2

Bill 19-299, the Retail Service Station Amendment of 2011, was introduced on May
17, 2011. The legislation would prohibit gasoline distributors from operating retail service
stations in the District, clarify that marketing agreements may not preclude competition by
prohibiting the purchase of competitively priced fuel from third parties who are not part of the
agreement, provide franchisees with the right of first refusal when a sale, assignment, or transfer
is set to take place, and empower the Attorney General of the District of Columbia to bring legal
actions in Superior Court for violations of this chapter.

STATEMENT OF PURPOSE AND EFFECT

May 17, 2011 Introduction of B19-299 by Councilmembers Cheh, Evans, Mendelson,
and Wells

May 17, 2011 Referral of B19-299 to the Committee on Government Operations and the
Environment

May 27, 2011 Notice of Intent to Act on B19-299 is published in the District of
Columbia Register

June 3, 2011 Notice of Public Hearing on B19-299 is published in the District of
Columbia Register

June 17, 2011 Public Hearing on B19-299 held by the Committee on Government
Operations and the Environment

July 11, 2011 Consideration and vote on B18-521 by the Committee on Government

LEGISLATIVE HISTORY

I. Background

A. Retail Service Station History in the District

BACKGROUND/COMMITTEE REASONING
The District has a long history of regulating the retail service station industry dating back
to the passage of the Retail Service Station Act of 1976 (RSS). Out of concern over domination
of the market by major oil companies like BP or Exxon, the District passed the RSS, which is a
divorcement law preventing refiners from operating retail stations.
1

1
D.C. Law 1-123. The Retail Service Station Act of 1976.
During the same time period,
several other states passed divorcement laws as well. In 1979, the District amended the RSS,
enacting the first of several laws establishing a moratorium on conversions of full-service retail
3
service stations without a waiver from the Mayor.
2
In 2004, the Council again amended the RSS
by enacting the moratorium permanently and adding jobbers into the divorcement law with a
two-year phase-out period. By 2007, however, the jobber divorcement provision had not yet been
fully implemented.
3
The Committee report on the 2007 legislation noted that the provision
adding jobbers to the divorcement law in 2004 had not been included in the introduced version of
the bill, which deprived potential opponents of the measure an opportunity to speak against it.
4

Taken together, the lack of adoption and less visible notice of the change prompted
Councilmember Mary Cheh and then-Councilmember, now-Chairman Kwame Brown to
introduce a measure removing jobbers from the divorcement law, so all interested parties would
have an opportunity to testify on the matter.
5
The Committee on Public Services and Consumer Affairs conducted a full hearing on the
amendment to remove jobbers from the statute on May 24, 2007. The Committee report
concluded that any expansion of the divorcement statute would only create further disincentives
for new competitors to enter the marketplace.

6
With these pieces of legislation and with changing market conditions, the gasoline
industry has changed significantly in the District. Over the years, the total number of retail
service stations has steadily decreased. According to a September 2008 report prepared by the
District Department of the Environment (DDOE), the total number of service stations fell from
270 (1977) to 108 (2006). More recent data shows that number to have dropped to 105.
Subsequently, the Council passed the 2007
legislation, and jobbers were once again free to operate service stations.

The Council then amended the RSS in 2009. In that year, the legislation added new
restrictions on converting full-service stations and provided franchisee station operators with a
right of first refusal if a franchisor sought to sell, transfer, or assign his interest in a station to a
third party. The added protections also included a duty to negotiate a lease in good faith.
Although the enhanced requirements for converting a full-service station remain, the other
protections sunset on January 1, 2011.

7

2
D.C. Law 3-44. Also, because the Act contained a two-year sunset clause, the Council was forced to reexamine
the issue in 1981. The Council passed nine subsequent emergency and temporary measures, keeping the moratorium
in place until 2004, when the moratorium was finally made permanent.
3
Committee on Public Services and Consumer Affairs Report on Bill No. 17-142, the Retail Service Station
Amendment Act of 2007, September 25, 2007, at 3.
4
Id.
5
Id. at 4.
6
Id.
7
Robert W. Doyle Testimony, Committee on Government Operations and the Environment Hearing on B19-299,
June 17, 2011, at 4.
As of
2006, only 47 full-service stations were left in the District. Those that do remain have
engendered significant goodwill from their respective communities. Notably, the Committee
received dozens of letters, emails, and calls praising the service provided by one local operator,
whose station has been serving a District neighborhood for years. The letters and support
demonstrate that in spite of any changes to the industry, the community still values independent
operators, who are able to devote time and energy to develop a relationship with the
neighborhoods they serve.

4
B. Market Shifts

The RSS set out the following goals in the regulation of service stations through
divorcement: (1) the further deterioration of free and open competition in the retail motor fuel
market by increases in the number of directly operated retail service stations will be prevented;
(2) competition in the motor fuel market will be enhanced by a dispersion of the concentration in
control and economic power inherent in existing directly operated retail service stations; (3) the
competitive position of independently operated retail service stations will be strengthened; and
(4) a downward pressure on retail motor fuel prices will be created.
8
During the 1970s, a few oil refiners like BP, Shell, and Exxon controlled the vast
majority of stations in the District.
Unfortunately, market
shifts seem to have frustrated the Councils purpose.

9
In 2004, the Council recognized that jobbers had begun to resemble large oil refiners in
the way that they interacted with the retail service station market and passed legislation adding
jobbers into the divorcement statute. The corresponding committee report explained: jobbers
instead of the oil companies are the entities exerting pressure to convert and otherwise
threatening the independence of the local retail operators. The legislative intent undergirding
divorcement is being undermined.
In cases where the refiners also operated stations, a refiner
could serve as the landlord, supplier, and competitor of a station it supplied. That situation
threatened the competitive viability of an independent service station operator.

10
Currently, fewer companies actually control a larger share of the market than in 2007.
During that year, five jobbers owned 68 of the Districts 108 service station, with the two largest
jobbers owning a combined 47 stations.
The concern was justified. Reversing the 2004 legislation
by removing jobbers from the divorcement statute in 2007 has led to greater market
concentration and reduced competition.

11
Today, the two largest jobbers account for 72 of the
Districts 105 service stations, which is nearly 70%.
12
District customers are paying the second highest prices in the nation for gasoline.
Moreover, the pricing gap between the
District and other jurisdictions has increased, sharply. The prediction that removing jobbers from
the divorcement law would reduce disincentives to market entry made in the Committees 2007
report has not come true. Instead, removing jobbers from the divorcement statute has created
rather than eliminated disincentives to enter the gasoline market in the District.

C. Prices

13

8
Committee on Transportation and Environmental Affairs Report on Bill No. 1-133, the Retail Service Station Act
of 1976, September 10, 1976.
9
Subcommittee on Public Interest on Bill No. 15-914, the Retail Service Station Amendment Act of 2004, October
27, 2004, at 5.
10
Id.
11
Ralph McMillan Testimony, Committee on Public Services and Consumer Affairs Hearing on B17-142, June 12,
2007 (contained in attachment I), at 2.
12
Doyle Testimony on B19-299, at 5.
13
http://www.washingtoncitypaper.com/articles/41082/why-does-gas-cost-so-much-in-dc-joe-mamo/
More
troubling is the fact that the gap between prices in the District and the rest of the nation,
5
including nearby suburban Virginia and Maryland, is growing. Gas prices will invariably rise
and fall with crude oil prices, but those variations do not explain the growth of the pricing gap.
Although opinions vary over the extent of the increase, no evidence presented to the Committee
disputes that the gap has grown.

In a May 27, 2011 editorial, a local paper attributed the Districts historically higher gas
prices to the higher insurance and rents paid in town.
14
Nevertheless, AAA reports that the price
gap between the District and national average stood at just five cents in 2007.
15
On June 17,
2011, the price gap stood at 28 cents, according to AAA.
16
On the same day, gas could be
purchased for an average of 41 cents per gallon less in Virginia than in the District.
17
Higher
rents and insurance costs may explain the smaller, historical pricing gap that had existed for
years in the District, but they do not explain the gaps rapid growth over the past four years, as
AAA testified in the Committees hearing.
18
The same local paper argued that the growth over the past two years, which it reports has
increased by seven cents since 2009, between the District and nearby Virginia and Maryland
suburban areas is attributable almost entirely to tax increases.

19
That argument is questionable
and premised partially on an error. While the Districts excise tax on fuel did increase 3.5 cents
per gallon in 2010, that change accounts for only half of the reported seven-cent increase. The
newspapers report errantly relies on a sales tax increase of 0.25 percent to account for the
remainder of the growth. The District, however, does not apply sales tax to motor vehicle fuels;
it applies only an excise tax to them.
20
Currently, neither the District nor Maryland applies any
sales tax to motor vehicles fuels. In contrast, Virginia imposes a 2.1% sales tax on motor vehicle
fuels sold in Northern Virginia.
21
The Committee notes the value of objective expert testimony, particularly in complex
economic matters such as this one. When the Committee on Public Services and Consumer
Consequently, ifas AAA reported at the hearinga gallon of
gas is approximately a dollar more expensive than it was a year ago, the gap between the District
and Northern Virginia should have actually decreased by two cents as the result of sales tax,
significantly offsetting the Districts excise tax increase. The District and Maryland apply
identical excise taxes to unleaded fuels, and the District applies a lower excise tax to diesel fuels.
Virginia applies a smaller excise tax than does the District, but adds the 2.1% sales tax in
Northern Virginia. Taxes may help explain some very small fluctuations, but they do not account
for anything approaching the price gap growth the District has experienced since 2007.

D. Expert Testimony

14
http://www.washingtonpost.com/opinions/pumped-up-for-gas-price-scapegoating-in-
dc/2011/05/26/AGkamyCH_story.html
15
John B. Townsend II Testimony, Committee on Government Operations and the Environment Hearing on B19-
299, June 17, 2011, at 4.
16
Id. at 1.
17
Id.
18
Id. at 5.
19
http://www.washingtonpost.com/opinions/pumped-up-for-gas-price-scapegoating-in-
dc/2011/05/26/AGkamyCH_story.html
20
D.C. Code 47-2005 (20)
21
Va. Code 58.1-1720
6
Affairs moved forward with a provision removing jobbers from the divorcement statute in 2007,
the corresponding report relied on a recommendation from the Federal Trade Commission (FTC)
and analysis from the Districts Office of the Attorney General.
22
In 2007, the FTC concluded
that removing jobbers from the statute would increase competition and eliminate a potential
double markup resulting from both a distributor and a retailer earning profits for their efforts.
23

According to the FTC, prices would likely drop as a result of the legislation.
24
The Attorney
General, without taking a firm position on the legislation argued that entry into the jobber market
was not difficult and predicted that removing jobbers from the divorcement statute would not
lead to further market concentration.
25
The Attorney General, along with other neutral experts, argued at the June 17, 2011
Committee hearing that adding jobbers back into the divorcement statute is the right course of
action and would to help to restore competitive balance to the market.
Those predictions, however, did not bear out.

26
David A. Balto, a current senior fellow at the Center for American Progress, a former
policy director at the FTC, and a long-time antitrust attorney, testified in strong support of the
bill. He argued that removing jobbers from the divorcement law and allowing vertical integration
from the distribution level to the retail level has created a market that is not competitively
healthy.

27
Mr. Balto also explained that the FTC study offered in 2007 was flawed in several critical
ways. The study began with a faulty premise, failing to examine the Districts specific market
and instead examining the retail service station industry as a whole nationally. The mistake
prevented the FTC from taking into account the high levels of market concentration already
present in the District in 2007 and how a partial repeal of divorcement would affect a market
The retail service station market has been harmed in three primary ways, he
explained. First, the retail service station industry suffers from weak competition, particularly at
the wholesale level. Mr. Balto referred to the current market structure as a tight duopoly. With
two major jobbers controlling 70% of that market, competition for price and business simply
isnt sufficient to drive prices down. Second, high barriers for entry into the wholesale market
preclude conditions from improving. He explained that the presence of integrated stations, which
are owned by a distributor, limits the number of stations looking to competitively purchase fuel.
Consequently, little business is available for a jobber interested in entering the Districts
wholesale gasoline market. Third, as the landlord, supplier, and competitor of station operators,
jobbers control rent prices, gasoline prices, and have access to sensitive business data for
competing stations. With knowledge of overhead costs and profit margins, Mr. Balto warned that
jobbers can manipulate prices to maximize profits at the expense of fair competition.

22
See generally Committee Report on B17-142
23
Comment from United States Federal Trade Commission, Office of Policy and Planning (June 8, 2007) (contained
in attachment I) at 5.
24
Id. at 6
25
Committee Report on B17-142, at 7
26
The Districts Attorney General did not appear in person at the June 17, 2011 hearing, but the office submitted a
letter detailing its views, which Councilmember Cheh read into the record.
27
Committee on Government Operations and the Environment Hearing on B19-299, June 17, 2011 (available at:
http://oct.dc.gov/services/on_demand_video/on_demand_June_2011_week_3.shtm).
7
structured in that specific way.
28
Mr. Balto concluded by stating that he strongly supports the legislation because it would
break the ownership bind over service stations and help to restore competition at both the retail
and wholesale levels. He also noted concern that the District is losing excise tax revenues as
consumers choose to purchase gasoline outside the District due to higher pricesa proposition
supported by a drop in excise tax revenues from 2009 to 2010.
Next, the study examined the effects of refiner divorcement
while failing to address the specific issue of jobber divorcement in any meaningful way. Refiner
ownership of stations offered the District some benefits that jobber ownership has not. Refiners
like Exxon or BP not only wished to sell fuel, they also wished to protect the value of a
trademark. For example, Mr. Balto noted that a major oil company like Exxon might seek to
ensure that all its stations were in good repair to maintain a uniformly positive image of its
branded stations. In contrast, jobbers do not have a visible brand name to protect and may devote
fewer resources to leased stations. Finally, Mr. Balto argued that whatever the basis for the
FTCs study in 2007, it is clear in 2011 that they were simply wrong. Prices are higher, and
competition has decreased.

29
Robert W. Doyle, a former trial attorney at the FTC and a long-time antitrust practitioner,
also testified in support of the legislation. He identified concerns over market concentration with
ownership ties, particularly after a large merger in 2009, and potential sales of gasoline stations
to developers. Mr. Doyle presented a study of the gasoline service stations in the District
concluding that 46% of all stations in the District and 53% of all branded stations in the District
are owned by one jobber.

30
Mr. Doyle argued that the jobbers share of the market, which had
increased considerably since acquiring 30 stations in 2009, had allowed jobbers to set prices
irrespective of the competition. For example, if the jobber owned a Shell station on one corner
and its only nearby competitor is an Exxon station across the street, the jobber, who owns both
stations, could simply set both stations prices at higher levels because the jobber could no longer
be pressured into lowering prices through competition. Prior to the 2009 acquisition, brands were
forced to compete. After the merger, though, as Mr. Doyle put it, that jobber, who now owns
multiple brands, would be disinclined to go head to head with himself.
31

28
Mr. Balto noted in oral testimony that the District has one of the highest concentrations of jobber ownership in the
nation.
29
Excise tax revenues from gasoline dropped more than $1.5 million from 2009 to 2010. Source: Districts Office
of Revenue Analysis. Nevertheless, the consumption of finished motor gasoline nationally increased over that same
time period, according to the U.S. Energy Information Administration.
http://www.eia.gov/dnav/pet/pet_cons_psup_dc_nus_mbblpd_a.htm
30
Prior to one jobbers acquisition of the Districts 30 Exxon stations in 2009, the market had been less
concentrated.
31
Committee Hearing on B19-299.
He argued that the
situation could be magnified throughout the city, leading to much higher comparative prices.

Mr. Doyle also emphasized the danger that a jobber might simply begin to sell stations,
particularly given the two-year phase-out period required by the legislation. He noted that
Capitol Petroleum had already sold one station on Capitol Hill and had obtained permits to sell
another. He then said that he supported adding a right of first refusal to the legislation to prevent
jobbers from selling stations without giving operators the right to buy it and retain it as a service
station for the benefit of District residents.
8

In summation, Mr. Doyle supports the legislation because he believes that it will break
the ownership tie present in integrated stations. Breaking the tie, he argued, should inject some
needed competition into the retail and wholesale markets.
32
John B. Townsend II, Manager of Public and Government Affairs for AAA Mid-Atlantic,
discussed changes in pricing over the past four years, since the jobber divorcement was repealed.
Mr. Townsend explained that, historically, District gas prices were only marginally higher than
the national average and than in neighboring suburban areas in Maryland and Virginia.
He also explained that divorcement
should offer more opportunities for small businesses, as stations will each need an independent
operator to run them.

33
Since
2007, however, the pricing gap has widened rapidly.
34
He testified that taxes, rents, and
insurance costs could not account for the price gap growth, noting that the District and Maryland
applied identical excise taxes to unleaded fuels and that rents in the District are not necessarily
higher than in surrounding areas such as Bethesda, Maryland.
35
The Attorney General for the District of Columbia, Irvin B. Nathan, also submitted
testimony strongly supporting this legislation. Mr. Nathan acknowledged that this support
represented somewhat of a reversal from 2007 when a representative from his office testified,
[b]y allowing jobbers to operate their own retail stations in D.C., Bill 17-142 ha[d] the potential
to encourage retail competition by increasing the number of stations that [were] not controlled
and supplied by the major oil companies."
Moreover, distributors in the
District purchased gasoline at the same rack prices as distributors traveling to stations in nearby
Maryland and Virginia. Mr. Townsend reported that his research showed delivery costs for
gasoline to be somewhere around 4 cents per gallon nationally and less than 3.5 cents per gallon
locally. He said that neither rack prices nor delivery costs could account for the price gap growth
either. He argued that the only significant change over the past four yearsand the only
plausible explanation for the price gap increaseis the change in market concentration at the
jobber level.

36
The reversal comes out of recognition that [s]ince
2007, the landscape has changed dramatically in D.C.'s retail gasoline market.
37
Whereas in
2007, the retail gasoline market was shared by oil companies and jobbers, the current market is
dominated by two jobbers.
38
In contrast to 2007, when the Office of the Attorney General suggested in its
written testimony that the Council might "consider additional statutory changes in
order to allow D.C.'s independent [gasoline station] operators to operate more
independently of particular oil companies" (emphasis added), now the primary
Mr. Nathan also notes that:

32
Although fully supportive of the legislation, Mr. Doyle went further and argued that full divestiture might be
needed to ensure adequate competition at the retail level.
33
Mr. Townsend testified that prices were generally 2-5 cents per gallon higher in the District.
34
Mr. Townsend testified that prices in the District were 40 cents per gallon higher than in Virginia as of June 17,
2011, the day of the Committee hearing.
35
Committee Hearing on B19-299.
36
Letter from the Attorney General for the District of Columbia, Irvin Nathan (June 17, 2011) (contained in
Committee Report, attachment G at 2).
37
Id.
38
Id.
9
concern at the retail level is the high proportion of D.C. gasoline stations owned
by particular wholesalers.
39
The proposed bill would prohibit distributors from operating retail service stations in the
District. The change is needed to help restore a competitive balance in the retail service station
market in the District.

Market concentration allows jobbers to use market power to increase prices to the
detriment of consumers. Thus, the Attorney General strongly supports enacting B19-299 because
he argues that it will reduce the risk that jobbers could use market power to increase prices.

In 2007, the Committee relied on the FTCs recommendation and the Attorney Generals
analysis, in no small part, because they lacked a pecuniary interest in the outcome of the
legislation. However valuable and informative testimony from supporters of station operators or
supporters of jobbers may be, their positions remain essentially unchanged since 2007 because
their pecuniary interests remain largely the same. Each side presented illuminating facts, but the
conclusionssupporting or opposing the legislationwere foregone.

In contrast to 2007, though, the weight of expert testimony supports the passage of jobber
divorcement. Mr. Balto, Mr. Doyle, Mr. Townsend, and Attorney General Irvin Nathan lack
pecuniary interest in the outcome of the legislation. In fact, as stated before, the Attorney
Generals position represents a partial reversal from 2007 because of changes in the gasoline
industry. Taken with rising prices, declining station numbers, and increased market
concentration, the experts recommendations for jobber divorcement, along with accompanying
measures, are well justified.

II. Legislative Action: Description & Analysis

As experts testified, the retail service station industry in the District is no longer
structurally competitive. The result is fewer service stations in the District and higher prices at
those that remain. Legislative changes are needed to restore a competitive balance in the industry
and to achieve the long-established and accepted goals of the RSS. Bill 19-299 will make the
needed changes to achieve both of these objectives.

A. Divorcement

40
Approximately 70% of stations in the District are controlled by two
jobbers. This structure has led to more rapid price growth in the District than has been
experienced in surrounding jurisdictions and creates significant barriers to market entry,
preventing meaningful competition from entering the market.
41
In 2007, the Council removed jobbers from the divorcement statute, enabling a more
vertically integrated market to take shape. At the time, the FTC argued that vertical integration

39
Id.
40
See generally David A. Balto Testimony, Committee on Government Operations and the Environment Hearing on
B19-299, June 17, 2011; Doyle Testimony on B19-299.
41
Balto Testimony on B19-299, at 2.
10
would lower prices because the price at the pump would reflect fewer markups.
42
The FTCs
analysis, however, relied on the assumption that wholesale and retail markets would be
structurally competitive.
43
In the Districtwith two jobbers controlling a large majority of the
wholesale marketthis assumption is unsound.
44
Although vertical integration offers the
potential to maximize efficiencies and lower prices, prices have increasedand industry
representatives report that service from distributors has deteriorated.
45
For any potential benefits vertical integration offers, it presents dangers as well. In the
District, vertical integration has permitted three significant issues to develop. First, barriers to
entry into the Districts wholesale or retail gasoline markets have become very tough to
overcome.

46
Nonintegrated jobbers report that it is extremely difficult to enter the District
market, given the prevalence of integrated stations.
47
Second, current law permits a jobber to too easily manipulate the prices of competing
stations by allowing jobbers to serve as landlord, supplier, and competitor of independent station
operators. As landlord and supplier, a jobber has access to sensitive information such as
overhead costs, volume, and sales trends. Jobbers can use that information to modify prices in a
way that is anticompetitive, such as through the use of zone pricing.
The lack of nonintegrated systems means
that fewer stations are seeking to competitively purchase fuel from third-party distributors.
Vertical integration has allowed significant barriers to restrict entry into the jobber market in the
District.

48
Zone pricing establishes a
station or a group of stations as part of a zone that will pay the same thing for gasoline. Station
operators report that the gap in what they pay for gasoline versus some closely situated
competitors has grown significantly. One operator reported to Anacostia Realty, a subsidiary of
Capitol Petroleum, I have been advised by other dealers in Northwest Washington that I am
paying a premium of about ten cents per gallon over [their dealer tank wagon prices].
4950
Third, a system permitting vertical integration and encouraging concentrated ownership
is generally detrimental to small businesses, who wish to establish relationships with the
community. Vertical integration and market concentration may, in some situations, benefit
consumers if efficiencies and economies of scale are used to drive down prices.
Other
station operators reported at the hearing that stations in Virginia and Maryland were charging
less at the pump than they were paying for wholesale gasoline. The existing statute has
contributed to a competitively unhealthy gasoline marketand higher prices.

51

42
[W]hen both suppliers and station operators have the ability to price above cost, each will add a mark-up to the
final price. This double mark-up problem reduces supplier profits because retail prices are higher than they would
be if the supplier set them, causing business to be lost to lower-priced retailers. Comment from Federal Trade
Commission at 5.
43
Balto Testimony on B19-299 at 4.
44
Id.
45
Id. at 3.
46
Id. at 2.
47
Id.
48
Id.
49
Letter from Stacy Milford, Circle Exxon, to Anacostia Realty (Feb. 17, 2011) (contained in attachment F)
50
Dealer tank wagon price is the price paid by a dealer to a distributor when gasoline is delivered to the station.
51
Comment from FTC on B17-142, 4-6.
Even when
they benefit consumers in terms of the prices paid, thoughwhich they have not done for the
11
Districts gasoline pricesthe system prefers larger businesses positioned at several layers of the
market to the detriment of smaller ones. Unlike the larger businesses, single station operators
cannot, for example, raise prices at one isolated station as a way to lower them at a station facing
greater competition. Particularly when faced with anticompetitive practices, independent station
operators will find it difficult to compete. Protecting the viability of independent station
operators is one of the four stated goals of the RSS.
52
District residents continue to find the protection of independent station operators to be a
worthy goal. As stated earlier, dozens of community members contacted the Committee to
express support for the continued operation of an independent service station operator.

53
His
excellent service and connection to the community are greatly valued by nearby residents. Mat
Thorp, who testified on behalf of the Palisades Citizens Association (PCA), reiterated the
importance of full-service stations to the community. PCA testified at the Committee Hearing
because it seeks to protect its neighborhoods last remaining full-service station. This legislation
would ensure that stations are operated by independent operators. This will mean that the
Districts 105 stations will support the development of small community businesses, which is an
aim of the RSS and a desire of District residents.
54
Reinstituting jobber divorcement will break the vertical control that jobbers currently
exercise over individual stations. By breaking the ownership bind, more stations will be in
position to competitively select their suppliers and negotiate the lowest possible price.

55
With
more stations free to purchase fuel from their preferred supplier, more jobbers may choose to
enter the market.
56
The proposed bill would reinstate the right of first refusal. The right of first refusal allows
franchisees the opportunity to purchase the franchisors interest in a station if the franchisor
seeks to sell, assign, or transfer its interests to third party. Such a right had been added to the
RSS as an amendment in 2009the provision, however, sunset on January 1, 2011.
More jobbers in the market will mean better competition at the wholesale
level. At the retail level, all market entrants should, after the passage of B19-299, be similarly
situated. No longer will some participants have access to competitors sensitive business
information or the ability to control their pricing. This will lead to lower comparative prices for
consumers and help to ensure the continued viability of independent station operators.

B. Right of First Refusal

57
In 2009,
the Committee explained that action was needed to protect the interests of retaining service
stations in the long term.
58

52
Committee Report on B1-133.
53
Letters from Community (contained in attachment H)
54
Doyle Testimony on B19-299. Mr. Doyle explained at the hearing that divorcement would open up additional
opportunities for small businesses because all stations would need to be run by independent dealers.
55
Balto Testimony on B19-299, 3-4.
56
Doyle Testimony on B19-299, at 1.
57
The right of first refusal included in the 2009 legislation applied to sales, assignments, or transfers by a refiner.
58
Committee on Government Operations and the Environment Report on Bill No. 17-142, the Retail Service Station
Amendment Act of 2009, April 2, 2009, at 6.
Many district service stations are located on valuable pieces of
propertyoften property coveted by a developer. This issue was explored in a February 18, 2011
Washington City Paper article. When discussing the future of his stations, Capitol Petroleum
12
owner Joe Mamo noted, We are really a real estate company . . . . [l]ong term, the real estate is
where the value is.
59
Capitol Petroleum already converted and sold one station on Capitol Hill,
which is now the site of condominiums.
60
Mr. Mamos company has reportedly obtained permits
to convert another as well. Protecting the viability of independently operated, neighborhood
service stations is a well-established goal of the RSS, which the reinstitution of a right of first
refusal would help to accomplish.
61
The District was not the first jurisdiction to enact a right of first refusal for dealers.
California has extended this right to dealers for more than twenty years.

62
New Jersey recently
extended this right to dealers as well.
63
Courts have found Californias law to be Constitutional
and not preempted by the Petroleum Marketing Practices Act, which regulates the termination
and non-renewal of franchise agreements.
64
The Committee finds that as in 2009, extending the
right of first refusal is consistent with federal law [] and is a proper exercise of the
legislature.
65
B19-299 would clarify that existing District law prohibits marketing agreements that
preclude the purchase of fuel from any person or entity who is not a party to the marketing
agreement.

C. Clarification of Nonwaiverable Conditions

66
Prohibit a retail dealer from purchasing or accepting delivery of, on consignment
or otherwise, any motor fuels, petroleum products, automotive products, or other
products from any person who is not a party to the marketing agreement or
prohibit a retail dealer from selling such motor fuels or products, provided that if
the marketing agreement permits the retail dealer to use the distributor's
trademark, the marketing agreement may require such motor fuels, petroleum
products, and automotive products to be of a reasonably similar quality to those
of the distributor, and provided further that the retail dealer shall neither
represent such motor fuels or products as having been procured from the
distributor nor sell such motor fuels or products under the distributor's
trademark[.]
The language in the statute is straightforward and states that no marketing
agreement shall:

67

59
http://www.washingtoncitypaper.com/articles/40430/joe-mamo-dc-gas-station-master/page5/
60
http://www.washingtoncitypaper.com/articles/40430/joe-mamo-dc-gas-station-master/page5/
61
See generally Committee Report on 1-133.
62
Cal Bus. & Prof. Code 20999 et seq.
63
N.J. Stat. 56:10-6.1
64
Forty-Niner Truck Plaza, Inc. v. Union Oil Co. of Cal., 589 Cal. App. 4
th
1261 (Cal. Ct. App. 1997).
65
Committee Report on B18-89, at 7.
66
Marketing agreement is defined broadly as a contract, lease, franchise, or other agreement, which is entered
into between a distributor and a retail pertaining to, inter alia, the sale or distribution of gasoline, the use of a
trademark for the purposes of selling gasoline, and the occupancy of property for the purposes of selling gasoline.
D.C. Code 36-301.01 (7).
67
D.C. Code 36-303.01

13
The provision, as the Attorney General explains, means that a distributor may seek to secure a
station operator's loyalty through better prices or better service, but not through contractual
restraints on the station operator's ability to buy gasoline from other suppliers.
68
Recent decisions out of the Superior Court of the District of Columbia reiterate that the
provision applies to franchise arrangements and preclude exclusivity agreements. Kazemzadeh
v. Eastern Petroleum Corp., 2006 CA 009077, at 15 (D.C. Super. Ct. R. Civ. August 19, 2010)
(holding that D.C. Code 36-303.01(a)(6) precludes exclusivity arrangements even when
franchise agreements are present).
Despite the
seemingly plain language, local jobbers are not complying, according to testimony provided at
the Committees June 17 hearing.

69
The Attorney General explains, []while District law does
not permit a gasoline station operating under the Brand "X" trademark to purchase Brand "Y"
gasoline and dispense it from a Brand X pump, the law does give the Brand X gasoline station
the right to purchase Brand X gasoline from any available supplier.
70
Finally, B19-299 would expressly empower the Attorney General to bring actions in the
name of the District of Columbia for violations of the RSS. This comes at the request of the
Attorney General and is a logical extension of the RSS.
Available legal
interpretations and the plain language of the statute all point to the same thing: District law
permits dealers to purchase gasoline from any available source.

Nonetheless, testimony provided at the hearing demonstrates that marketing agreements
do not adhere to the law as written or are being implemented in a way that does not adhere to the
law as written. A jobber and station operators indicated that their marketing agreements
precluded the purchase of fuel from anyone but that jobber. Consequently, the Committee finds
that clarifying language is necessary to underscore the original meaning and purpose of the
statute.

D. Empower Attorney General to Bring Actions

71
As explained, the legislation sought to
encourage competition and drive prices down, for the benefit of consumers. If the law is not
being adhered to, however, consumers are not well equipped to either detect a violation or to
bring an action as result of one. Unless a consumer could assemble a suitably large class,
individual damages would likely prove quite small and prohibitive to bringing a complicated
lawsuit.
72
Station operators are also poorly situated to bring an action against owners. Although the
operators are in much better position to detect violations of RSS, the operators would be forced
to bring a suit against their landlord, supplier, and competitor. Whatever the legal protections in
place to prevent retaliation, most station operators have not brought actions against their
The Attorney General is best situated to bring an action on behalf of District residents
and consumers.

68
Letter from Attorney General on B19-299, at 2.
69
See also, Kazemzadeh v. Eastern Petroleum Corp., 2006 CA 009077, at 15 (D.C. Super. Ct. R. Civ. July 18,
2007).
70
Id. at 3.
71
Letter from Attorney General on B19-299, at 3.
72
Hypothetically, if a consumer drives 12,000 miles per year and consumes one gallon of gasoline per 25 miles, that
consumer would pay an extra $96 per year as a result of a 20-cent per gallon pricing gap.
14
respective distributors, despite documented concern surrounding pricing, as discussed earlier in
this report. Bringing legal action is also a financial drain on operators, who may not have the
resources to bring a complex legal action against a much wealthier adversary. The Attorney
General can pursue actions against any party violating this act to the detriment of District
residents and consumers without fear of reprisal or significant concern over being priced out of
pursuing the action.

The Committee notes that empowering the Attorney General to bring actions on behalf of
the District in no way extends or removes existing protections. It merely enables the most
appropriate agency in the District to ensure that a consumer protection law is implemented as
written.

SECTION-BY-SECTION ANALYSIS

Section 1 provides the long and short title of the legislation.

Section 2 amends the Retail Service Station Act of 1976 as follows:

Subsection (a) adds jobbers back into the divorcement statute, prohibiting jobbers
from operating service stations in the District.

Subsection (b) provides jobbers with two years to come into compliance with
subsection (a).

Subsection (c) clarifies the meaning of D.C. Code 36-303.01 (a)(6) to include
franchise agreements and branded fuel.

Subsection (d) empowers the Attorney General of the District of Columbia to
bring legal actions in the name of the District against parties who violate this act.

Subsection (e) creates a right of first refusal in the event that a franchisor sells,
transfers, or assigns its interest in the premises of a retail service station to a third party. It also
establishes a judicial remedy for failure to provide a right of first refusal.

Section 3 contains the fiscal impact statement.

Section 4 contains the effective date.

FISCAL IMPACT

A fiscal impact statement prepared by the Chief Financial Officer and dated July 5, 2011
is attached to this report. The fiscal impact statement notes that B19-299 would have no fiscal
impact.

15

IMPACT ON EXISTING LAW

Bill 19-299 would amend the Retail Service Station Act of 1976 (D.C. Law 1-123; D.C.
Official Code 36-301.01 et seq.). The bill will (1) prevent jobbers from operating service
stations in the District after a two-year phase-out period, (2) clarify the meaning of D.C. Code
36-303.01 (a)(6), so that it is clear that operators may purchase branded fuel from any available
supplier, (3) empower the Attorney General to bring actions on behalf of the District for
violations of this Act, and (4) creates a right of first refusal for station operators.

[to be added]

COMMITTEE ACTION

LIST OF ATTACHMENTS
(A) Bill 19-299, as introduced
(B) Notice of Intent to Act, published in the District of Columbia Register
(C) Public Hearing Notice, published in the District of Columbia Register
(D) Public Hearing Agenda and Witness List
(E) Committee Print of Bill 19-299
(F) Testimony
(G) Letter from Attorney General for the District of Columbia
(H) Letters from Community
(I) Testimony from Previous Hearings
(J) Fiscal Impact Statement

Attachment A

_______________________ ________________________ 1
Councilmember Phil Mendelson Councilmember Mary M. Cheh 2
3
_______________________ ________________________ 4
Councilmember Tommy Wells Councilmember Jack Evans 5
6
7
8
9
A BILL 10
11
_________ 12
13
14
IN THE COUNCIL OF THE DISTRICT OF COLUMBIA 15
16
_______________ 17
18
19
Councilmembers Mary M. Cheh, Phil Mendelson, Jack Evans, and Tommy Wells 20
introduced the following bill, which was referred to the Committee on 21
___________. 22
23
To amend the Retail Service Station Act of 1976 to prohibit gasoline distributors from 24
owning and operating retail service stations in the District of Columbia. 25
26
BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, 27
That this act may be cited as the Retail Service Station Amendment Act of 2011. 28
Sec. 2. Section 3-102 of the Retail Service Station Act of 1976, effective April 19, 29
1977 (D.C. Law 1-123; D.C. Official Code 36-302.02), is amended as follows: 30
(a) Subsections (a) and (b) are amended by striking the phrase no producer, 31
refiner, or manufacturer wherever it appears and inserting the phrase no jobber, 32
producer, refiner, or manufacturer in its place. 33
(b) Subsection (c) is amended to read as follows: 34
(c) Any jobber in violation of subsections (a) or (b) of this subsection as of the 35
effective date of this Act, shall have 2 years following the effective date to come into 36
compliance.. 37
2

Sec. 3. Fiscal impact statement 1
The Council adopts the fiscal impact statement in the committee report as the 2
fiscal impact statement required by section 602(c)(3) of the District of Columbia Home 3
Rule Act, approved December 24, 1973 (87 Stat. 813; D.C. Official Code 1- 4
206.02(c)(3)). 5
Sec. 4. Effective date 6
This act shall take effect following approval by the Mayor (or in the event of veto 7
by the Mayor, action by the Council to override the veto), a 30-day period of 8
Congressional review as provided in section 602(c)(1) of the District of Columbia Home 9
206.02(c)(1)), and publication in the District of Columbia Register. 11
Attachment B

Attachment C

Attachment D

C O U N C I L O F T H E D I S T R I C T O F C O L U M B I A
1 3 5 0 P ENNS YL VANI A AVENUE, N. W. S UI TE 1 1 1
WAS HI NGTON, DC 2 0 0 0 4
T EL EP HONE: ( 2 0 2 ) 7 2 4 - 8 0 6 2 F AX: ( 2 0 2 ) 7 2 4 - 8 1 1 8
COMMITTEE ON GOVERNMENT OPERATIONS
AND THE ENVIRONMENT
MARY M. CHEH, CHAIR
WITNESS LIST

COUNCILMEMBER MARY M. CHEH, CHAIRPERSON
COMMITTEE ON GOVERNMENT OPERATIONS & THE ENVIRONMENT

ANNOUNCES A PUBLIC HEARING ON

B19-299, the Retail Service Station Amendment Act of 2011

June 17, 2011
11:00 AM
Room 412
John A. Wilson Building
1350 Pennsylvania Ave., N.W.

WITNESSES
David Balto, Law Offices of David A. Balto
Robert Doyle, Doyle, Barlow & Mazard PLLC
Melvin Sherbert, The Washington, Maryland, Delaware Service Station
and Automotive Repair Association
Kirk McCauley, The Washington, Maryland, Delaware Service Station
and Automotive Repair Association
Lynn Cook, Parkers Exxon
John Connor, BP Station Operator
John Townsend, AAA Mid-Atlantic
Matt Thorpe, Palisades Citizens Association
John Ray, Partner, Manatt Phelps & Phillips
Joe Mamo, President, Capitol Petroleum Group, Inc.
David L. Calhoun, Senior RAM, Capitol Petroleum Group, Inc.
Al Alfano, Partner, Bassman, Mitchell & Alfano
Steven Smith, Representative, Rainbow PUSH Coalition
Pete Horrigan, Mid Atlantic Petroleum Dealers Association
Pierpont Mobley, Private Citizen
Bruce Bereano, Offices of Bruce Bereano
John Distad, BP Station Operator
James Giles, Former Shell Station Operator
John Johnson, Exxon Station Operator
Alma Gates, Neighbors United Trust
Petros Kiflu, Commission Operator, Shell Station @ 3355 Benning Road NE
Alexander Anenia, Commission Operator, Shell Station at 1830 Rhode Island Ave NE

Dawit Habte Selasie, Commission Operator, Shell Station at 6201 New Hampshire Ave NE
Redi Hassan, Commission Operator, Shell Station @ 4140 Georgia Ave NE
Frank Wilds, Private Citizen
Robert Vinson Brannum, President, DC Federation of Civic Associations, Inc.
Attachment E

Draft Committee Print, B19-299 1
Committee on Government Operations and the Environment 2
July 11, 2011 3
4
5
A BILL 6
7
_________ 8
9
10
IN THE COUNCIL OF THE DISTRICT OF COLUMBIA 11
12
_______________ 13
14
15
To amend the Retail Service Station Act of 1976 to prohibit gasoline distributors from 16
operating retail service stations in the District of Columbia, to clarify that 17
marketing agreements may not prohibit the purchase of fuel from any nonparties 18
to the agreement, to empower the Attorney General of the District of Columbia to 19
bring legal actions in Superior Court for violations of this chapter, and to provide 20
franchisees with the right of first refusal if a sale takes place. 21
22
BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, 23
That this act may be cited as the Retail Service Station Amendment Act of 2011. 24
Sec. 2. The Retail Service Station Act of 1976, effective April 19, 1977 (D.C. 25
Law 1-123; D.C. Official Code 36-301.01 et seq.), is amended as follows: 26
(a) Section 3-102 is amended as follows: 27
(1) Subsection (a) is amended by striking the phrase no producer, refiner, 28
or manufacturer wherever it appears and inserting the phrase no jobber, 29
(2) Subsection (b) is amended by striking the phrase no producer, 31
refiner, or manufacturer wherever it appears and inserting the phrase no jobber, 32
(b) Subsection (c) is amended to read as follows: 34
2

(c) Any jobber in violation of subsections (a) or (b) of this section as of the 1
effective date of this Act, shall have 2 years following the effective date to come into 2
compliance.. 3
(c) Section 4-201(f) is amended by adding new paragraph (1) to read as follows: 4
(f)(1) this subsection shall apply to all marketing agreements, including 5
marketing agreements under which a retailer would sell a particular brand of fuel under a 6
trademark. Marketing agreements shall not prohibit a retailer from purchasing any brand 7
of fuel from any person not a party to the marketing agreement. 8
(d) Section 4-206 is amended by adding new (d) to read as follows: 9
(d) (1) The Attorney General for the District of Columbia, or any of his 10
assistants, is hereby empowered to maintain an action or actions in the Superior Court for 11
the District of Columbia in the name of the District of Columbia to enjoin any refiner, 12
distributor, or retail dealer, and those acting in concert with such refiner, distributor, and 13
retail dealer, from violating this subchapter, to recover a civil penalty of not more than 14
$5,000 for each violation, and to recover the costs of the action and reasonable attorneys 15
fees. 16
(2) If the Attorney General, in the course of an investigation to determine 17
whether to bring a court action under this section, has reason to believe that a person may 18
have information, or may be in possession, custody, or control of documentary material, 19
relevant to the investigation, the Attorney General may issue in writing and cause to be 20
served upon the person or entity, a subpoena or subpoenas requiring the person or entity 21
to give oral testimony under oath, or to produce records, books, papers, contracts, 22
electronically-stored data and other documentary material for inspection and copying. 23
3

(3) Information obtained pursuant to this authority to subpoena is not admissible 1
in a later criminal proceeding against the person who provided the information. 2
(4) The Attorney General may petition the Superior Court of the District of 3
Columbia for an order compelling compliance with a subpoena issued pursuant to this 4
authority to subpoena.. 5
(e) A new title III-A is added to read as follows: 6
III-A. Franchisee Purchase Rights. 7
Sec. 5A-301. Definitions. 8
For the purposes of this title, the term: 9
(1) Distributor means any person, including any affiliate of such person, who 10
either purchases fuel for sale, consignment, or distribution to another, or receives fuel on 11
consignment for consignment or distribution to his or her own fuel accounts or to 12
accounts of his or her supplier, but shall not include a person who is an employee of, or 13
merely serves as a common carrier providing transportation service for, such supplier. 14
(2) Franchise means any contract between a refiner and a distributor, between 15
a refiner and a retailer, between a distributor and another distributor, or between a 16
distributor and a retailer, under which a refiner or distributor authorizes or permits a 17
retailer or distributor to use, in connection with the sale, consignment, or distribution of 18
gasoline, diesel, gasohol, or aviation fuel, a trademark which is owned or controlled by 19
such refiner or by a refiner which supplies fuel to the distributor which authorizes or 20
permits such use. The term "franchise" includes the following: 21
(A) Any contract under which a retailer or distributor is authorized or 22
permitted to occupy leased marketing premises, which premises are to be employed in 23
connection with the sale, consignment, or distribution of fuel under a trademark which is 24
4

owned or controlled by such refiner or by a refiner which supplies fuel to the distributor 1
which authorizes or permits such occupancy; 2
(B) Any contract pertaining to the supply of fuel which is to be sold, 3
consigned, or distributed under a trademark owned or controlled by a refiner or 4
distributor; and 5
(C) The unexpired portion of any franchise, as defined by this paragraph, 6
which is transferred or assigned as authorized by the provisions of such franchise or by 7
any applicable provision of District law which permits such transfer or assignment 8
without regard to any provision of the franchise. 9
(3) Franchisee means a retailer or distributor who is authorized or permitted, 10
under a franchise, to use a trademark in connection with the sale, consignment, or 11
distribution of fuel. 12
(4) Franchise relationship means the respective fuel marketing or distribution 13
obligations and responsibilities of a franchisor and a franchisee that result from the 14
marketing of fuel under a franchise. 15
(5) Franchisor means a refiner or distributor that authorizes or permits, under 16
a franchise, a retailer or distributor to use a trademark in connection with the sale, 17
consignment, or distribution of fuel. 18
(6) Leased marketing premises means marketing premises owned, leased, or 19
in any way controlled by a franchisor and which the franchisee is authorized or permitted, 20
under the franchise, to employ in connection with the sale, consignment, or distribution 21
of fuel. 22
(7) Refiner means any person engaged in the refining of crude oil to produce 23
fuel, and includes any affiliate of such person. 24
5

(8) Retailer means any person who purchases fuel for sale to the general 1
public for ultimate consumption. 2
Sec. 5A-302. Franchisees right of first refusal. 3
(a) In the case of leased marketing premises as to which the franchisor owns a 4
fee interest, the franchisor shall not sell, transfer, or assign to another person the 5
franchisor's interest in the premises unless the franchisor has first either made a bona fide 6
offer to sell, transfer, or assign to the franchisee the franchisor's interest in the premises, 7
other than signs displaying the franchisor's insignia and any other trademarked, 8
servicemarked, copyrighted or patented items of the franchisor, or, if applicable, offered 9
to the franchisee a right of first refusal of any bona fide offer acceptable to the franchisor 10
made by another to purchase the franchisor's interest in the premises. 11
(b) In the case of leased marketing premises which the franchisor leases from a 12
third party, following notice by the franchisor to the franchisee of termination or 13
nonrenewal of the franchise by reason of the expiration of the franchisor's underlying 14
lease from the third party, the franchisor shall, upon request by the franchisee and subject 15
to the franchisee purchasing or leasing the premises from the third party prior to the date 16
of termination or nonrenewal of the franchise set forth in the notice, make a bona fide 17
offer to sell to the franchisee any interest the franchisor may have in the improvements on 18
the premises, other than signs displaying the franchisor's insignia and any other 19
trademarked, servicemarked, copyrighted or patented items of the franchisor, at a price 20
not to exceed the fair market value of the improvements or the book value, whichever is 21
greater, or, if applicable, offer the franchisee a right of first refusal of any bona fide offer 22
acceptable to the franchisor made by another to purchase the franchisor's interest in the 23
6

improvements. For the purposes of this subdivision, "book value" means actual cost less 1
actual depreciation taken. 2
(c) This section shall not require a franchisor to continue an existing franchise 3
agreement or to renew a franchise relationship if not otherwise required by federal law. 4
Sec. 5A-303. Remedy for violation of title. 5
(a) Any person who violates any provision of this title may be sued in the 6
Superior Court of the District of Columbia for temporary and permanent injunctive relief 7
and damages, if any, and the costs of suit. 8
(b) No action shall be maintained to enforce any liability created under any 9
provision of this title unless brought before the expiration of 2 years after the violation 10
upon which it is based or the expiration of one year after the discovery of the facts 11
constituting such violation, whichever occurs first.. 12
Sec. 3. Fiscal impact statement 13
The Council adopts the fiscal impact statement in the committee report as the 14
fiscal impact statement required by section 602(c)(3) of the District of Columbia Home 15
206.02(c)(3)). 17
Sec. 4. Effective date 18
This act shall take effect following approval by the Mayor (or in the event of veto 19
by the Mayor, action by the Council to override the veto), a 30-day period of 20
Congressional review as provided in section 602(c)(1) of the District of Columbia Home 21
206.02(c)(1)), and publication in the District of Columbia Register. 23
Attachment F

Statement of Alexander Anenia
on Retail Service Station Amendment Act of 2011 (Bill 19-299)
My name is Alexander Anenia. Like Petros KifIu, I run the convenience store at the
Shell gas station at 1830 Rhode Island Avenue NE. I have been working at this station for 4
years. There is also a repair bay at my gas station. A total of eight employees work at these
facilities.
As I understand this legislation, it would force Mr. Mamo to go to the single franchise
system. If Bill 19-299 becomes law, DAG Petroleum may be forced to sell this station. It will
surely have to bring in a franchisee. As for me, the cost to purchase a service station franchise
business is beyond my reach. So there will be a lot of unknown if the station is sold to someone
else.
Bill 19-299 is creating a lot of troubles and worries for me and my family. A change
from DAG to someone else means I will have to deal with a new operator of the gas station who
mayor may not renew my lease at the mini-market. This is bad. It is bad for me and my family.
It is bad for my employees and their families.
I assume that what you are doing is legal and that you have the power to do it, but why
does the government want to meddle in our jobs? I along with other tenants at these gas stations !
are small, hardworking entrepreneurs and employees. We go to work every day and we provide :
a needed and a convenient service to our customers. At my store, I do not know of any .
complaints from our customers. Madam Chair and other members of the City Council, I petition:
you today not to support such a legislation. Please let us work in peace. Do not interfere with
my business and threaten my and my employees' livelihoods.
I ask for your help. Thank You!
COUNCIL OF THE DISTRICT OF COLUMBIA'
COMMITTEE ON GOVERNMENT OPERATIONS
AND THE ENVIRONMENT
Mary M. Cheh, Chairperson
Friday, June 17, 2009
RETAIL SERVICE STATION AMENDMENT ACT OF 2011
BILL 19-0299
Testimony of Alma Hardy Gates on behalf of Neighbors United Trust
Good morning Councilmember Cheh and Members of the Committee. My name is
Alma Gates. I live at 4911 Ashby Street, NW.
I am pleased to appear before the committee today in support of Bill 19-0299, the
"Retail Service Station Amendment Act of 2011." (The Bill)
I sat before this Committee on March 25, 2009, in support of an amendment to
prohibit converting Washington's full-service filling stations into gas-and-go
stations; and, in particular to support World Famous Parker's Exxon, located at
4812 MacArthur Boulevard that has served residents ofthe Palisades for five
generations.
When Exxon sold off a group of stations to Joe Mamo three years ago, he became
distributor and owner ofthe stations, the same role Exxon exercised in the past.
Now he wants to operate his stations, and replace operators who held the station
franchise under Exxon. Lynn Cook, an operator the Palisades community has
come to know and respect, would be replaced by a manager of Mamo' s choice and :
it is safe to assume a similar fate would befall station operators across the city as
well as their employees. This would allow the jobber to pocket all the receipts.
As you are aware similar legislation was passed by Council in 2004 and then
repealed in 2007 under heavy lobbying on behalf of Mamo. Today John Ray and
Jessie Jackson are actively lobbying on behalf of gas station magnate Joe Mamo so
he might function as distributor, owner and operator of his many retail service
stations. Yes, they oppose the Bill.
There is also the issue of homeland security in the Nation's Capital. As jobber for
his many stations, Mr. Mamo controls whether or not gasoline is available.
The proposed amendment to the Retail Service Station Act of 1976 would ensure '
the current management structure at Parker's continues and with it the service uponi
which the Palisades community depends. It would prevent a total monopoly.
Neighbors United Trust supports Bill 19-0299 to prohibit gasoline distributors
from owning and operating retail service stations in the District of Columbia, and
suggests its scope be broadened to allow existing station operators to hire their
replacements, independent of the and, to divorce station
operators from the requirement they purchase petroleum from a single source
distributor.
Please, let's get the legislation right this time!
TESTIMONY OF ALPHONSE M. ALFANO
Before The Council of The District of Columbia
Committee on Government Operations And The Environment
Friday, June 17,2011
John A. Wilson Building
1350 Pennsylvania Avenue, N.W.
Room 412
Madam Chairperson and Members of the Committee
F or the past 28 years, I have been engaged in the practice of law in
the District of Columbia. All of my clients are wholesale distributors of
refined petroleum products, sometimes referred to as "jobbers." The
purpose of this hearing is to determine whether jobbers should be
prohibited from selling motor fuels at retail in the District of Columbia.
Jobbers purchase motor fuels from nlajor oil companies, like Shell,
Exxon, and Chevron, and resell the products at wholesale and retail. In
some cases, they act as middlemen, purchasing from a major oil
companies and selling at wholesale to independent dealers. In other
cases, they own and operate stations and sell motor fuels directly to the
general motoring public. In still other cases, they consign motor fuels to .
an operator who sells the products on their behalf and the operator is
paid a commission for each gallon sold.
Jobbers decide the most economical and efficient means of selling
their motor fuels; if it is most efficient to make a nlajor capital
investment to purchase a service station and sell directly to consumers,
they will do it. Where it is more efficient to sell at wholesale to
independent dealers, they confine their activities to wholesale sales.
They operate in the manner that is most efficient and economical for the
particular geographic market in which they operate so they can be as
competitive as possible.
Other than the District of Columbia, no state or other political
subdivision in the country has ever enacted a jobber divorcement law.
That is, no state or political subdivision prohibits jobbers from selling
motor fuels at retail. Service station dealers, however, and the
organizations that represent them, have been pushing jobber
divorcement for decades. They've pushed it in a number of states
without any success. This lack of success is understandable. The
2
legislatures in the various states saw jobber divorcement for what it is,
special interest legislation (protectionism, if you will) that eliminates all
competition for service station dealers.
More importantly, it is special interest legislation with no benefit
to consunlers in the District of Columbia and with significant anti
competitive effects. Because of the anti-competitive nature ofjobber
divorcement, the Federal Trade Commission's Bureau of Economics
determined that divorcement regulations would raise the price of
gasoline by about 3 cents per gallon. Speaking to a joint subcommittee
of the Virginia Senate and House of Delegates, Ronald B. Rowe,
Director for Litigation of the Federal Trade Commission's Bureau of
Competition stated: "There appears to be no factual support for
divorcement legislation, but there are compelling reasons to believe that
such legislation would be harnlful to competition and to Virginia
consumers and visitors." The same would be true in the District of
Columbia.
In fact, the only benefits ofjobber divorcement accrue to about 30
independent service station dealers who may not even be residents of the
3
District. It eliminates their competition so that they compete only with
one another. The only basis given by these dealers for jobber
divorcement is that jobbers will somehow "get rid of the dealers," so that
jobbers can engage in direct operations. If this happens, the dealers
argue, District of Columbia residents will be deprived of the services
offered by independent dealers at their stations, like automotive repairs.
This argument has no merit whatsoever. The Petroleum Marketing
Practices Act was enacted by Congress in 1978, and it prohibits jobbers
from terminating a dealer lease or motor fuel supply contract, or even
nonrenewing a lease or supply contract, except on specified grounds that
are explicitly set forth in the Act. Quite simply, a jobber cannot
terminate (or "get rid of') a dealer unless there are proper grounds
therefor and there is proper notice.
Nor can jobbers take other actions to deprive communities of the
automotive repair services that independent dealers offer at their
stations. As you know, the Retail Service Station Act of 1976 placed a
moratorium on the conversion of service stations from bay operations
(that is, automotive repair facilities) to convenience stores or other
4
methods of operation. Thus, dealers are fully protected by federal law
and by the laws ofthe District of Columbia.
In short, if the jobber divorcement law is allowed to go into effect,
there will be no benefits to the District of Columbia or its residents. The
only beneficiaries would be a group of service station dealers who would
be insulated from any effective competition. Jobbers, on the other hand,
who invested millions of dollars to purchase service stations with an eye
towards operating them directly, will have to tum them over to dealers
and earn a significantly lower return on the investments they made and
the entrepreneurial risks they took to build, modernize, and improve
service stations in the District. Jobber divorcement would discourage
these types of investments leading to a deterioration ofthe condition of
service stations in the City. And, of course, with less competition,
gasoline prices will rise.
These are true effects ofjobber divorcement and, for these reasons,
Bill 19299 should not be enacted.
C:Wfano\2011 Testimony Before DC Council.doc
5
GOVERNMENT OF THE DISTRICT OF COLUMBIA
OFFICE OF THE ATTORNEY GENERAL
***
-
-
June 17,2011
BY HAND
Councilmember Mary M. Cheh, Chairperson
Washington, DC 20004
Re: Bill 19-299, the "Retail Service Station Amendment Act of2011"
Dear Chairperson Cheh:
I am pleased to provide the Committee on Government Operations and the Environment with the
views of the executive branch of the District of Columbia Government ("District") in support of
Bill 19-299, the "Retail Service Station Amendment Act of2011."
In recent years, the Attorney General's office has sought to apply consumer protection and
antitrust laws to protect D.C. consumers from anti-competitive practices by sellers of gasoline
that result in higher prices to consumers. Bill 19-299 would provide a major assist to our efforts.
It would amend the provision of the Retail Service Station Act of 1976 that has prohibited
gasoline producers, refiners, and manufacturers from opening or operating gasoline service
stations in D.C. D.C. Official Code 36-302.02. The proposed amendment would extend this
prohibition to "jobbers," which are defined by statute as "wholesale supplier[s] or distributor[s]
of motor fuel." D.C. Official Code 36-301.01(6A). Jobbers that currently operate gasoline
service stations in D.C. would have two years to come into compliance with the new restriction.
The primary benefit of prohibiting jobbers from operating gasoline service stations in D.C. is to
make it more difficult for jobbers to use any market power they may have as the owners of
multiple D.C.-area service stations in a way that increases the retail gasoline prices charged by
D.C. stations. The recent trend towards concentration of D.C. service station ownership in the
hands of a few major jobbers leads the Administration to conclude that additional statutory
protection is needed. For this reason, we support Bill 19-299.
We point out, however, an inconsistency between the caption of the bill and the statute it is
amending. The long title says the intent of the bill is to prohibit gasoline distributors from
441 Fourth Street, NW, Suite 1100S, Washington, D.C. 20001, (202) 724-1301, Fax (202) 741-0580
June 17,2011
Page 2
"owning and operating retail service stations in the District of Columbia." The statute, however,
as it presently exists, simply prevents producers, refiners, and manufacturers from "opening" and
"operating" retail gas stations. The premise of the existing law is that those covered - i. e, the
producers, manufacturers, and refiners - can continue to own the stations but cannot operate
them; the stations need to have independent operators. Thus, if jobbers and wholesalers were
simply added to the list ofthose covered by the law, they could continue to own the stations but
could not operate them. If the intent of the legislation is to prevent jobbers from "owning" the
stations and the real estate on which they are located, as the long title seems to suggest, then the
text of the bill would need to be amended to reflect that intent.
Back in May 2007, at a Council Committee hearing on Bill No. 17-142, the "Retail Service
Station Clarification Amendment Act of2007," the Office of the Attorney General presented
testimony that offered some support for allowing jobbers to own and operate gas stations in D.C.
The focus at that time was to keep producers, manufacturers and refiners from controlling the
price at the pumps. It was believed that jobbers would be a pro-competitive force. According to
the written testimony, "[b]y allowing jobbers to operate their own retail stations in D.C., Bill 17-
142 ha[ d] the potential to encourage retail competition by increasing the number of stations that
[were] not controlled and supplied by the major oil companies." Testimony of Bennett Rushkoff
(May 24,2007). The Committee also received a letter from the Federal Trade Commission staff
in support of allowing jobbers to operate gasoline service stations. The FTC staff stated that
vertical integration of suppliers and service stations is often "based on efficiency concerns," and
that "[l]imiting the ability of suppliers to operate service stations when it is efficient to do so is
likely to lead to higher retail prices." Letter from FTC Office of Policy Planning, Bureau of
Economics, and Bureau of Competition (June 7, 2007).
Since 2007, the landscape has changed dramatically in D.C.'s retail gasoline market. In 2009,
Exxon sold all of its D.C. gasoline stations, resulting in just two major gasoline wholesalers
owning a substantial majority ofD.C.'s gasoline stations. In contrast to 2007, when the Office of
the Attorney General suggested in its written testimony that the Council might "consider
additional statutory changes in order to allow D.C.'s independent [gasoline station] operators to
operate more independently of particular oil companies" (emphasis added), now the primary
concern at the retail level is the high proportion ofD.C. gasoline stations owned by particular
wholesalers. Last month, I indicated publicly that, as part of the District's efforts to try to reduce
the exorbitant prices that D.C. consumers pay for gasoline, this Office is actively investigating
whether there have been antitrust law violations in the D.C. gasoline market that have resulted in
unnecessarily high prices. That investigation is continuing.
In D.C., as in most other large cities; a major constraint on retail gasoline competition is the
relatively small number of retail stations. In addition, in many parts of D.C., it is not easy to find
suitable sites for new stations. Given the significant barriers to entry into D.C.'s retail gasoline
June 17,2011
Page 3
market, the recent concentration of gasoline station ownership in the hands of a small number of
wholesalers has the potential to enable those wholesalers to exercise market power, resulting in
higher retail prices for consumers.
The District's current law on gasoline marketing agreements makes it harder than it would
otherwise be for a wholesaler to exercise market power through direct manipulation of gasoline
prices. The law does so by prohibiting a distributor from requiring a station operator - including
the operator of a station owned by the wholesaler itself - to buy gasoline from that distributor.
D.C. Official Code 36-303.01(a)(6). Under this law, a distributor may seek to secure a station
operator's loyalty through better prices or better service, but not through contractual restraints on
the station operator's ability to buy gasoline from other suppliers. Put another way, while District
law does not permit a gasoline station operating under the Brand "X" trademark to purchase
Brand "Y" gasoline and dispense it from a Brand X pump, the law does give the Brand X
gasoline station the right to purchase Brand X gasoline from any available supplier.
The threat to consumer welfare posed by these market conditions calls for vigorous enforcement
of federal and District antitrust laws, careful antitrust review of transactions that could further
increase market concentration, and serious efforts to reduce unnecessary barriers (including
regulatory barriers) to the opening of new gasoline stations. Bill 19-299 is an important step in
the right direction. By forbidding wholesalers from directly operating their D.C. gas stations,
Bill 19-299, together with the District's existing restrictions on gasoline marketing agreements,
would help to prevent wholesalers from exercising market power. If not restricted in this way,
wholesalers could maintain their positions as the exclusive suppliers of particular gasoline
stations simply by becoming the operators of those stations and choosing themselves as their
suppliers. Accordingly, the Administration supports Bill 19-299.
We fully support the bill as written. We further suggest that, either as part of this bill or as part
of a future bill, the Council may wish to consider additional statutory measures that could offer
consumers more effective long-term protection from the combination of (1) high concentration in
the ownership of D. C. gasoline stations and (2) significant barriers to the entry of new retail
gasoline stations in D.C. First, we respectfully request the Council to consider providing the
Attorney General with express authority to seek injunctions and civil penalties, on behalf of the
public, against distributors that violate the District's gasoline marketing agreement law or engage
in any other presumptively anti-competitive practices that could have the effect of increasing
prices at the pump. Second, if the current bill is intended to allow wholesalers to own gasoline
stations, but not operate them, then a new bill should provide that wholesalers with a high
concentration of gasoline station ownership may not use their market power, over time, in other
ways besides increasing wholesale gasoline prices. 'For example, a wholesaler with a high
enough concentration of gasoline stations could choose to raise rents and/or provide little or no
facility maintenance. The station operators would probably have little choice but to pass on their
higher rental and maintenance costs in the form of higher retail prices to consumers.
June 17,2011
Page 4
In conclusion, passage of Bill 19-299 should increase the effectiveness of the District's gasoline
marketing agreement law as a means of preventing gasoline wholesalers, at least in the short
term, from exercising market power to the detriment of consumers. We support Bill 19-299,
commend the Members of the Council for its introduction, and urge its favorable consideration
by the Committee, and, ultimately, by the full Council.
Sincerely,
/\ (
C _ J ,\ I (l
/ ,;t..VV "--t ~ L- ~ L~ ;::...= -_ _
Irvin B. Nathan
Attorney General
for the District of Columbia
IN THE COUNCIL OF THE DISTRICT OF
COLUMBIA
BEFORE THE COMMITTEE ON GOVERNMENT
OPERATIONS AND THE ENVIRONMENT
Public Hearing on B19-299 - the Retail Service Station!
Amendment Act of 2011
Remarks Prepared By:
David A. Balto
Law Offices of David A. Balto
David. balto@dcantitrustlaw.com
June 17,2011
I
TESTIMONY OF DAVID A. BALTO
BEFORE THE DC CITY COUNCIL
IN SUPPORT OF PROPOSED LEGISLATION B19-299
JUNE 17,2011
INTRODUCTION
Madam Chair and other distinguished members of the council, I want to thank you for
giving me the opportunity today to speak about B19-299. The proposed legislation to amend the
Retail Service Station Act of 1976 to prohibit gasoline distributors from owning and operating
retail service stations in the District of Columbia. As I will detail in my testimony, the retail
gasoline market in the District of Columbia is not competitively healthy. Two gasoline
distributors (jobbers) control approximately 70% of the retail market. Since the council passed
legislation to permit jobbers to own service stations four years ago, there have been numerous
service station acquisitions which have led to a significant increase in gasoline prices. This
tremendous vertical integration between jobbers and retailers raises serious competitive concerns I
and has led to significantly higher prices for hundreds of thousands of DC consumers.
My testimony today is based on over 25 years of experience as an antitrust practitioner,
the majority of which I spent as a trial attorney in the Department of Justice and in several senior i
management positions including Policy Director of the Federal Trade Commission. As a trial
attorney in the Justice Department, I helped to bring several criminal enforcement actions against
gasoline jobbers for price fixing. As the Policy Director of the Federal Trade Commission, I
investigated numerous gasoline mergers including ExxonIMobil and BP/Arco-both of which
led to major divestitures. Finally, on multiple occasions I have contributed to studies on retail
gasoline competition.
I am here before the committee today with a simple message: the repeal of the DC
divorcement law harms consumers. By diminishing competition, the law results in higher prices
at the pump. The DC gasoline market is a tight duopoly controlled by two gasoline jobbers with
a combined market share of approximately 70% -- a market share higher than jobbers in any
other US metropolitan market. The price gap between DC and its suburban neighbors has
increased by more than 7 cents since 2009, according to the Washington Post. The elimination of
divorcement law has caused consumers in DC to pay far more for gasoline.
But the council can correct this mistake by enacting BI9-299. Enactment of this
proposed divorcement legislation, along with sound antitrust enforcement actions by the DC
Attorney General, would appropriately address this broken market.
I will begin my testimony with a discussion of the issues with vertical integration in the
gasoline industry and will then, make three major points.
1. Elimination of the divorcement legislation has harmed consumers through higher
retail gasoline prices, greater concentration and a less than competitive gasoline market. .
1
i
2. Enactment ofB19-299 will restore competitive balance to this market and should
in turn, lead to lower gasoline prices.
3. The 2007 FTC letter to the DC Council and other FTC studies which claim the
ban on divorcement to be procompetitive are inapt.
CONCERNS OVER VERTICAL INTEGRATION
Since the proposed legislation importantly prohibits the vertical integration ofjobbers
and retailers, let me first raise a few concerns about vertical integration in this market. In many
markets, vertical integration among complimentary levels can be beneficial. By coordinating the
production and distribution of products, vertical integration can promote efficiency and eliminate
the need for firms on different levels ofthe market to secure profits. With one firm controlling
both production and distribution, there is only a single margin to be secured.
But vertical integration is not innocuous. As the early history of Standard Oil has
demonstrated, vertical integration can also be a very effective tool for stifling competition.
There are three tendencies of vertical integration that may explain how the elimination of
divorcement legislation has harmed competition in the DC gasoline market.
For one, vertical integration can raise entry barriers or foreclose nonintegrated firms from
a market. In the case ofthe DC gasoline, for example, having two dominant jobbers that control
approximately 70% ofthe retail market makes it is much more difficult for new jobbers to enter.
In preparation for this testimony, I spoke with jobbers from outside the Washington area. They
explained that because of the vertical integration between the two dominant jobbers and their
service stations, it was particularly difficult to enter into the Washington wholesale gasoline
market. Because of the lack of nonintegrated independent gasoline retailers, it is exceedingly
difficult for a nonintegrated jobber to effectively enter into this market.
Second, vertical integration may enable integrated firms to raise its competitors' costs in
an anticompetitive manner and reduce the incentive for nonintegrated firms to compete. For
example, a dominant jobber may diminish the ability of independent firms to compete by
limiting its supply or by raising prices strategically. Positioned at two levels of the market, a
vertically integrated jobber/retailer relates to service stations as both a horizontal competitor, and.
as a supplier. In its position as supplier, the jobber/retailer has access to competitively sensitive
information about its retail competitors. Access to such sensitive information enables a firm to
diminish the ability of its rivals to compete. Also thanks to their dual market position,
jobber/retailers can manipUlate the price it charges to retail competitors, thus further hindering
their rivals' ability to compete. Put simply, permitting jobbers to own retailers is essentially to
put the fox in charge of guarding the henhouse.
Finally, since a vertically integrated jobber has both the incentive and ability to raise
retail prices, integration can facilitate collusion. In the Justice Department cases against jobbers
for retail price fixing, jobbers owning retail stations were frequently members to the conspiracy.
2
In owning retail stations, jobber/retailers have more price information, and are more able to
coordinate price increases. Their position as supplier furthermore enables them to discipline
rivals should they choose not to follow through with price increases.
IMPACT OF THE REPEAL OF THE DIVORCEMENT LEGISLATION
When the divorcement legislation was repealed in 2007, the Council received testimony
that its elimination had the potential to increase competition and reduce gasoline prices. The
facts, however, do not reveal this to be the truth. Since 2007, gasoline prices have increased
significantly and based on my review, their increases have largely not been the result of any
other factor, including increases in wholesale costs or increases in taxes. Gasoline prices have
increased at a more rapid rate in the District of Columbia than in any adjoining jurisdictions and
there are simply no exogenous facts to explain this disproportionate increase.
So, why didn't the 2007 acquisition work the way it was intended? First, despite the
testimony that there are few barriers to entry in the jobber market, the very limited entry to the
market over the past several years seems to suggest otherwise. Second, the fragile nature of
gasoline competition, due to the significant entry barriers at the retail level, was insufficiently
recognized. These factors combined made this a fertile environment for retail acquisitions to lead
to increased prices.
In the past four years, there have been significant increases in concentration at both the
jobber and the retail level. Two jobbers control approximately 70% of the market, a level of
concentration much higher than any other metropolitan gasoline market in the United States. The
two major jobbers have acquired approximately 30 stations in the past four years.
Sometimes, these types of acquisitions create efficiencies, especially where an acquisition
allows a firm to improve service or lower costs resulting in lower prices for consumers. In this
case, however, the acquisitions have not benefited consumers. The retailers I have spoken with
continually complained that these dominant jobbers do not support the same level of quality as
previous owners and that competition based on the level of service has diminished enormously.
ENACTMENT OF THE PROPOSED LEGISLATION SHOULD RESTORE COMPETITIVE
BALANCE AND LEAD TO INCREASED COMPETITION
The current market structure, where two jobbers have such a substantial share of both the
wholesale and retail market, leads to significant anti competitive problems. Enactment of the
proposed legislation will eliminate the vertical control that these two dominant jobbers possess.
By breaking the ownership bind, independent retailers would have greater freedom to price
competitively. For, with a broader selection ofjobbers to choose from, independent retailers
should be better able to seek the lowest wholesale costs, thus spurring competition at both retail
and wholesale levels.
3
Elimination of the ownership bind over retail should also spur greater entry at the
wholesale level. With more nonintegrated service stations, there will be an increased ability for
jobbers to enter the DC market.
FTC STUDIES ON DIVORCEMENT ARE INAPT
In 2007, the FTC wrote to the Council suggesting that the elimination of the divorcement
law would be procompetitive. They suggested that past FTC studies have demonstrated
divorcement legislation to lead to higher prices and other anticompetitive effects.
There are several reasons to discount this FTC study. First, though economic theory is
surely of important value, here the evidence clearly demonstrates that the elimination of
divorcement legislation has led to higher and not lower prices. Regardless of the theoretical
rationale of these FTC studies, the fact is that in reality, the elimination of divorcement
legislation has harmed consumers.
Second, the 2007 FTC letter never considered the market structure at issue. FTC studies
typically assume that both the wholesale and retail markets are competitive. Yet in this case,
with two firms having a 70 percent wholesale market share, the wholesale market is obviously
not structurally competitive.
Third, FTC studies, including those referenced in the letter, are frequently based on dated
evidence. Most of the studies referenced by the FTC are from the 1990s with one even dating all
the way back to 1984.
Finally, one reason the FTC gives for opposing divorcement legislation is that the vertical
integration in this case enables refiners to effectively control the level of service provided at
gasoline stations so as to protect the value and reputation of their brand. While this may indeed
be a legitimate concern in other contexts, this simply is not a concern relevant for jobber
ownership. Jobbers are not a brand. They are the middlemen between refiners and retailers. No
one goes to a particular service station because it is owned by a particular jobber.
On a final note, I would like to briefly touch upon the impact of these gas price increases
on DC tax revenue. While typically, higher prices translate to higher taxes, the close proximity of
DC's adjoining jurisdictions negates this norm. In this case, high gas prices caused by the ban on
divorcement may actually lead to lower tax revenue as more consumers are incentivized to fill up
out of the district. Divorcement legislation, therefore, should maximize DC revenue as well as
keep more DC based services in business.
I hope this testimony has been valuable in illuminating the need for proposed legislation
and I look forward to your questions.
4
Testimony of David "Corky" Calhoun
Bill 19-299 "Retail Service Station Amendment Act of2011"
Friday, June 17, 2011
Room 412, John A. Wilson Building
1350 Pennsylvania Avenue NW
My name is David "Corky" Calhoun and I am currently employed by Capitol
Petroleum Group as the Field Sales Manager. Prior to joining CPG earlier this year
I enjoyed a 30 year career with ExxonMobil and for the past 10 years I served as
U.S. Dealer Recruiting Manager. In this role I evaluated the business plans and
qualifications for Franchisees who were seeking to become Exxon dealers.
In my current role with CPG I have direct responsibility for the supervision and
development of(5) Territory Managers as well as management of the business
relationship between CPG and our franchise dealers who serve the Washington,
DC market.
Historically the dealers in the metropolitan market have enjoyed business results
that far exceed the national average. Franchise values have remained
comparatively high and there have been very few dealer changes. Periodically I
review a commercial website (www.bizbuysell.com) and review sales contracts
processed through our office. It is clear from this data that franchise values remain
strong. In spite of the current difficult economic environment our dealers continue
to thrive.
In spite of this comparative economic success it is puzzling to know that there is a
group of dealers who are claiming that there needs to be new laws enacted to
"prevent them from being squeezed". (6) dealers who are leaders of this group held
a press conference to petition the City Council for action. These dealers operate
(9) service station facilities in the District. Six of these of these nine locations are
still under the same lease terms that existed when they were acquired from
ExxonMobil in 2009. The other three locations have been given lease renewals.
Just as was the case when the properties were owned by ExxonMobil, the lease
rent is calculated based on the property values, property taxes, and the cost of
maintenance. It is clear that in the metro Washington. DC area the property values
vary significantly.
On the basis of claims that their profits are being "squeezed" these (6) dealers have
proposed what they cal1 "price gouging legislation". The slides I will show you
will illustrate how much profit each of these (6) dealers make on a gal10n of
gasoline. When we review the slides you can judge for yourselves if they are
real1y being squeezed.
Testimony of Dawit Habteselasie
Bill 19-299 "Retail Service Station Amendment Act of 2011"
Friday, June 17,2011
My name is Dawit Habteselasie. I am the tenant operator of the mini-market
at the Shell station located at 6201 New Hampshire Avenue NE. It is a small
convenience store and I have three employees who work for me.
I am here to oppose Bill 19-299. I am not sure what I can say today to
change your mind about the law you are about to apply to DAG Petroleum and Mr.
Mamo. What I do know is that I am able to own and operate my own business
now. I provide jobs for these people and I do not want any law passed that would
threaten or change how I now make a living. I also speak for my three employees.
This is the most un-American thing I have ever seen. If this happens to Joe Mamo,
it will not be good for me.
Trying to run a small retail business is tough these days because of the
economy. Operating a little mini-market at a gas station is not easy. The hours are
long, and it can be dangerous too, but it allows me and my employees to work and
earn our income. For this, we are thankful of Mr. Mamo and America.
If Bill 19-299 becomes law, I am told that Mr. Mamo may have to terminate
my lease because he will have to bring in someone other than DAG to operate the
gas stations. I suppose I could attempt to purchase the franchise, but this is beyond
my current financial ability. This is not a good law and its passage will cause great
difficulty for me and my business. I ask the City Council to reject this legislation.
Thank you.
The following data was provided by
the station operator at 2151 M St. NW.
---
FAIRFAX OUR LUKE SUNOCO SUNOCO
MAY RACK DTW DIFF RETAIL MARGIN OIL 22&P 15&U
l-May 3.458 3.7553 0.2973 4.59 0.4347 4.59 4.09 3.99
2-May 3.458 3.7553 0.2973 4.59 0.4347 4.59 4.09 3.99
3-May 3.432 3.7453 0.3133 4.59 0.4447 4.59 4.09 3.99
4-May 3.432 3.7453 0.3133 4.59 0.4447 4.59 4.09 3.99
5-May 3.446 3.7653 0.3193 4.59 0.4247 4.59 4.09 3.99
6-May 3.2825 3.6253 0.3428 4.59 0.5647 4.59 4.09 3.99
7-May 3.343 3.5853 0.2423 4.59 0.6047 4.59 4.09 3.99
8-May 3.343 3.5853 0.2423 4.59 0.6047 4.59 4.09 3.99
9-May 3.343 3.5853 0.2423 4.59 0.6047 4.59 4.09 3.99
10-May 3.5585 3.6753 0.1168 4.79 0.7147 4.79 4.29 4.12
11-May 3.526 3.6753 0.1493 4.79 0.7147 4.79 4.29 4.12
12-May 3.3855 3.6453 0.2598 4.79 0.7447 4.79 4.29 4.12
-
13-May 3.323 3.5953 0.2723 4.79 0.7947 4.79 4.29 4.12
14-May 3.265 3.5653 0.3003 4.79 0.8247 4.79 4.29 4.12
f-
15-May 3.265 3.5653 0.3003 4.79 0.8247 4.79 4.29 4.12
e-------
16-May 3.265 3.5653 0.3003 4.79 0.8247 4.79 4.29 4.12
--
17-May 3.155 3.5153 0.3603 4.79 0.8747 4.79 4.29 4.12
18-May 3.0985 3.4953 0.3968 4.79 0.8947 4.79 4.25 4.12
19-May 3.086 3.4953 0.4093 4.79 0.8947 4.79 4.25 3.99
20-May 3.0645 3.4753 0.4108 4.79 0.9147 4.79 4.25 3.99
21-May 3.076 3.4753 0.3993 4.79 0.9147 4.79 4.25 3.99
---
22-May 3.076 3.4753 0.3993 4.79 0.9147 4.79 4.25 3.99
--
23-May 3.076 3.4753 0.3993 4.79 0.9147 4.79 4.25 3.99
--
24-May 3.066 3.4553 0.3893 4.79 0.9347 4.79 4.25 3.99
-
25-May 3.098 3.4553 0.3573 4.79 0.9347 4.79 4.25 3.99
26-May 3.1475 3.4553 0.3078 4.79 0.9347 4.79 4.19 3.99
~ -
27-May 3.112 3.4553 0.3433 4.79 0.9347 4.79 4.19 3.99
28-May 3.139 3.4853 0.3463 4.79 0.9047 4.79 4.19 3.99
--
29-May 3.139 3.4853 0.3463 4.79 0.9047 4.79 4.19 3.99
30-May 3.139 3.4853 0.3463 4.79 0.9047 4.79 4.19 3.99
31-May 3.139 3.4853 0.3463 4.79 0.9047 4.79 4.19 3.99
100.737 110.6043 9.8673 146.69 23.6857 146.69 130.27 124.86
AVG 3.249581 3.567881 0.3183 4.731935 0.764055 4.731935 4.202258 4.0277419
3.649581
I
RACK vol 89327
I
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COST
I
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MID-ATLANTIC PETROLEUM DISTRIBUTORS' ASSOCIATION
550M Ritchie Highway. PMB 283 Severna Park, Maryland 21146
(410) 349-0808 Fax: [410) 34S-8510
E-mail: petegwyn@aol.com
Peter Potter
F. PETER HORRIGAN
Chaitman I
President
June 17,2011
The Honorable Mary M. Cheh
Chairwoman, Committee on Government Operations and the Environment
1350 Pennsylvania Avenue, NW
Suite 108
Re: Opposition to Bill 19-299 Retail Service Station Amendment Act of2011
I am Peter Horrigan, President ofthe Mid-Atlantic Petroleum Distributors Association
(MAPDA) a 68-year-old association of petroleum marketers. The members ofMAPDA
are petroleum marketers (Jobbers) marketing gasoline through retail outlets in the District
of Columbia, Maryland, Delaware and Virginia. Members go to market representing
major brands as well as private brands. The members are small business.
Over the past 10 years the make up ofthe retail petroleum industry has changed
dramatically and those changes are on going as we attend this hearing today. Major oil
companies are leaving direct marketing, new market entrants such as Walmart, Safeway,
Giant, BJ's, Royal Farms, Sheetz, WaWa and other big box or super retailers are making
their presence felt and creating very competitive markets. Jobbers, small companies that
supply major oil branded products as well as unbranded products to dealers, commercial
accounts and government have taken the place of most of the major oil companies in the
supply chain. Quite a dramatic shift as to how consumers fill their tanks.
Jobbers provide dealers a business model that others in the supply chain do not. A
Sheetz, WaWa or Royal Farms operate their outlets with company personal and offer no
chance for small independent dealers to have a business opportunity. Removing any
option, which this bill does, from a jobbers successful stay in business makes that stay
much more difficult and puts the dealers that the jobber supplies at risk for their success.
Removing the right of a jobber to operate his business takes away an option used to
improve under performing investments. Considering the substantial investment a jobber
has in each location in the form of real estate and equipment, not to mention the
significant environmental liability, divorcement is a significant penalty that does not give
consideration to this investment. Jobbers are not major oil companies and do not have
the asset resources that majors have and need all the tools available to them to be
successful.
Jobbers, through the dealer business model, place their considerable investment in the
hands ofdealers and under jobber divorcement ifthe dealer works to devalue the
investment, the jobber has no recourse except possibly to sell the asset for another
intended use or to sell the asset below the invested value. Not a pleasant choice for the
jobber and quite possibly the District would loose another gas station.
A deterrent to investment is inconsistency in government regulations. This bill is a classic
example of government inconsistency as jobbers were excluded in the original statue,
then added then removed and now are threatened with being added again. This type of
government action discourages business investment and creates uncertainty. If a station
closes, because the dealer leaves, there is no incentive for the jobber to reopen the
property as station but to sell it as real estate. The District looses and the dealer looses!
Higher gasoline prices in the District have been an issue before the Council in the past
and many studies, including those ofthe Federal Trade Commission has indicated that
divorcement leads to higher prices for consumers. Because of many factors the District
consumers already pay a high price for their gasoline and this bill will only add to those
costs.
We request defeat of Bill 19-299 Retail Service Station Amendment Act of 2011.
The following PowerPoint slides were provided by
representatives of Capitol Petroleum and Joe Mamo.
ANACOSTIA REALTY LLC
6820-B COMMERCIAL DRIVE
SPRINGFIELD, VA 22151
Phone: (703) -750-6810
Fax: (703) -750-6817
Sold VE
To:
2708 VIRGINIA AVE NW
WASHINGTON, DC 20037
Acct. No: 93930064 PO No:
Ship via:Samuel coraluzzo Co Inc. Sales
Product Code/
Description
S/L Number-- 846017
065
87 OCT UNL REG
066
89 OCT UNL MID
069
93 OCT PREM
FED ETHANOL CREDIT
DC EXC GAS TAX
FED. GAS TAX .184
INVOICE DUE ON 06/07/2011
Internal Use Invoice
Page: 1
No : 49275
I nvoi ce Date : 06/04/ul
Ship Date: 06/ 04/11
Profit Center: 312
Ship
To:
2708 VIRGINIA AVE Nllf
Terms :NET 3
ID : NC BOL / Ship.Order:
Quantity Price
Shipped Each Extens ion
5 ,701. 0 p . 4553001 19,755. 68
1,001. 0 3. 570300 3,573.87
2,000.0 3.740300 7,480.60
8,702.0 J -391.60
8,702.0 2,044.98
8,702.0
0.235000
o. 184000 1,601. 16
Total Amount: 34,064.69
Dealer pays per gallon:
Regular
3.4653
-0.0450
0.2350
0.1840
Premium
3.7403
-0.0450
0.2350
0.1840
3.8393 4.1143
682 0 -8 COMMERCIAL DRI VE
Phone: ( 703)-750- 6810
Fax : (70 3)- 750-681 7
Sold 215 0 M STREET NW
To:
2150 M STREET NW
Acct . No:93930150 PO 1,0:
Page: 1
Invoice No: 49787
I I ITY0ce pate: ::wzrv ru
ship Date: 06 / 14/ 11
Profi t Center : 328
Shi p 2150 M STREET NW
To:
,
Ship via:Sasnuel Coraluzzo Co Inc. Sales ID:NC
Terms :NET 3
BOL/Ship.Order:
Product Code/
Descri pti on
B/L Number- 848162
065
87 OCT UNL REG
069
93 OCT UNL PREM
FED ETHANOL CREDIT
DC EXC GAS TAX
FED. GAS TAX .184
INVO ICE DUE ON 06/ 17/2 011
Quantity
Shipped
5,701. 0
3,000.0
8,701. 0
8 ,701. 0
8,701 . 0
Price
Each
13
3. 72 5 300
Total Amount:
Extension
19 ,641. 66
11 , 17 5.90
-391. 55
2,044.74
1,600. 98
34,071.7 3
Regular Premium
3.4453 3.7253
-0.0450 -0.0450
0.2350 0.2350
0.1 840 0.1840
3.8193 4.0993
-
OJ
l>
<
tD
::l
c::
tD
'"
m
6820 -B COf\'IMERCIAL DRIVE
Phone: (703) -750- 6810
Fax: (703) -750- 5817
So ld 339 PENNS iWE
To:
339 PENNS AVE SE
Acct . No:93930007 PO No:
Ship via:Samuel Coraluzzo Co Inc . Sale s
Product Code /
Description
B/L Number- - 847305
065
87 OCT UNL REG
055
89 OCT UNL MID
FED ETHANOL CREDIT
DC EXC GAS TAX
FED . GAS TAX .184
INVOICE DUE ON 06/13/ 2011
Intemal Use Invoice
Page: 1
I n vo i c e No: 4962 9
Ir nvoi ce Date: 66716711 1
s hi p Date: 06 /10/ 11
Profit Center: 301
Ship
To:
339 PENNS AVE SE
Te rms: NET 3
ID:IK BOL/Ship.Order:
Quanti ty Price
Shipped Each Extens i on
3,702.0 [ 3 ~ 4203001 12, 661. 95
1,701.0 3 . 530 300 6,005.04
5,403.0 - 243.14
5,403.0 1,269.71
5 ,40 3. I) 994.15
Total Amount: 20 , 687 . 71
Dea ler pays per gallon :
Regula r
3.4203
-0 .0450
0.2350
0.1840
Mid-Grade
3.5303
-0.0450
0.2350
0.1840
3.7943 3.9043
MIACOSTIA REALTY LLC
6820-B COMMERCIAL DRIVE
SPRH,GFIELD, VA 22151
Phone: (703)-750-6810
Fax: (703)-750-681 7
sold ."
To:
1601 I/II SCONSIN AVE NIH
Acc t . No: 93 9 301 30 PO No:
Sh i p \/"ia : samu e l Co r a luz zo Co Inc. sales
Product Co de/
De sc ri p ti on
B/ L r'lumber-- 847539
06 5
87 OCT UI'IL REG
06 6
8 9 OCT
069
9 3 O::: T UNL PREM
FED ETHANOL CREDIT
DC EXC GAS TJ1X
FED. GAS TAX .184
I NVOI CE DUE ON 06/14/2011
Page: 1
I nvo i c e No : 496 48
I r n VO l ce Dace: 06/ 11/ 11i
s h i p Dace : 06 / 11/ 11
Profit Center: 325
Ship .. i' i
To:
1601 WISCONSIN AVE NW
WAS HINGT ON, DC 20007
Tenlls:NET 3
ID:NC BOL/Ship.Order:
Quant i ty Price
Sh ipped Each Extension
5 ,701.0 p. 19,527.64
1, 000 .0 3. 530300 3,530. 30
2 ,000.0 3.700300 7 ,400 . 60
8,701.0 - 39 1. 55
8,701. 0 2,044.74
8 , 701.0 1, 600.98
To tal Amount : 33 ,712. 71
Regular
3.4253
-0.0450
0.2350
0.1840
Premium
3.7003
-0.0450
0.2350
O. 1840
3.7993 4.0743
ANACOS TIA REALTY LLC
6820 -8 COMMERCIAL DRI VE
Phone: (703) -7 50 - 6810
Fax: (703)- 750- 6817
So ld 200 MASSACHU SETTS AVE
To:
AVE NE
WASHI NGTON, DC 20002
Acct . No:93930117 PO No:
Sh ip v i a :samuel Coralu zzo Co Inc . Sales
Pr"od uct Code /
Des c ript i on
B/ L Nurnber- - 847752
06 5
87 OCT UNL REG
069
9 3 OCT UN L PREM
FED ETHANOL CRED IT
DC EXC GAS TAX
FED. GAS TAX .184
INVOICE DUE ON 06/15 / 2011
Pag e: 1
Invoi ce No: 49655
'I nyoice Dare -;- -- QllZ(]l ,
s hip Date: 06/ 12/11
Profi t Center: 322
Ship 200 MASSACHU SETTS AVE
To :
SAVE NE
WASHI NGTO N, DC 20002
T e rrns : NET 3
ID:NC OL /Sh i p. Ord e r:
Quanti t y P[" ice
shipped Each Exte ns ion
6 ,701 . 0 3. 420 300 I 22 ,919.43
2, 000 .0 3. 700300 7,400 . 60
- 391 . 5 5
8, 701. 0
0. 045000 8,701.0
2,044.74
8,701.0
0.2 35000
0.184000 1,600.98
Total Amount: 33, 574 .2 0
Regular
3.4203
-0 .0450
0.2350
0.1840
Premium
3.7003
-0 .0450
0.2350
0.1840
3.7943 4.0743
_.
Q)
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tD
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tD
tn
m
6820-B COMMERC IAL DRIVE
Phone: (703) -750-681 0
Fax: (703)-750 -681 7
Sold dlli, ;;::V%
To: I ' _. _01' __ ' __ 1
12 01 PENNSYLVANIA AVE SE
WAS HINGTON, DC 20003
ACCt. No:9 39 30084 PO No:
To
Pag e : 1
Invoice No : 49627
D O vOl ce Date: 06 110[111
Ship Date: 06/10/ 11
Prof it Center: 315
1201PENNSYLVANIA AVE SE
WASH I NGTON, DC 20003
Shi p Vi a:S amue l Coraluzzo Co Inc. Sales ID:NC
Te rms: NET 3
BOL/sh i p. orde r:
Product Code/
D'2sc r' i p ti on
B/L Numbe r- B47320
065
8 7 OCT REG
066
89 OCT UNL MID
069
93 OCT UNL PREM
FED ETHANOL CREDIT
DC EXC GAS TAX
FED . GAS .184
INVO I CE DUE ON 06/ 13/2011
Quant i t y
Sh ipped
5,701. 0
1 ,000.0
2,000.0
8,701. 0
8,701. 0
8,701. 0
Price
Each
[Limn-oOi
3. 53 0300
3.700300
u
0 .235000
0.184000
Total Amount:
Ext ens i on
19,499.13
3, 530.30
7, 400 . 60
-391.5 5
2,044. 74
1,600. 98
33,684.20
Dealer pays per gallon :
Regular Premium
3.4203 3.7003
-0.0450 -0.0450
0.2350 0.2350
O. 1840 O. 1840
3.7943 4.0743
682 0 -B DRI VE
SPRINGFIELD, VA 22 151
Phone: (703) -75 0-6810
FJ.x : (70 3) - 750 - 68 17
sold 481 2 MAC ARTHUR 8LVD
To:
4812 MAC ARTHUR BLVD NW
VJASH HIGTON , DC 20007
Acc t. No:939 30018 PO NO:
srli p Via: Samue l cor al uk: zo Co I nc. Sales
rroduct code/
Descrip t i on
8/l Number - - 847527
065
87 OCT UNL REG
066
09 OCT UNL MID
069
93 OCT UNL PREM
FED ETHANOL CREDIT
DC GAS TAX
FED. GAS TAX .184
INVOI CE DUE ON 06/ 14/2 011
Internal Us e Invoi ce
PJ.ge: 1
Invoice No : 49641
U nYOlce bate: 06/UIl D
ship Date : 06/11 / 11
Profi t Center: 303
Sh ip 4812 ARTHUR BLVD
To:
4812 MAC ARTHUR BLVD NW
'IJASHINGTON, DC 20007
Terms:NET 3
ID: NC BOL/ship. Order:
Quantit r rice
Shipped Each Ex tension
5 ,700 . 0 p. 42 53l5DI 19 , 524 .2 1
1 , 000 . 0 3. 530300 3, 530 . 30
2, 000. 0 3. 700300 7 , 400.00
8,700 . 0 -39 1. 50
8,700 . 0 2 ,044.5
8,700. 0 1,600. 80
Total Amoun t: 33 ,708.91
Regular
3.4253
-0.0450
0.2350
0.1840
Premium
3.7003
-0.0450
0.2350
0.1840
3.7993 4.0743
Higher fuel prices and slightly highly vol ullle also drovethe sales gain. 1fotor fuel sales gre,;r 17. 2
percent last year as overall per gallon prices rose 14.4 percent. Fuel continues to generate the
majority of c-store revenuebut only aSTIlall share of the industry' sprofits. Orerall ,69.3 percent of
total c-store sales dollars vvera traIn Inotor furls. Even with an increase in Inotor fuels gross Inargi.n.s
t 1,5. 8 ts -Ir lotar fuels nlargjns relnamad slitn and nlotor fuels .still only fur
26.4 vercent 0 preta..x pronts at c-stort:s.
--
60 Day Fuel Profit Trend
mid 60 day avg
2150 MSTREET NW
Site Iregular 60 day avg
$ 0.68
200 MASSACHUSETTS AVE NE I $ 0.32
$ 0.66
$ 0.33
339 PENNS AVE SE 1$ 0.58 $ 0.56
1601 WISCONSIN AVE NW 1$ 0.45 $ 0.53
1201 PENNSYLVANIA AVE SE I $ 0.37
I
$ 0.45
4812 MAC ARTHUR BLVD NW $ 0.28 $ 0.37
2708 VIRGINIA AVE NW $ 1.14 $ 1.22
premiu,m60 day avg
$ 0.59
$ 0.31
$ 0.61
$ 0.57
$ 0.38
$ 0.38
$
Testimony of Joe Mamo
before the
"Retail Service Station Amendment
Act of 2011" (Bill 19-299)
Friday, June 17,2011 at 11:00 AM
John A. Wilson Building, Room 412
1350 Pennsylvania Avenue, NW
Introduction
Good afternoon, Chairperson Cheh, members and staff of the Committee.
My name is Joe Mamo. I am a local businessman, and I have been operating gas ,
stations in the District of Columbia for almost three decades. I am here today .
to oppose Bill 19-299. This legislation that would treat jobbers the same as oil I
producers, oil refiners or manufacturers of motor fuel is misguided. There will i
be no public benefit in the City Council passing a law to prevent me and other I
jobbers from owning, operating and managing gas stations in the District of I
Columbia. This unfair legislation will have a serious economic impact and I
complicated legal ramifications on many of the gas stations owned and J
operated by Capital Petroleum Group ("CPG"). Moreover, it will adversely impaq
the stations' contract managers, commission operators and their employees in !
the District. This anti-jobber legislation will not help you, Madam Chair, achieve i
your goal of reducing gas prices at the pump. In fact, it will do just the .
opposite, especially in the northeast and far southeast sections of the City
where jobbers like myself and others such as Lowest Price, Hess, Chevron
supply and distribute gasoline.
I also like to inform the Chair that we are fully cooperating with the
District's Attorney General in addressing concerns such as my so-called
monopolizing of gas stations in the District and the implied price gouging. You
can be assured that CPG does not engage in any of these business practices.
Perhaps, you should also be asking the AG to investigate other gas stations for
price gouging. I think you might find that there is where the price gouging is
mostly happening.
I do not understand why the City Council is considering and
reconsidering various forms of retail service station legislation target primarily
at me. The litany of bills range from giving dealers right-of-first refusal,
prohibiting jobbers from owning and operating gas stations to imposing
retroactive transfer tax on sale of gas stations, etc.
On another note, why does the City Council not step in and, prohibit, say,
the Colonial Parking, Doggett or PMI from owning and operating additional
"
parking garages because these companies already control a significant number
of parking garages in the District? Or why not pass a law and tell Starbucks
they cannot own their coffee shops but must franchise them out because they
outnumber the local coffee shops?
The real test for the City Council is whether or not Bill 19-299 will benefit!
the consumers. What are the benefits from enacting such a law? The original I
intent of divorcement laws is to protect consumers from predatory pricing and I
to ensure that "producers, refiners or manufacturers of motor fuel" and Big Oil !
companies would not exert full control on the flow of oil from the ground to
the pump. A jobber is none of these entities nor am I the new "Rockefeller". A
jobber is simply a gasoline wholesaler that fosters competition and engages in
volume retail gasoline business. When oil companies and Wall Street
speculators drive up prices, jobbers suffer too.
It is also clear that including jobbers in the divorcement laws along with
oil producers, oil refiners and manufacturers of motor fuel will have no impact
on lowering prices for consumers. In fact, the FTC has found that divorcement I
laws tend to raise retail gas prices and do not protect the consumers. Extensive
and comprehensive economic studies done by FTC have shown that
divorcement laws tend to increase retail prices by an average of 2.6 cents per
gallon. A study of Maryland's divorcement laws by its Department of Fiscal
Services revealed that gas prices went up as a result of divorcement. Further,
according to the U.S. Department of Energy, "divorcement is an unwarranted
intrusion into the market. The allegations of proponents of divorcement do not
support its enactment".
Making jobbers subject to divorcement statutes is unnecessary and
counterproductive. There are no real benefits for the consumers. This Bill is
clearly a single industry legislation that favors six dealers led by their lobbyist,
Mr. Bereano who are trying to force me to sell them the gas stations so they can
develop the real estate.
In conclusion,
1. Will forcing jobbers to be divorced from the operations of their gas
stations lower gasoline prices and benefit consumers? NO.
2. Does the District want to be the first and only jurisdiction in the country
to enact a jobber divorcement statute and create an unfair, unfriendly
and uncompetitive business environment at the expense of the
consumers? NO.
3. Does the City Council want to implement special interest legislation to
change the rules to benefit six dealers? NO.
I ask the City Council to reject Bill 19-299. Thank you again for the opportunity'
to testify and I am happy to answer any questions that you may have.
Page 2
Hearing on Retail Service Station Amendment Act of 2011
(Bill 19-0299)
District of Columbia Council Committee on Government Operations and the Environment
Room 412, the Wilson Building
1350 Pennsylvania Avenue NW, Washington, D.C. 20004
Friday. June 17,2011, 11:00 A.M.
John B. Townsend II, Manager of Public and Government Affairs
AAA Mid-Atlantic
Good morning.
As Winston Churchill famously once said, "Russia is a riddle wrapped in a mystery inside an
enigma." For motorists, consumers, and even some economists, elected officials, and
government officials, the same is true of the mysterious nature of gasoline prices in the District
of Columbia and in other jurisdictions.
It is a conundrum wrapped in the cryptic inside the inscrutable. Although fuel prices have
declined 24 cents a gallon in the District since peaking in early May (when it crested at $4.21 per
gallon on May 12, versus $3.97 a gallon currently) the overall price of fuel is up 37 percent this
year.
Moreover, monthly household motor fuel expenses are up 76% in 2 years. No wonder the
price of fuel is a source ofconsumer angst and anger in this nation and in this city.
As they continue to cope with the recession and the down economy, consumers are
bewildered and deeply concerned about the high cost of gasoline in the District of
Columbia, which is still a dollar and eighteen cents higher than it was at this time last
year ($3.973 yesterday, versus $2.79 a year earlier).
Across the nation, the price of gasoline has declined five percent in recent weeks, Yet
consumers continue to pay an extra dollar per gallon each time they pull up to the pump
this summer. That's $18.50 more for a fill-up this summer, compared to last summer.
Today, the price of unleaded regular gasoline in the District of Columbia is $3.97 a gallon.
However, the District average is 41 cents higher than the statewide average in Virginia
($3.56) and it is 28 cents higher than the national average price ($3.68).
What is more, it is 27 cents higher than the statewide average in Maryland ($3.70). it's 23
cents higher than the average price in the entire Washington metro area ($3.74). It is 22
cents higher than the cost in Washington's Maryland suburbs ($3.75).
For the benefit of the motoring public, consumers and club members, AAA keeps it fingers
on the pulse of real-time retail fuel prices. AAA is the most comprehensive resource for gas
price infonnation in the nation, and it represents more than 80 thousand members in the
nation's capital, Washington, D.C.
1
In fact, the AAA Daily Fuel Gauge Report reflects actual prices from credit card
transactions at more than 100,000 gas stations, convenience stores, supermarkets, and big
.
box stores in the United States (the data is provided by the Oil Price Information Service
(OPIS) in cooperation with Wright Express).
Likewise, another AAA consum.er resource, the AAA Fuel Price Finder site is derived from
credit card transactions, direct feeds and other survey methods at more than 100,000 outlets
around the country. This helps motorists find the cheapest gas at stations close to them.
Ifadopted, the Retail Service Station Amendment Act of2011 (Bill 19-0299) would amend
the Retail Service Station Act of 1976 to prohibit gasoline distributors from owning and
operating retail service stations in the District of Columbia.
A number ofstates and jurisdictions, including Maryland, have enacted gasoline divorcement
laws that prohibit companies that refine gas from operating filling stations. As one consumer
reporter put it: ''Gas station divorcement laws basically prohibit oil companies and refineries
from operating retail s t a t i o n s ~ but would still allow them to own stations as long as they contraCt
the stations out to independent franchisees."
This increases prices by 1.5 cents a gallon, some economists say. However, a look at the historic
AAA Fuel Gauge Price data shows that the price increase has been much larger inthe District of
Columbia than these academic studies would suggest.
For example, several months before the law was changed, the gap between the daily average
price of a gallon ofunleaded regular gasoline in the District of Columbia and in the Washingto1!l
Metro area was as narrow as two cents a gallon. This was the case ofNew Year's Day ($2.3621
a gallon in D.C. proper versus $2.3356 per gallon in the Washington, D.C. metro area, January
1,2007). However, we have seen the gap grow in recent years.
In the past, the Federal Trade Commission (FTC) has routinely asserted that "studies have found
that when laws prohibit suppliers from operating retail service stations, consumers pay higher
prices for gasoline."
It did so in its studies and assessments of gasoline station divorcement laws in New York and
Hawaii. It did so again, in its June 8, 2008 letter to Council Member Mary Cheh. In fact, the
FTC staffwrote, "Based on this evidence, FTC staff believes that the Act's divorcement
provision likely cause D.C. residents to pay more for gasoline than they otherwise would.
Accordingly, we support your proposal to allow jobbers to operate retail service stations."
However, our research shows that it appears that the opposite has occurred in the District since
the law was changed Since then, D.C. residents have not only routinely paid more for gas than
their counterparts across the nation; they are also paying more for gasoline than their neighbors
in Virginia and in suburban Maryland. This was the case in the period from 2007 until this
present time.
When the Retail Service Station Act of 1976 was passed, the annual average price of self-serve
regular gasoline in United States was only 63 cents a gallon.
2
When a bill barring wholesalers from owning and operating gasoline stations in the District waS
enacted by the Council in 2004, the price of gasoline averaged $1.90 a gallon in the nation's
capital and $1.84 across the country. The average cost of regular grade in the top 85 markets in
the USA that year was $1.88 per gallon.
When that act was repealed in 2007, the cost of gasoline in the District was $2.84 per gallon and
it averaged $2.79 at pumps across the nation. The average annual cost in the top 85 urban areas
that year was $2.80 per gallon.
However, when the Council enacted this bill it, neither it nor consumers, had any way of
foreseeing the "Oil Shock of 2007-2008." During this span o f t i m e ~ the retail price of gasoline
and diesel soared to all-time historic highs. *During this time frame, consumers witnessed what
industry watchers and economists call an "unprecedented increase in gasoline costs."
During the period from late 2007 to the summer of2008, fuel prices skyrocketed to record levels.
That year, the national average price of a gallon of self-serve regular peaked at $4.11 on July 17,
2008, costing American motorists $1.6 billion a day to fuel their vehicles.
National Average Fuel Prices throughout The Decade
Year Unleaded Gas Average Diesel Avel'llge
2000 $1.50 gal $1.56 gal
2001 $1.44 gal $1.50 gal
2002 $1.35 gal $1.36 gal
2003 $1.56 gal $1.59 gal
-
2004 $1.84 gal $1.86 gal
2005 $2.27 gal $2.48 gal
2006 $2.57 gal $2.79 gal
2007 $2.79 gal $2.96 gal
2008 $3.25 gal $3.91 gal
*During 2008 the average retail price during the year was more than twice the average annual
price recorded in the first four years ofthe decade. Likewise, the yearly retail price average for
diesel fuel during 2008 was more than twice the average annual price from 2000 through 2004.
However, the nominal price of gasoline climbed even higher in Washington, D. C. proper, hitting
$4.19 a gallon the day before on July 16, 2008, which was then an all-time high (that record
remained unbroken until this spring).
i
3
Annual Average Price of Self-serve Regular Gasoline from 2007-2010
Year USA DC MD VA
2007 $2.79 $2.84 $2.74 $2.67
2008 $3.25 $3.35 $3.21 $3.16
2009 $2.35 $2.41 $2.30 $2.23
2010 $2.78 $2.88 $2.75 $2.67
Even w o r s e ~ during 2007-2008, local consumers and motorists witnessed a growing gap in the
price offuel in the District and nation, and in the District and its surrounding jurisdictions in
Maryland and Virginia.
In 2007, the annual average cost in the District was only five cents higher than the national
average, however, it was ten cents higher than the annual average in Maryland that year. It
ended up being 17 cents greater than the annual average price in Virginia during 2007.
The situation did not improve in 2008. That year, the annual average price for a gallon ofself
serve regular gasoline in the District was $3.35, compared to an annual average of$3.25 across
the country, a gap often cents a gallon.
Still, the price gap was even higher than the statewide averages in both Maryland and
Virginia However, that year District prices were 14 cents higher than they were in Maryland.
Even so, the cost was 19 cents higher in the city than it was in Virginia
Interestingly, the differential continued even after the "Oil shock of2007-2008" dissipated from
coast to coast. For example, in 2009 pump prices receded, as the national price point dipped to an
annual average of $2.35, ninety cents cheaper a gallon.
However, pump prices were six cents higher in the District that year, where it averaged $2.41 a
gallon annually. In contrast, the District's annual average price was 11 cents higher than it was in
Maryland and 18 cents higher than it was in Virginia.
The gap continued that year, as was the case in 2010. Last year, the annual average price
nationally increased to $2.78 a gallon. However, the annual average price was $2.88 in the
District last year, or ten cents higher than the national average.
Again, we witnessed a gap between the District annual average and in both Maryland and
Virginia The annual average in Maryland that year was $2.75 a gallon. Annually, the cost of g8s
in Maryland was 13 cents cheaper than the District average.
Tellingly, the annual average price in Virginia was $2.67 a gallon during 2010. That means the
annual average price in Virginia was 21 cents cheaper a gallon than it was in the District last
year. This year, the cost ofa gallon ofregular unleaded gasoline rose even higher in the District
than it has in the past. It broke the previous all-time record last month on May 12, when it hit
$4.21 per gallon.
4
On that date, average retail prices in the District were 23 cents higher than the national average
price ($3.98 per gallon). Incredibly, the average District gas price was 31 cents higher than the
statewide average price in Virginia, where was averaging $3.90 a gallon.
What is more, pump prices in the District were 17 cents higher than the statewide average price
in Maryland of $4.04 a gallon.
Yet, according to the r e s e a r c ~ states without divorcement laws, gas station owners face "an 00
level playing field where their wholesale suppliers are also their retail competitors in a highly
vertically-integrated market."
Gasoline prices tend to track crude oil prices. But other factors can impact the cost of gasoline,:
including "seasonal factors, changes in supply or demand for gasoline, refinery outages, and
transpOrtation problems," as the American Petroleum Institute (API), the Energy Information
Administration (EIA), and AAA routinely explain.
Yet none ofthese factors can account for the gap in the price point in the District and the region,
or the nation, for that matter.
Pump prices vary by region. Why are pump prices higher in the District? Let's round up the
usual suspects, which include:
Higher operating costs.
The higher cost of real estate in the District.
Competition or the lack thereof. Pump prices are often highest in locations with few
gasoline stations.
State motor fuel excise taxes and other taxes.
Fuel delivery fees.
However, none ofthese commonly proffered reasons, explanations or arguments is plausible.
For the price differential we are seeing in Washington, D. C., some are fond of using the cost qf
real estate and the higher operating costs as the justification. They are just straw men.
However, the Energy Information Agency (EIA) notes, "Even stations located close together
may have different traffic patterns, rents, and sources of supply that influence their pricing."
Yet this doesn't explain the difference in the cost of gasoline in the District and neighboring
jurisdictions.
As mentioned, the average cost of gas in the District was $3.97 a gallon yesterday. A gallon of
mid-grade was $4.20 a gallon, and the cost of a gallon ofpremium was $4.32 a gallon and the
price ofdiesel was $4.19 a gallon.
But even when you compare and contrast the District's pump prices to those in locales such as
Rockville, Potomac, Bethesda, you still see a gap. For example, yesterday the statewide average
price ofregular gas in Maryland was $3.71 a gallon (a difference of26 cents) and it was $3.57 in
Virginia (a difference of40 cents).
5
Moreover, when you compare District prices to the cost of gas in suburban Maryland, a price gap
still appears. The cost of gas in Washington's Maryland suburbs yesterday was $3.76, which was
five cents higher than the statewide average. Yet the cost in these adjacent counties was still 21
cents cheaper than it was in the District of Columbia.
Fuel Excise Taxes
As far as the excise tax is concerned, the District Council voted to increase the motor fuel tax in
the District in 2010 by three and a half cents. As a result, the current fuel excise tax in the
District is 23.5 cents for both a gallon of gasoline and for a gallon of diesel fuel. That compares
to an average statewide gas tax of31.1 cents across the USA. However, the federal excise tax on
gasoline is 18.4 cents a gallon, bringing the total to 41.9 cents in the District, compared to a
U.S. average of 49.5 cents.
In comparison, it is 23.5 cents in Maryland at the state level, for a total of41.9 cents in total
state plus federal excise taxes. The state excise fuel tax is 17.5 cents a gallon in Virginia, for a
total of 38.6 when both the state and federal excises taxes are added.
The state motor fuel excise tax on a gallon of gasoline is 32.2 cents in West Virginia, for a total
of 50.6 cents in state plus federal excise taxes. Even so, it is 32.3 cents in Pennsylvania, where
the total is 50.7 per gallon in total state plus federal excise taxes.
Nationwide, the federal excise tax on diesel fuel is 24.4 cents, bringing the total in the District to
47.9 cents per gallon. The average statewide fuel excise tax on diesel is 30.6 cents, bringing the
total to 55 cents.
The Fuel Delivery Fees
Normally, the average delivery fee is 4 cents in some locales around the country, according to
estimates by OPIS. However, in the city of Washington the average cost that we are seeing for
the delivery of fuel from the terminal in Fairfax, Virginia to the gas stations in the District is
between two and half cents and three and half cents. That's according to gas station operators
and the owners in the District.
Since the fuel comes from the same location, either the Baltimore terminal or the Fairfax
terminal, which is the closest, it is not the delivery fee that causes higher prices in the District
than in Maryland or Virginia.
The Profit Margin
The only plausible explanation for higher pump prices in the District of Columbia is higher retail
margins. Industry insiders say in most locales service stations generally earn on average
between 10 and 15 cents on a gallon of gas. Depending on the rack price or the FOB terminal
price, it can range from $.12 per gallon to $.24 per gallon.
6
~ According to a recent study by Oil Price Information Service (OPIS), the leading supplier of
wholesale terminal rack prices to the U.S, "Market volatility is more hectic than ever with price
swings in excess of5 to 10cts/gal more common than any time in history."
"That means high-volUI'lie rack price changes that occur all through the day - morning, noon, and
night, even on Saturdays," adds OPIS, which provides daily fuel price data to AAA.
To arrive at this, that is, the retail margin in the District, we take into account the retail price,
and simply subtract federal and local taxes, and then subtract the wholesale price, and subtract
the delivery fee (which according to OPIS is normally 1.5 cents per gallon).
By definition, the profit margin is "a ratio ofprofitability calculated as net income divided by
revenues, or net profits divided by sales. It measures how much out of every dollar of sales a
company actually keeps in earnings."
As one economist notes, "Profit margin is very useful when comparing companies in similar
industries. A higher profit margin indicates a more profitable company that has better control
over its costs compared to its competitors."
However, an analysis ofthe OPIS PADD 1 Report, for the period ending Julie 13,2011, bears
this out. This report tracks gasoline and distillate reseller prices across the country and in our
area. The report also reflects end spot or rack prices at the terminal, excluding taxes and
discounts. The OPIS Smart Rack shows retail prices from the closest metro statistical area
(MSA) to the OPIS Rack.
This week's OPIS PADD 1 Report shows that the five-day price for RFG Ethanol 10 percent
blend unleaded regular gasoline was $3.0782 per gallon. The price at the terminal in Fairfax,
Virginia was $2.995.
However, the low retail price in the District was $3.464, and the average retail price in the
District was $3.804. When taxes are excluded, the low retail price for unleaded regular gasoline
in the District was $3.135. The average retail price excluding taxes in the District was $3.430.6.
However, when we examine this week's OPIS P ADD 1 Report, we see similar trends in
Maryland and in Virginia. Yet the final prices that consumers pay are generally higher than in
Washington, D. C. proper than in Maryland or Virginia.
According to industry insiders, the gas station operators and owners, "profit margins at the gas
pump stay at around 23 cents a gallon, regardless ofthe price per gallon." That's according to a
report on CNN.
An analysis ofthe AAA Daily Fuel Gauge Report shows that the profit margin or the markup in
Washington, D. C. is higher still than in Maryland or Virginia.
Why are prices higher in Washington, D. C.?
At the end ofthe day, and after all is said and done, the only explanation appears to be profit.
7
STATEMENT OF JOHN RAY
before the
on Bill 19-299 (Retail Service Station Amendment Act of 2011)
To the Chairperson and members of the Committee, I wish I could say that it is my
pleasure to appear before you and that I am pleased to be here today. To the contrary, I am
perplexed as to why we are here today and hope that the saga that brings us here today will soon
complete its final chapter,
In introducing Bill 19-299 on May 17,2011, Chairperson Cheh stated that this legislation
is to return to the Council original policy in 2004 on jobber divorcement. I submit that the
original policy of the City council and the District is the law as it exists today, Before I became a
member of the City Council and for seven (7) year after I left the City Council, the existing law
was and still is the law and the policy of the District.
Until 2004, In that year, in my opinion, Councilmember Mendelson used a surreptitious
legislative procedure to change the law to benefit a few non-residents of the District. Mendelson
had before his then Subcommittee on Public Interest a proposal to extend the moratorium on
converting full service stations to "gas-n-go" without governmental approval, The Bill
Mendelson introduced into the City Council stated:
''To amend the Retail Service Station Amendment Act of 1976
to make the moratorium on conversions of full service stations
to limited service stations pennanent and to increase the penalty
for violation", (See Attachment A)
In Chainnan Linda Cropp's transmittal of the legislation to the CFO for a fiscal impact
statement, she writes:
''The proposed legislation maintains an existing practice in the District
of disallowing motor vehicle service stations from converting to retail!
grocery or retail []restaurant service stations other than those that existed
prior to April 19, 1977," (See Attachment B)
To maintain an existing practice. It certainly was not maintaining an existing practice for jobbers
Quite the contrary, Bill 19-299 is about to turn the operational practice of jobbers upside down.
Sometime after introducing the measure, Mendelson decide to include an amendment the
District divorcement law that would treat a jobber like BP and EXXON. It had nothing to do
with preventing full service stations from converting to "gas-n-go" stations. He did not infonn
the jobbers that he was amending the divorcement law to include them nor did he reach out to
them to solicit their views about the impact of such an amendment. He only sought the view of
dealers, who had asked him to include such an amendment in a law enacted for another purposes.
Mr. Mamo was unaware that such an amendment to the divorcement law has been passed until
the DC Department of Energy infonned him that he had a few months to come into compliance.
i
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On February 12, 2007, I, Mr. Mamo and Tina Ang met with Mendelson and his staff,
Mike Battle to talk about his amendment to the divorcement law and its impact on Mr. Mamo's
company. At frrst. Mendelson said he did not know what we were talking about or why he
would have made such a change to the divorcement law. When I stated from reading the record
and documents it appearS the dealers were behind the change. His recollection being refreshed,
he responded. "Oh yes I did do it for service station dealers" and he became very defensive. He
continued to say such things that Mr. Mamo should been aware of the legislation, and he has
plenty of time to prepare for the change over.
I will not repeat here today what I said to Mendelson that day, but my words were not
kind.
Ms. Ang and I went to visit with each Councilmember and not one, not one could
remember that they voted to change the divorcement law. They thought they voted to extend the
moratorium on the conversion of full service stations to "gas-n-go" stations. The Mendelson
sneaky amendment was reversed unanimously by the City Council. When Mendelson inserted
the divorcement amendment into the Retail Service Station Amendment Act of 2004, it was not
for the purpose of reducing gasoline prices at the pump for consumers, but rather to help a few
service stations operators. It would not reduce gas prices at the gas pump in 2004, and it will not
reduce them today, not by a single penny.
It is important for this Committee and the City Council understand that there is no state,
no county, no city, no village, no non incorporative community that has a law that the sponsors
of B 19-299 is recommending. I do not believe it is reaching too far to say that if such a simple
act would save consumers just 1 cent per gallon at the gas pump, almost every state in the
country would have already enacted such a measure.
It is also important for this Committee and the City Council to remember that Capitol
Petroleum Group or ("Capitol") has two classes of gas stations. The first class is the stations that
Capitol had before it acquired the Exxon stations. These stations are commission/contract
managers operated. and it is not uncommon to have three or four contractors (small businesses)
at each gas station. Someone operates the food mart, someone else operates the rental car,
someone runs the check cashing facility and someone sells the gasoline. These stations tend to
be located in parts of Ward 4 and primarily in Wards 5, 7 and 8. These contractors tend to be
African-American who cannot afford to purchase a franchise, but they are able to afford $25,000,1
which is the average amount required to become one of the aforementioned contractors. Bill19-1'
299 threatens the existence of the small businessmen. It also threatens to engulf Capitol in a
financial dilemma and a legal battIe with people holding valid contract that he will be forced to '
end.
The second class is the stations that Capitol recently acquired from Exxon. These stations
are operating under the same franchise agreements when Exxon owned them. From the very
start, the idea embodied in Bill 19-299 lacked full disclosure and got its birth under a coat of
silence, half truths and unabated untruths. We read that the service dealer at the Exxon West End
on M & 22nd station, Mr. Gupta said since Mr. Mamo took over ownership of the Exxon
i
stations, he had been forced to sell his stations in VA. He should not be allowed to simply make
a statement like that to advance this measure, unless it is true. He is operating his Exxon station
under the same franchise agreement that was in place when Exxon owned the station. So, he
should be required to tell this Committee on the record, what is that Mr. Mamo is doing or
requiring him to do that is so obviously, vastly different from Exxon that it has forced him to sell
his stations in Virginia.
And, then there Mr. Lynn Cook, the dealer from Parker Exxon in Palisades who wrote on
the neighborhood blog that Mr. Mamo "wants to replace to replace Lynn (and others station
managers) with his own mangers". He also wrote: ''Two years ago, Mamo attempted to change
Parker from a full-service station to a gas-and-go". Both statements are lies. In fact, two years
ago the Exxon station in question was owned by Exxon. Mr. Mamo is here today, and I think
Mr. Cook is testifying today. If this Committee is interested in the truth, this dealer should be
held accountable for such outlandish statements. (See Attachment C)
Then there are the allegations of anti-competitive practices and market control. There are
statements about the District being a small market. Well the District is not a market under the
anti-trust law and regulations. The market is the District, several counties in Maryland and
several counties in Virginia. Before Capitol could proceed with the purchase of the Exxon
stations, it had to make a HRS filing with the FTC. If the Capitol purchase of the Exxon stations
would have resulted in all the bad things that we are now hearing from the Attorney General and
some, members of the City Council, the FTC would never allow the sale to take place or without
some adjustments.
Then there is the issue of price gouging. This I believe the Attorney General should
investigate - Capitol and the individual gas station dealers. I spent three years working
as an Assistant General Counsel to the United States Senate Anti-trust and Monopoly
Sub-committee. During my tenure, we witnessed some price hikes in gasoline and awful long
gasoline lines. I tell you, if you want to find price gouging, look at the individual station dealers,
who think they can get away with extraordinary pricing because the public will blame big oil
companies for high gasoline prices.
Bill 19-299 provides no, no benefit to the consumers of gasoline. It will not reduce prices
at the gas pump and it will do nothing about anti-competitive behavior. The truth is this Bill and
several other retail service station measures that had been introduced and re-introduced in the
City Council will only help accomplish one thing and one thing only - help five or six station
dealers who hold franchises on very valuable real estate who see an opportunity to increase their
fortunes as third party real estate developers. Following this hearing. this anti-jobber Bill should
be left on the shelf to die a natural death in this legislative session.
3
----------------------
3
4
ATTACHM*NT A
A BILL
IN THE COUNCIL OF THE DISTRICT OF COLUMBIA
Councilmember Phil Mendelson introduced the folJowing bill, which was referred to the
Committee on
To amend the Retail Service Station Amendment Act of 1976 to make the moratorium on
conversion of full service retail service stations to limited service retail service stations
permanent and to increase the penalty for violation.
BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA. That this I
act may be cited as the "Retail Service Station Amendment Act of 2004".
Sec. 2. Section 5-301 of the Retail Service Station Amendment act of 1976, approved II,
April 19. 1977 (D.C. Official Code 36-304.01) is amended s follows:
(a) Subsection (b) is amended to read as follows: I
"(b) No retail service station which is operated as a full service retail service station on Jr
I
after April 19, 1977, may be structurally altered, modified, or otheIWise converted, irrespective
I
ofthe type or magnitUde of the alteration, modification, or conversion, including, but not limit1
to, any alteration, modification, or conversion which has the effect of merely obstructing access!
to an existing garage, service bay, work area. or similar enclosed area by any motor vehicle
. which was previously accommodated, into a non-full service facility."
(b) Subsection (c) is amended to read as follows:
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U(c) No person who is an operator ofany fu1l service retail service station on or after
April 19, 1977, including any person who is a subsequent operator of any such retail service
station, or who, in any manner, controls the operation of any such retail service station, shall
substantially reduce the number, types, quantity, or quality ofthe repair, maintenance, and other
services, including the retail sale of motor fuels, petroleum products, and automotive products
previously offered. Such operators shall maintain the retail service station's existing garages,
service bays, work areas, and similar areas in a fully operational condition and reasonably
equipped to perform repair, maintenance, and service work on motor vehicles, including the
provision of a qualified individual or individuals who is or are capable ofperforming repair,
maintenance, and service work on motor vehicles during a reasonable number ofhours per day
and of days per week. This subsection shaU not be construed as prohibiting any person who
I
I
operates or controls a fun service retail service station from discontinuing the retail sale of motor
i
fuels at such retail service station, provided that less than 20% of such retail service station'S .
gross revenue derived from the retail sale of motor fuels, petroleum and automotive
products and from the repair, maintenance, and servicing ofmotor vehicles is derived from the
retail saJe ofmotor fuels, and provided further that such discontinuance of the retail sale ofmot(!)r
fuels shall not authorize any other substantial reduction in repair, maintenance, or other serviceJ
previously offered. This subsection shall not be construed as prohibiting a full service retail
service station from selling motor fuels on a self-service basis, provided that such retail service
station continues to sen motor fuels on a non self-service basis.
(c) Subsection (e)(4) is deleted.
(d) Subsection (g) is amended as follows:
2
I
1 (1) by designing the current as paragraph (2) and inserting a new paragraph (I) to read *
follows: 2
"{l} Any person, including the principal officers or agents of a corporation or associatio, 3
who converts or causes a conversion of a retail service station without procuring an exemption 4
pursuant to this act shall upon conviction, shall be subject to a fine ofnot less than $10000, but 5
not more than $20,000, for each offense."; and 6
(2) insert a new paragraph {3} to read as follows: 7
"(3) For the purposes ofthis section, each day shall be a considered a separate." 8
(e) Subsection (h) is amended to read as follows: 9
"(h) The Office of Energy shall, pursuant to subchapter I of Chapter 5 ofTitle 2, issue.. 10
. rules to implement the provisions ofthis section which shall inc1ude a requirement that each 11
petition for exemption include an estimated date of completion for each phase of a full service 12
retail station conversion." 13
Sec. 3. Fiscal impact statement. 14
The Council adopts the fisca] impact statement in the committee report as the fiscal 15
impact statement required by section 602(c)(3) of the District of Columbia Home Rule Act, 16
approved December 24, 1973 (87 Stat. 813; D.C. Code 1-233(c}(3. 17
Sec. 4. Effective date. 18 .
This act shall take effect following approval by the Mayor (or in the event of veto by thb 19
I
Mayor, action by the Council to override the veto), a 30-day period ofCongressional review as . 20
I
provided in section 602(c}{1) ofthe District ofColumbia Home Ru1e Act, approved Decemberl .21
24, 1973 (87 Stat. 813; D.C. Code 1-233{c)(1 , and publication in the District of Columbia 22
3
1 Register.
4
ATTACHMENT B
Government of the District of Columbia
Office of the Chief Financial Officer
***
Natwar M. Gandhi
Chief Financial Officer
MEMORANDUM
TO: The Honorable Linda W. Cropp
Chairman, Council of the District of Columbia
FROM:
DATE:
OCT 27 2104
SUBJECT: Fiscal Impact Statement: "Retail Service Station Amendment
Act of 2004"
REFERENCE: Bill Number 15-914 as Introduced
Conclusion
The proposed legislation will not impact the District's budget and financial plan. No
additional staff or resources will be required to implement the proposed legislation.
Background
The proposed legislation maintains an existing practice in the District of disallowing
motor vehicle service stations from converting to retail/grocery or retailVrestaurant service
stations other than those that existed prior to April 19, 1977.
Financial Plan Impact
Funds are sufficient in the FY 2005 through FY 2008 budget and financial plan as agreed
to by the Mayor and the Council because implementing the proposed legislation will not
impact the budget and financial plan, nor require additional resources to implement.
1350 Pennsylvania Avenue, N.W., Suite 209, Washington, DC 20004 (202) 727
M
2476
____ .,Ji._"'- __ _
City Paper
Neighborhood News Roundup: Cleveland Park's Urbanist Tendencies Edition
Posted by Alex Saea on Jun. 15, 2011 at 8:08 am
A regular summary of irregular news and notes from neighborhood blogs and email lists around the
District.
Out of Gas: From a member of the Palisades email list comes this request: "Lynn Cook, who ~ I
has managed Parker's Exxon for many years, needs your help. On Friday, Mary Cheh will
introduce legislation to prevent gasoline distributors, or Jobbers' from also managing stations J
Mamo, jobber and owner of over half the service stations in the District of Columbia, wD,Dts to I+'"
1Jl.lace Ly!!n {and other station managersl with his own managel!. Mamo bought Parker's when
Exxon sold off its stations and has amassed a fortune in petroleumJ real estate across the Districti
You may recall Mamo plans to build on the site of the Georgetown Exxon Station (Canal Road .
and Whitehurst Freeway). Two years ago, Mamo attempted to change Parkers from a full-servic4 +
station to a gas-and-go station but Council legislation, community support and testimony

I
prevented the conversion. We've gotten used to having the convenience of Parker's and Lynn's
extraordinary commitment to service and the community. But, don't take it for granted
commitment and service will continue! It's your turn to repay the commitment and service by
taking time to let Mary Cheh know you support Bill 19-0299, the 'Retail Service Station
Amendment Act of 2011.'" But the libertarian spirits of others are getting in the way: "I don't
want the Council deciding who is naughty and who is nice. Even if I agreed with the notion that
this is an idea that requires Council action I'm not sure I accept the underlying premise either. I
wouldn't characterise the service at Parker's as 'extraordinary.' I'd put it more at 'good service at I
corresponding prices.' And while I admit that it would inconvenience me if Parker's were to c l o s ~
or change their service, there have been times when I have had to take my car to Bethesda for I
work that Parker's couldn't do, and somehow the world didn't end for me," says one. Several I
others have stated their agreement that the city shouldn't meddle with the free market, Joe Mamo,
or no Joe Mamo.
COUNCIL OF THE DISTRICT OF COLUMBIA
COMMITTEE ON GOVERNMENT OPERATIONS AND THE ENVIRIONMENT
June 17,2011
I'm Mat Thorp, testifying for the Palisades Citizens Association(PCA). The PCA Board
and its President, Bill Slover, have authorized me to testify on their behalf. Parker's
Exxon is located within the boundaries of PCA.
Parker's Exxon is a community asset. It is the only full service gasoline station remaining
in the Palisades. There used to be four such stations. It is the only place in our
neighborhood which provides needed automotive services. However, there is no lack
of convenience store services.
PCA opposes a management structure that permits gasoline distributors from owning and
operating retail service stations in the District of Columbia
PCA urges Council approval of this legislation.
I'm available for questions.
! I
Petros Kiflu's Statement on
Bill 19-299 "Retail Service Station Amendment Act of 2011"
on June 17 (Friday), 2011 at 11 am
Washington, DC
My name is Petros Kiflu. I am a contract operator at the Shell gas station located at 3355
Benning Road NE in Ward 7. I run the convenience store there for 12 years. There is also an
Enterprise Rental Car facility at this gas station. Eighteen employees work at the rental car
company and five employees work in the convenience store. I run the convenience store
operations.
I corne today to speak against Bill 19-299 because it would prohibit a jobber from
owning and operating a gas station and require it to be operated by a franchisee. For me, this is
not a pretty picture because it could well mean that my contract would be terminated, and my
livelihood, my family and my children will be put in jeopardy. This would not be a good
outcome for me. The mini-market is the way and the means for me to support my family. I like
what I do and it supports me and my family. I cannot afford the investment required for
inventory, working capital and the purchase of the franchise.
In appearing before you today, I realize that my voice is a mere whisper among the
voices of the six dealers that have already corne before you to take the action you are seeking to
impose on jobbers, DAG, myself, my employees and other tenants of gas stations. However, I
ask you, does what you are trying to achieve outweigh the likely damage you will cause to
jobbers, DAG, and small entrepreneurs like myself and my employees?
NATIONAL HEADQUARTERS
930 East 50th Street
Chicago, Illinois 60615
Phone: (773) 373-3366 .. Fax: (773) 373-3571
!'4'..'IgCZW.Va;The Honorable Chairman Kwame Brown and Committee Members
National Headquarters
Community Services
International Trade Bureau
laSalle Street Project
930 East 50th Street
Chicago, IL 60615
Phone: (713) 373-3366
Fax: (713) 373-3571
PubliC Policy Institute &
Telecommunications Project
n715"'St.NW
Suite 1200
Phone: (202) 393-7874
Fax: (202) 393-1495
Wall Street Project
5 Hanover Square
2'" Floor
New York, NY 10004
Phone: (212) 42&-7874
Fax: (212)968-1412
Entertainment Project
1313 8th Street
Suite 232
Los Angeles, CA90019
Phone: (323) 734-3900
Fax: (323) 734-3913
Technology Project
560 20th Street
Oakland, CA 94612
Phone: (510) 869-2202
Fax: (510) 763-2680
Peachtree Street Project
Hemdon Plaza
100 Aubum Avenue
Suite 101
Atlanta, GA 30303
Phone: (404) 525-5663 or 5668
Fax: (404) 525-5233
AutomotIVe Project
First National Building
860 Woodward Avenue
Suite 1433
Detroit, MI 48226
Phone: (313) 963-9005
Fax: (313) 9639012
Energy Science Project
2616 South Loop West
Suite 100 C
Houston, TX 77054
Phone: (713) 432-0209
Fax: (713) 218-7072
Thank you for allowing me to address you today. On behalf of the Rainbow
Coalition, I wish to express our opposition to the proposed legislation before yourl
committee - the retail Service Station Amendment Act of 2011 (Bil119-299). .
This legislation appears to be aimed only at one business, the ability for Eyob 10e
Mamo and Capitol Petroleum - a minority owned business - to own and operate his
newly acquired stations in the Washington, D.C. area. For over two decades *r.
Mamo and his company were virtually shut out of the industry and blocked from dny
expansion and acquisitions. But through his persistence and patience, and with the
support of Rainbow PUSH, minority business development agencies and civil
groups, he has made landmark breakthroughs in the petroleum industry in the
two to three years. Indeed, Mr. Mamo and his company have emerged as a modeli of
success for minority entrepreneurs all around the nation. I
The proposed legislation would now seek to "change the rules" - enacting provisiqns
that exist nowhere else in the country and would affect only Capitol Petroleum in 1he
District.
I
The proposed legislation would unfairly infringe on the ability for jobbers to operxte
his business. It is unfair and over-reaching government interference. In effect, e
bill unfairly scapegoats and singles out Mr. Mamo's company - the city's oly
minority owned gas industry entrepreneur/jobber (indeed, one of the few in the entire
nation). This Bill, if passed, would turn back the clock on the progress that minority
entrepreneurs are making in today's marketplace, and their efforts to even the
playing field in industries where they have been historically excluded,
Not insignificant, the bill, if enacted, would also deprive the city
revenue, much needed in these times of economic crisis.
The bill, in enacted, would put in place onerous and inequitable business
and barriers gas retailers and jobbers that do not exist anywhere else in the
The bill seems to be aimed at protecting special interests that have
dominated the oil/gas industry, whiledenying equal opportunity to mino1ty
businesses in the District. i
The District of Columbia has a proud and distinguished record advocating
fairness, inclusion and minority business development. I appeal to the Council to
uphold these values and extend equal opportunity to all businesses in the Distritt.
The District should be a beacon for minority business participation and not a barrfr
. to it. I thank you again for considering my view. .
Rev, Jesse L. Jackson, Sr., Founder & President
Martin L. King, Chairman
VNIW.rainbowpush,org
.... 6O'MBE
Statement of Redi Hassen
before the Committee on Government Operations and the Environment
on the "Retail Service Station Amendment Act of 2011"
Friday, June 17, 2011 at 11:00 am
John A. Wilson Building, Room 412
Thank you for giving me the opportunity to testify. Good afternoon to you, .
Chairperson Cheh and members of the Committee. My name is Redi Hassen. My I
brother, Shemsenid Hassen, and I run the convenience store at 4140 Georgia Avdnue
leased to us by Mr. Mamo. I remember three years ago, you tried to pass the same
law. So today I am here to tell you and the Council please do not pass such an unfair
law because it can impact our business and our lives if Mr. Mamo is forced to franfhise
his gas stations to someone else by this anti-jobber law. I
I
My brother, who is a District resident, has been a tenant of Mr. Mamo for a long tire.
As I said earlier, I help him manage the convenience store. My brother is not her
today, but I want to speak on his behalf. Our store at the gas station offers
customers the convenience of being able to come in get their gas tanks filled up,
up a quart of milk, or buy a bottle of water. .
Making Mr. Mamo franchise his gas stations will create a lot of uncertainty for me
my brother. We cannot afford to lose our business and we do not want to lose our
customers. We do not want someone to come in and buy Mr. Mamo's stations anql
then tell us that they decide not to let us run the store operations because they want
to lease the store to some of their relatives or friends.
The way Mr. Mamo manages and operates his gas stations have given me and myi
brother an opportunity to start our business. It may be a small mini-mart at a ga$
station, but it means a lot to us because the store is where we make our living. I
Assuming Mr. Mamo has to let us go as his store operator, we may end up !
unemployed? This jobber law is so unfair. All we want to do is to stay and run 0 r
store at the gas station and serve our customers. We do not want to lose our mini
mart. We do not want to lose our customers that my brother and I have known a d
served over the years.
I hope Council will not force Mr. Mamo to change, sell or give up the operations of his
gas stations. This law can do a lot of financial damage to very small-time
operators like me and, potentially, can put me out of existence. The law does notl
make sense. Thank you for letting me speak.
.
IN THE COUNCIL OF THE DISTRICT OF
COLUMBIA
BEFORE THE COMMITTEE ON GOVERNMENT!
I
OPERATIONS AND THE ENVIRONMENT :
Public Hearing on B19-299 - the Retail Service Station
Amendment Act of 2011 I
Remarks Prepared By:
Robert W. Doyle, Jr.
Doyle, Barlow & Mazard PLLC
rdoyle@dbmlawgroup.com
June 17,2011
DIVORCEMENT, DIVESTITURE, OR BOTH
I. INTRODUCTION
.:. Chairperson Cheh, Members of The Committee on Government Operations and the
Environment, my name is Robert W. Doyle, Jr. I am appearing here today on behalf ofthe
law firm of Doyle, Barlow & Mazard PLLC.
I have been a resident of the District of Columbia since 1978 and have lived in Ward 6 for !
most of that time. I am an antitrust attorney practicing law in the District of Columbia and al
member in good standing of both the DC Bar Association and the Bar Association of I
Pennsylvania.
I am one ofthe three founding partners ofthe law firm of Doyle, Barlow & Mazard,
established in April 2006. DBM is a Washington, DC law firm involved in cutting edge
antitrust issues before the courts, Federal Trade Commission and Department ofJustice.
Prior to that, I practiced law at several firms in the District in addition to holding various
positions as a trial attorney and management official at the Federal Trade Commission for
over 20 years.
II. SUPPORT FOR DIVORCEMENT LEGISLATION
.:. I strongly support amending Section 3-102 ofthe Retail Service Station Act of 1976 to
prevent jobbers from operating retail gas stations in DC. I am here to actively support the
proposed divorcement legislation in order to break the tie that exists between the gasoline
jobber and the gasoline retailer in the District of Columbia. Breaking that tie will instill a
degree of competition at both the jobber level and at the retail level and will hopefully result
in new entry at the jobber level and increased price competition at retail gasoline stations in I
D.C., where prices are uniformly higher than other neighboring metropolitan jurisdictions.
Some have indicated that D.C. gasoline prices are 7%-10% higher than prices in other areas. :
.:. Divorcement, however, could reduce output in the D.C. gasoline retail market ifjobbers
choose to shut down gas stations rather than sever the tie with their retailers and divest the
property as an ongoing independent gas station competitor. Some have urged that the value
of the real estate is higher in other end uses and gas stations may be converted to apartments
and condos all ofwhich may result in higher retail gasoline prices in D.C. This trend is
beginning now as we speak. Careful consideration must be given to how divorcement is
imposed and implemented.
In fact, Eyob Mamo's Capital Petroleum Group sold a former gas station property at 1024
Pennsylvania Ave. SE on Capitol Hill, today the site ofthe Butterfield House condos. CPG
has lined up the necessary zoning permits to do the same with a gas station property at the
comer of North Capitol Street and Florida Avenue. And stations like the Key Bridge Exxon
in Georgetown, which CPG purchased in 2009, could also be redeveloped, says Mr. Mamo,
1
in public statements. Mr. Mamo has also noted that D.C. now has fewer than half the gas
stations it did when he leased his first station in 1987 .
:. My concern is that the proposed legislation may not go far enough in curing the overall
anti competitive problem in the D.C. retail gasoline marketplace. As we know, gasoline
jobbers now play three critical roles in DC: (1) they are suppliers of gasoline; (2) they are th4
landlords/owners of the real estate; and (3) they are competitors to the retailers they serve. '
Divorcement legislation will address some ofthese concerns. But divorcement legislation ,
does not go to the heart of the anticompetitive problem-concentration at the retail gasoline i
~ c l . i
.:. The proposed divorcement legislation addresses the vertical integration/and foreclosure I
problems inherent in the present system in the District of Columbia. But, in my opinion, the I
legislation does not adequately address the horizontal gasoline retail issues in DC. In D.C., :
the retail gasoline market is highly concentrated as a result of mergers and acquisitions that
have occurred in the last several years. These mergers and acquisitions at the retail level, in
my opinion, are a key reason why we have a dysfunctional and anti competitive gasoline .
retail marketplace in D.C. And this disfunctionality continues to worsen.
These mergers need to be investigated, and iffound to be anticompetitive, divestitures need
to be ordered to restore competition at the retail level. I would like to share with you my
thoughts on the problems at the retail level and point out to you some surprising statistics
resulting from a series of anticompetitive mergers. But first let me provide some background
on a key player in the D.C. market.
III. BACKGROUND ON METROPOLITAN RETAIL GASOLINE MARKET
.:. DAG Petroleum Suppliers, LLC ("DAG") was established in 1987 by entrepreneur and
majority owner Eyob ("Joe") Mamo. Capitol Petroleum Group ("CPG"), according to its
website, along with its affiliated companies including DAG, is a leading distributor of
petroleum products and services in the metropolitan Washington, DC region. It sold in
excess of 88 million gallons of motor fuel products in 2009 and is an authorized distributor
for the Exxon, Mobil and Shell brands .
:. CPG controls a major market share ofthe petroleum products sold to the motoring public
in Washington, DC; Arlington County, Fairfax County, as well as the City and County of
Alexandria, Virginia; and Prince Georges County, Maryland. CPG owns, operates or
supplies 164 retail sites in this overall market and in 2010 these locations were projected to
generate approximately $778 million in revenues, and distribute 260 million gallons of fuel.
CPG most recently acquired Mobil stations in the three New York boroughs of Manhattan.
Queens, and the Bronx, where it owns, operates, and supplies 71 stations.
+) The DAG organization started in 1987 when Mamo purchased a single Amoco branded
gasoline service station franchise in Washington, DC. Over the next 23 years, DAG and/or
its affiliates have continued to expand the organization's retail network. The majority ofthe
company's growth has occurred by completing several strategic acquisitions of major oil
company retail sites. In 1996, DAG began the careful and deliberate expansion ofthe
2
I
company and its real estate holdings by purchasing individual fee simple service station
properties from existing independent operators or landlords and developing new-to-industry i
service station sites. In 1998, Mamo became one of Texaco's first minority wholesale
distributors in the United States and in 2000, DAO completed its first major retail acquisitio$
often sites from Motiva Enterprises, LLC, a Shell Oil Company/Texaco joint venture. In
2003, DAO converted all of its then existing stations to the Shell brand and signed a 15-year:
branded supply agreement with the Shell Oil Company. Since April 2009, affiliated
companies ofDAO successfully completed five retail acquisitions of 140 Exxon Mobil and !
Shell Oil Company branded sites located in the metro Washington, DC trade area and for the
first time, started to market Exxon branded motor fuel products. A brief summary of these
recent transactions is listed below:
In April 2009, CPO acquired 18 locations from Shell Oil under NOV A Petroleum R e a l t y ~
LLC (NOVA); .
In June 2009, CPO acquired 34 locations from Exxon Mobil under Anacostia Petroleum, i
LLC (Anacostia);
In August 2009, CPO bought 23 locations from Exxon Mobil under Mount Vernon
Petroleum Realty, LLC (MVPR);
In September 2009, CPO purchased 36 locations from Exxon Mobil via a Sale Lease
Back Agreement with Oetty Petroleum Realty under White Oak Petroleum, LLC (WOP);
and
In February 2010, CPO acquired 29 locations from Exxon Mobil under Springfield
Petroleum Realty, LLC (SPR), Burke Petroleum Realty, LLC (BPR) and Fairfax
Petroleum Realty, LLC (FPR) .
:. CPO has recently ventured outside the metro Washington, DC area, and recently completed
transactions in the New York City market. In November 2010, it bought 47 locations in the
borough of Queens, NY from Exxon Mobil under East River Petroleum Realty, LLC
(ERPR), and 24 locations in the boroughs of Manhattan and the Bronx from Exxon Mobil
under Liberty Petroleum Realty, LLC.
3
IV. THE STRUCTURE OF THE DC RETAIL GASOLINE MARKET
.:. Market at Retail Level Including Unbranded Stations
>46%
.:. Market at Retail Level Without Unbranded Stations
>53%
.:. As seen from above, the D.C. gasoline retail market is highly concentrated by any standard of
antitrust review and is a market that needs close scrutiny. Mergers and acquisitions have
been a key strategic component of CPO's business strategy over time and now have reached
levels where CPO controls approximately 50% of the D.C. gasoline retail market. If branded;
stations are analyzed as a separate product market, CPO's market share is 53%, a problematicl
share that assumes a high degree of market power and control in the hands of CPO. Even in i
the slightly less concentrated overall market, including unbranded stations, CPO has a
commanding 46% share.
If CPO's individual stations and surrounding competition are analyzed in the District, you
will see that there are small localized markets where CPO literally has a monopoly position
with no competition within a reasonably close geographic location. The chart below
examines each and every one ofthose small localized D.C. markets where CPO does
business.
4
V. D.C. RETAIL GASOLINE MARKET AND COMPETITION
SURROUNDING CPG OWNED STATIONS
.:. CPO has 47 gas stations in the District of Columbia. The following table lists the name and I
location ofeach of these CPO gas stations. In addition, I have detailed the closest competiD.$
gas station, and also provided a list of all additional competing stations within one mile of :
each CPO gas station.
StationILocation
Closest Competitor Other Competing Gas
Stations Within 1 Mile Station Distance
Shell
4700 S. Capitol St SE
DC 20032
Lowest Price Gas Station
4665 South Capitol St
SW, DC 20032
0.1 mi
Texaco
5321 Indian Head Hwy
I
Oxon Hill, MD 20745 (0.4 I
mil
Eastover
5401 Indian Head Hwy
I
Oxon Hill, MD 20745 (0.4 I
mil
I
BPAmoco
5507 Livingston Rd
Forest Heights, MD 20745
. (0.5 mil
Exxon Mobil
3825 Alabama Ave SE
DC 20020
Fort Dupont BP
4101 Alabama Ave SE,
DC 20019
0.4 mi
Exxon Mobil
3201 Pennsylvania Ave
DC 20020
Pennsylvania Avenue
Amoco
SE, DC 20020
0.6 mi
BP Eastern Petrol Corp. !
2801 Alabama Ave SE
DC 20020 (0.8 mil
Fort Dupont BP
4101 Alabama Ave SE
DC 20019 (0.8 mil
Shell
SE, DC 20020
Pennsylvania Avenue
Amoco
SE, DC 20020
0.1 mi
Quarles Petroleum Inc.
2300 Pennsylvania Ave SE
DC 20020 (0.1 mil
Penn Avenue Sunoco
.
2305 Pennsylvania Ave SE I
DC 20020 (0.2 mi)
i
I
Exxon Mobil
4501 Benning Rd NE
DC 20019
Dexon Inc.
4519 Benning Rd SE, DC
20019
0.1 mi
Benning Citgo
I
3820 Minnesota Ave NE
!
DC 20019 (0.7 mil
Chevron
4200 Nannie H Burroughs
Ave, DC 20019 (0.8 mil
Sonny's Amoco
Ave NE, DC 20019 (0.9 mi)
5
Dexon Inc.
Shell
3830 Minnesota Ave
DC 20019
Shell
3355 Benning Rd
DC 20019
Benning Citgo
3820 Minnesota Ave NE,
DC 20019
Benning Citgo
DC 20019
0.1 mi
0.5 mi
4519 Benning Rd SE
DC 20019 (0.8 mi)
Chevron
Ave, DC 20019 (0.8 mi)
Benning Road Amoco
1950 Benning Rd NE
DC 20002 (0.9 mi)
Chevron
Ave, DC 20019 (1.0 mi)
Kenilworth Citgo
1329 Kenilworth Ave NE
I
!
i
I
Exxon Mobil
4100 Hunt Place NE
DC 20019
Chevron
Ave
DC 20019
0.2mi
DC 20019 (0.2 mi)
Benning Citgo
DC 20019 (0.7 mi)
B.P. Eastern Petrol
Corporation
1535 Kenilworth Ave
DC 20019 (0.8 mi)
Dexon Inc.
I
I
I
I
I
I
I
4519 Benning Rd SE
DC 20019 (0.9 mi)
Sonny's Amoco
Ave NE, DC 20019 (1.0 mi)'
Kenilworth Citgo
I
1329 Kenilworth Ave NE
DC 20019 (0.1 mi)
B.P. Eastern Petrol
Shell
4321 Nannie Helen
Burroughs Ave
DC 20019
Chevron
Ave
DC 20019
0.1 mi
Corporation
1535 Kenilworth Ave
DC 20019 (0.7 mi)
Benning Citgo
DC 20019 (0.8 mi)
Dexon Inc.
4519 Benning Rd SE
i
DC 20019 (0.9 mi)
Sonny's Amoco
I
Ave NE, DC 20019 (1.0 mi) .
Exxon Mobil
2651 Benning Rd NE
Benning Rd Amoco
9150 Benning Rd NE
0.3 mi
Bladensburg Amoco
1201 Bladensburg Rd NE
6
DC 20002 DC 20002 DC 20002 (0.8 mi)
i
Kasey's (BP)
I
I
DC 20002 (0.8 mil
Benning Citgo
DC 20019 (1.0 mi)
,
Shell
1601 New York Ave
DC 20002
Hess
1801 New York Ave NE,
DC 20002
0.2 mi
New York Ave BP
!
1231 New York Ave NE
DC 20002 (0.4 mi)
i
New York Ave Mobile
I
;
Services Station (Citgo)
i
DC 20002 (0.5 mi)
Lowest Price
1230 New York Ave NE #
I
I
B, DC 20002 (0.5 mi)
925 Brentwood Rd NE
DC 20018 (0.6 mi)
Northeast Amoco
i
DC 20018 (0.6 mi)
,
Freedom Citgo
1905 9th St NE # A
DC 20018 (0.7 mi)
I
Bladensburg Amoco
1201 Bladensburg Rd NE,
DC 20002 (0.8 mi)
Lowest Price
2800 12th St NE
,
DC 20017 (0.8 mi)
I
Shell
1765 New York Ave
DC 20002
Hess
DC 20002
0.1 mi
New York Ave Mobile
DC 20002 (0.4 mi)
Northeast Amoco I
i
DC 20018 (0.5 mi)
New York Ave BP
,
!
DC 20002 (0.5 mi)
I
I
Lowest Price
1230 New York Ave NE #
B, DC 20002 (0.5 mi)
Freedom Cite:o
7
i
1905 9th St NE # A
DC 20018 (0.8 mi)
!
1
925 Brentwood Rd NE
DC 20018 (0.8 mi) 1
Bladensburg Amoco
DC 20002 (0.8 mi)
Northeast Amoco
DC 20018 (0.2 mi)
New York Ave Mobile
Exxon Mobil Hess
1925 Bladensburg Rd 1801 New York Ave NE , 0.1 mi
2420 New York Ave NE ,
NE, DC 20002 DC 20002 (0.3 mi)
DC 20002
i Bladensburg Amoco
DC 20002 (0.9 mi)
Northeast Amoco
DC 20018 (0.2 mi)
New York Ave Mobile
Exxon Mobil Hess
I
1801 New York Ave NE , 2230 New York Ave 0.1 mi
DC 20002 (0.3 mi) DC 20002
DC 20002
Bladensburg Amoco
DC 20002 (0.9 mil I
New York Ave Mobile
1
Shell RexonOilCo
DC 20002 (0.7 mi)
0.1 mi 2300 South Dakota Ave , 3298 Fort Lincoln Dr NE,
Northeast Amoco
DC 20018 DC 20018
DC 20018 (0.7 mi)
Northeast Amoco
DC 20018 (0.6 mil
New York Ave Mobile
Rexon Oil Co Shell
0.2mi 3298 Fort Lincoln Dr NE, 2350 South Dakota Ave,
DC 20018 DC 20018
DC 20002 (0.7 mil
Hess
I 1801 New York Ave NE,
DC 20002 (1.0 mi)
Shell Brentwood Sunoco Kenyon Oil Co.
OAmi
3730 Rhode Island Ave ! 3200 Bladensburg Rd 3556 Bladensburg Rd,
8
NE, DC 20018 Brentwood. MD 20722 Brentwood, MD 20722 (0.6
mil
!
Northeast Amoco
I
DC 20018 (0.9 mil i
Shell
3101 Rhode Island Ave
DC 20018
Brentwood Sunoco
Brentwood, MD 20722
0.5 mi
Kenyon Oil Co.
3556 Bladensburg Rd.
Brentwood, MD 20722 (0.6
mil
Northeast Amoco
i
DC 20018 (1.0 mi)
Shell
DC 20018
Lowest Price
2800 12th St NE
DC 20017
0.7mi
Northeast Amoco
DC 20018 (0.7 mil
I
New York Ave Mobile
i
I
DC 20002 (0.8 mil
Hess
DC 20002 (0.8 mil
Patti's Chevron
3701 12th St NE
DC 20017 (0.8 mil
Exxon Mobil
1020 Michigan Ave NE,
DC 20017
Patti's Chevron
3701 12th St NE
DC 20017
0.1 mi
Lowest Price
2800 12th St NE
DC 20017 (0.7 mil
South Dakota BP
4925 S Dakota Ave
DC 20017 (0.9 mil
Exxon Mobil
SE, DC20003
Sunoco
SE, DC 20003
0.1 mi
Distad's Amoco (BP)
823 Pennsylvania Ave SE,
DC 20003 (0.3 mi)
Exxon Mobil
SE, DC 20003
Distad's Amoco (BP)
DC 20003
O.4mi
Sunoco
1248 Pennsylvania Ave SE.
DC 20003 (0.7 mi)
,
Exxon Mobil
200 Massachusetts Ave
NE, DC 20002
Hess
520 Florida Ave NE
DC 20002
0.8 mi
Distad's Amoco (BP)
DC 20003 (1.0 mi)
Exxon Mobil
I Florida Ave NE
DC 20002
22 Florida Ave LP
22 Florida Ave NW
DC 20001
0.1 mi
BP Gas Station
306 Rhode Island Ave NW, I
DC 20001 (0.5 mi)
Hess
1739 New Jersey Ave NW,
I
DC 20001 (0.5 mi)
9
Hess
520 Florida Ave NE
DC 20002 (0.6 mi)
Amoco
!
1317 9th St NW
DC 20001 (0.8 mi)
Rhode Island BP Amoco
DC 20002 (0.8 mi)
Freedom Citgo
1905 9th St NE # A
DC 20018 (0.9 mi)
925 Brentwood Rd NE
DC 20018 (1.0 mi)
BP Eastern Petrol Corp .
5851 Riggs Rd
Hyattsville, MD 20783 (0.5 .
mi)
South Dakota BP
4925 S Dakota Ave
DC 20017 (0.7 mi)
Riggs Road Mart
(Chevron)
Shell Riggs Road Sunoco
5851 Riggs Rd
5515 South Dakota Ave 5801 Riggs Rd O.4mi
Hyattsville, MD 20783 (0.5
NE, DC 20011 Hyattsville, MD 20783
mi)
I
Takoma Park Sunoco
1
I
6360 New Hampshire Ave, !
Takoma Park, MD 20912
(0.8 mi)
Takoma Park Texaco
6400 New Hampshire Ave,
(0.8 mi)
Exxon Mobil BPAmoco
264 Missouri Ave NW
- 1.0 mi 6401 Georgia Ave NW !
DC 20011 DC 20012
Takoma Park Texaco
Takoma Park Sunoco
6360 New Hampshire Shell
(0.2 mi)
0.2mi Ave, Takoma Park, MD 6201 New Hampshire
Riggs Road Sunoco
20912 Ave, DC 20019
5801 Riggs Rd
mi)
10
I
Riggs Road Mart
(Chevron)
!
5851 Riggs Rd
mi)
DP - Eastern Petrol Corp
5851 Riggs Rd
Hyattsville, MD 20783 (0.5 ,
mi)
Takoma Junction Liberty !
7224 Carroll Ave
(0.9 mi)
Thu's Sunoco
,
(0.9 mi)
Takoma Metro Amoco
7000 Blair Rd NW
I
DC 20012 (0.5 mi)
DPAmoco
Exxon Mobil DPAmoco
6401 Georgia Ave NW
7401 Georgia Ave NW 7605 Georgia Ave NW 0.2mi
DC 20012 (0.8 mi)
DC 20012 DC 20012
Takoma Junction Liberty
7224 Carroll Ave
0.0 mil
DP Eastern Petrol Corp
6300 Georgia Ave NW
Shell DPAmoco
DC 20011 (0.1 mi)
6419 Georgia Ave 0.1 mi 6401 Georgia Ave NW
Takoma Metro Amoco
DC 20012 DC 20012
7000 Blair Rd NW
DC 20012 (0.7 mil
,
Takoma Metro Amoco
7000 Blair Rd NW :
Exxon Mobil DPAmoco
DC 20012 (0.4 mi)
0.3 mi 6350 Georgia Ave 7605 Georgia Ave NW
DPAmoco
DC 20012 DC 20012
6401 Georgia Ave NW
,
1 DC 20012 (0.7 mi)
1
Park Road DP
4501 14th St NW
J&KAmoco Exxon Mobil
3426 Georgia Ave
,
DC 20011
3426 Georgia Ave NW 1.0mi
DC 20010 (1.0 mi)
Park Road DP
I
DC 20010
J & KAmoco Exxon Mobil
3426 Georgia Ave
3540 14th St NW 0.5 mi 3426 Georgia Ave NW
DC 20010 (0.5 mi)
DC 20010 DC 20010
DP Quick Shoppe

11
I
i
2600 14th St NW
I
I
DC 20009 (0.8 mil
I
Shell
4140 Georgia Ave
DC 20011
Park Road BP
3426 Georgia Ave
DC 20010
0.6mi
I
-
i
i
Shell
4000 Georgia Ave
DC 20011
Park Road BP
3426 Georgia Ave
DC 20010
0.5 mi
!
-
Exxon Mobil
1827 Adams Mill Rd
NW,DC20009
BP Quick Shoppe
2600 14th St NW
DC 20009
0.6mi
E & C Enterprises Inc
i
(Sunoco) ,
1442UStNW
DC 20009 (0.7 mil i
Embassy Sunoco Services
Center
2200P StNW
DC 20037 (1.0 mil I
Exxon Mobil
2150 M Street NW
DC 20037
Embassy Sunoco
Services Center
2200PStNW
DC 20037
0.3 mi
Georgetown Amoco
I
2715 Pennsylvania Ave N W ~
DC 20007 (0.4 mil
I
Chevron
1401 1St NW
I
DC 20005 (0.9 mil
BP
i
!
1301 13th St NW
DC 20005 (1.0 mil
Exxon Mobil
2708 Virginia Ave NW,
DC 20037
GeorgetowD Amoco
NW, DC 20007
O.4mi
Rosslyn Chevron
1830 Fort Myer Dr,
Arlington, V A 22209 (0.9
I
mil
I
Exxon Mobil
3607 M Street NW
DC 20007
Rosslyn Chevron
1830 Fort Myer Dr,
Arlington, V A 22209
0.6mi
Georgetown Amoco !
2715 Pennsylvania Ave NW,1
DC 20007 (0.8 mil
Mid Atlantic Petroleum
Product (Chevron)
2643 Virginia Ave NW
i
DC 20037 (0.9 mil
Exxon Mobil
1601 Wisconsin Ave
NW, DC 20007
Georgetown Amoco
NW, DC 20007
0.6mi
BP - Eastern Petrol Corp
5001 Conn Ave NW
DC 20008 (0.6 mil
I
Embassy Sunoco Services
Center
2200PStNW
DC 20037 (0.8 mil
I
1
Georgetown Chevron
2450 Wisconsin Ave NW,
DC 20007 (0.9 mil
12
Product (Chevron)
DC 20037 (0.9 mi)
Exxon Mobil Sunoco
4812 MacArthur Blvd 2450 Wisconsin Ave NW, 1.3 mi -
NW, DC 20007 DC 20007
Exxon Mobil
3535 Connecticut Ave
Georgetown Chevron
2450 Wisconsin Ave NW, 1.2 mi -
NW, DC 20008 DC 20007
Exxon Mobil
4244 Wisconsin Ave
NW, DC 20016
Connecticut Avenue
Amoco
NW, DC 20008
0.9mi -
Exxon Mobil
4861 Massachusetts
River Road Citgo
5054 River Road, 1.2 mi -
Ave, DC 20016 Bethesda, MD 20816
Shell
4900 Wisconsin Ave
DC 20016
Connecticut Avenue
Amoco
NW,DC20008
0.7mi -
Shell
DC 20008
Connecticut Avenue
Amoco
NW, DC 20008
0.1 mi
Exxon Mobil
NW,DC 20008
Connecticut Avenue
Amoco
NW, DC 20008
0.1 mi -
Exxon Mobil
NW, DC 20016
Connecticut Avenue
Amoco
NW, DC 20008
0.7mi -
VI. BEYOND DIVORCEMENT: LESSONS LEARNED FROM THE DATA
.:. CPG controls the retail sale of gasoline in D.C .
:. D.C. gasoline retail markets are narrow geographic areas of competition and are highly
concentrated .
:. Divorcement legislation may not cure all anticompetitive problems at the retail level.
.:. Serious antitrust inquiry must be conducted of CPG' s past mergers and acquisitions at the
retail level.
13
Product (Chevron)
DC 20037 (0.9 mi)
I
I
Exxon Mobil
4812 MacArthur Blvd
NW, DC 20007
Sunoco
DC 20007
1.3 mi
!
I
Exxon Mobil
NW, DC 20008
Georgetown Chevron
DC 20007
1.2 mi -
i
I
Exxon Mobil
4244 Wisconsin Ave
NW,DC20016
Connecticut Avenue
Amoco
NW, DC 20008
0.9mi
I
Exxon Mobil
4861 Massachusetts
Ave, DC 20016
River Road Citgo
5054 River Road,
Bethesda, MD 20816
1.2 mi
Shell
4900 Wisconsin Ave
DC 20016
Connecticut Avenue
Amoco
NW, DC 20008
0.7 mi -
Shell
I DC 20008
Connecticut Avenue
Amoco
NW, DC 20008
0.1 mi
I
I
I
I
Exxon Mobil
NW, DC 20008
Connecticut Avenue
Amoco
NW, DC 20008
0.1 mi -
i
Exxon Mobil
NW, DC 20016
Connecticut Avenue
Amoco
NW, DC 20008
0.7 mi -
VI. BEYOND DIVORCEMENT: LESSONS LEARNED FROM THE DATA
.:. CPO controls the retail sale of gasoline in D.C .
:. D.C. gasoline retail markets are narrow geographic areas of competition and are highly
concentrated .
:. Divorcement legislation may not cure all anti competitive problems at the retail level.
.:. Serious antitrust inquiry must be conducted of CPO's past mergers and acquisitions at the
retail level.
13
.:. Geographic markets in the sale of gasoline in the retail level in D.C. may be as small as half
of a mile or less .
:. Within the small geographic market in the sale of gasoline in the retail level in D.C., CPG
may have a virtual monopoly position with the ability to raise prices or lower output at will.
VII. CONCLUSION
.:. In conclusion, I strongly support the enactment of the proposed divorcement legislation
provided that there is appropriate implementation to ensure that the intent of the legislation is
accomplished. We do not want jobbers to evade the effect ofthe new act by converting gas
stations into condo complexes. Also I encourage the Committee and the full City Council to .
direct the Attorney General's Office to seriously study competition at the retail level and seek .
divestitures of CPG owned retail gas stations where appropriate .
:. Thank you for allowing me this opportunity to provide the Committee with my thoughts on
the divorcement legislation as well as the leeway to offer my thoughts on gasoline
competition at the retail level.
14
06/ 16/ 2011 09: 03 2023610151 CIRCLEXONX #2352 P. 0 l aos
':..) r /7(./ ~ -(
June lS, 2011
Councilmember Mary Cheh
1350 Pennsylvania Avenue, Suite 108 NW
Via Fax: (202) 724-8118
Due to constraints on my time I will be unable to attend Friday's hearing on Jobber divorcement.
would like to offer you a few thoughts on points I expect will arise at the hearing.
My current Exxon three (3) year lease that Anacostia Realty acquired will expire in July of 2012. Under
that lease my rent was determined in large part by the appraised land value of $1,607,035. The rent
increases over the three year period is $33,669. Of course the calculations were made before the real
estate bubble bursts and today the current land value of record is $1,304,640. Will this 300k land value
decrease resuH: in lower rent or will rents being set arbitrarily?
The majorities of my gas customers are from Wards 3 and 4 and are paying a premium for gas that is
unreCiI. I no longer see Maryland commuter traffiC for gas sales due to the large difference between the
jurisdictions. 1am called a crook on a regular basis by Suburbanites that are on empty and must stop for
fuel. This is due to the zone pricing or zip code pricing scheme that is forced upon the dealers in
Northwest. As ofthis writing I am paying 5 cents more for a gallon of gas than it is being retailed for at
4501 Benning Road. In the past month the Dealers in Northwest have paid as much as 41 cents over the
benchmark rack price. I know of no other industry where a simple distributor has a higher markup than
the end retailer.
In addition to paying the high cost of fuel I have received a Notice of Minimum Volume. The attached
letters need no explanation. Not once have I received a reply or phone call from Managemfilnt at
Anacostia Realty.
I hope to have time to offer detailed written testimony for the record in the near future. I appreciate all
your efforts and please feel free to call me.if you have any questions.
Sincerely
. / ~ .
Stacy Milford
Owner, Circle Exxon
5521 ConnectiCut Ave NW
(202) 364-6364
06/ 16/2 01 09:03 202364 0151
CIRCLEXONX #2352 P.002 /00 5
ANACOSTIA REALTY, LLC
6820-B Commercial Drive
SpringfieL:l, Virginia 22151
703.750.6810 (p) 703.750.6817<!?
July 19, 2010
STACEY MILFORD
CIRCLE XON , LLC
5521 CONNECTICUT AVENUE NW
Re: Notice of Minimum Volume Requirement of PMPA FranChise Agreement
between Anacostia Realty, LLC ("Anacostia") and CIRCLE XON, LLC (the
"PMPA Agreement")
Dear STACEY MILFORD:
As you know, your company, CIRCLE XON, LLC, is a party to the PMPA
Agreement, under which you purchase Exxon branded motor fuels from Anacostia. The
PMPA Agreement provides for the sale of Exxon branded motor fuels to CIRCLE XON,
LLC for resale at your station in certain specified quantities. Under the PMPA
Agreement, CIRCLE XON, LLC is required to purchase 1,007,237 gallons of branded
motor fuels annually.
This is to advise you that your purchases of 425,017 gallons through June 30,
2010 represents 84% of your recently adjusted contracted minimum volume
requirement of 1,007,237 gallons per year. Please note that we expect all operators to
achieve one hundred percent of their minimum volume reqUirement, however anything
below 90% of that minimum is sufficiently close to a standard of noncompliance as to
warrant this notice.
The minimum purchase requirement is a material provision of the PMPA Franchise
Agreement that we take very seriously. We look forward to your devoting sufficient
attention to this matter so as to ensure compliance with this requirement on a consistent
basis.
Sincerely,
A ~ ~
Jeffrey Sykes
Retail Sales Manager
CIRCLEXONX
#2352 P.0 03 / OOS
06 / 16 /2011 09:04 202 364015 1
~ , . ~ ; " , , : , ~ .'
Circle Exxon
5521 Connecticut Avenue NW
August 25,2010
BY FAX AND CERTIFIED MAIL
703-750-6817
Mr. Jeffrey Sykes
Anacostia Realty, LLC
6820- B Commercial Drive
Springfield, VA 22151
RE: Notice of Purported Minimum Volume Violation
Dear :Mr. Sykes:
I am in receipt of your letter dated July 19,2010 in which you point out that
the product purchases at Circle Exxon is 84% of the minimum volume
requirement of 1,007,237 gallons per year." Putting aside that, as I understand it,
sales quotas are prohibited by law in the District of Columbia under the Retail
Service Station Act, the lower volume is directly attributable to the significantly
increased DTW that this station has been charged since the assignment to
Anacostia. Thave complained about the pricing on multiple occasions, and this
letter should serve as a further complaint.
I will be happy to discuss these issues with you further at your convenience.
Thank you.
. Sincerely,
Stacy Milford
CIRCLEXON X #2352 P. 0 04 /0 5
Circle Exxon
5521 Connecticut Avenue NW
Washington DC 20015
202-364-6364
February 17, 2011
VIA U.S. CERTIFIED MArl
Mr. Jeffrey Sykes
Anacostia Realty, LLC
6820-8 Commercial Drive
Springfield, VA 22151
Dear Mr. Sykes:
I want to bring to your attention an issue 1was just made aware of concerning the price I pay for a gallon
of gasoline. I have been advised by other dealers in Northwest Washinmon that I am paying a premium
of about ten cents per gallon over and above their DTW. I can only hope this is an oversight on your part
and not your normal operating practice. I anticipate once this error is corrected 1will be refunded the
overcharges. I am in the process of calculating these overcharges and will work with you to arrive at the
correct amount.
The Exxon Marketing Division always respected the laws of the District of Columbia regarding these
wholesale price differences by maintaining only two price zones in The District. Traditionally, Service
Stations east of Rock Creek Park had a two cent per gallon advantage over the Stations on the west side
of Rock Creek Park. While the Dealer.; were aware of this difference, the two cents did not seem of
great concern and probably was not. Now that my cost of fuel is higher than many of my competitors
retail prices I am very concerned.
Attached for your convenience, is a copy of section 36--303.01 of the DC Code that pertains to wholesale
pricing.
I hope we can put this issue behind us promptly and I would appreciate a response as soon as possible.
Please call me at your earliest convenience at 202.438.4386.
Sincerely

Circle Exxon
#2352 P.005 /005
C:;:RCLEXONX
9: 4
C6/16/
. . . Marketing Agreements .
03.01. Nonwaiverable conditions; conditions affecting marketing agreements.
a) All marketing shall be in writing and shall be to the l10nwaiverable conditions set
forth in this section, whether or not such conditions are ",,><r,,,,,,,,.,I,, set forth in such marketing agreements.
For the purposes of this section, the ,term "marketing shall also inciuoe any oral or written
collateral or ancillary No marketing agreement shall:
(1) ReQuire a retail dealer to keep'his retail service station open for business for any number
of hours per dayI or days per week, or for any specified hours of the day, or days of week, except
as otherwise provided in 36-303.03(c)(5);
(2) Require a retail dealer to purchase or aa;ept delivery of, on consignment or otherwise any products
from the distributor other than such motor fuels and petroleum as are [n the
marketing agreement;
(3). . maintain, or establish, Qr grant to the distributor the right, privilege, or authority to fix,
malntam, or tlie prices at which the retail dealer shall sell any motor fuels, petroleum
products, or automotive products; . .
(4) ReQuire the retail dealer to meet any sales quotas for any motor fuels, petroleum products, or ""
automotIve products; "
(5) Prohibit a retail dealer from assigl'ling, or otherwise transferring his
any interest therein to another person;
(6) Prohibit a retail dealer from purchasing or accepting delivery of, on consignment or otherwise, any
motor fuels, petroleum products, automotive products, or other prodUcts from ,:my person who is not a
party to the marketing agreement or prohibit a retail dealer from such motor fuels or products,
provided that if the marketing agreement permits the retail dealer to use the distributors t"P"I'I""",..",
the marketing may require such motor petroleum products, and automotive products
to be of a reasonably similar Quality to those of the distributor, and provided further that the retail
dealer shall neither represent such motor fuels or products as having been procured from the distributor
nor sell such motor fuels or products under the distributor's trademark;
(7) a retait dealer to take part in any promotional or advertising campaign which wi!! require the
retail dealer to \.Ise, utiliZe, or accept any premiums, coupons, posters, st<:imps, tickets, gifu, bonuses,
rebates, or other promotional items;
(8) Contain Clny provision which in any way limits the right of any party to such marketing agreement to
a trial by jury or to the interposition of counter-claims or cross-claims;
(9) Contain any provision which requires the retail dealer to assent to any releaser aSSignment,
novation, waiver, or estoppel which would relieve any person from any liability imposed by this
subchapter or would any rights granted to a dealer by this subchapter;
(lO) Be for a term of less than 1 year; or
(11) Contain any term or condition which, directly or Indirectly, violates this subchapter.
2117/2011
Attachment G

GOVERNMENT OF THE DISTRICT OF COLUMBIA
OFFICE OF THE ATTORNEY GENERAL
***
-
-
June 17,2011
BY HAND
Re: Bill 19-299, the "Retail Service Station Amendment Act of2011"
Dear Chairperson Cheh:
I am pleased to provide the Committee on Government Operations and the Environment with the
views of the executive branch of the District of Columbia Government ("District") in support of
Bill 19-299, the "Retail Service Station Amendment Act of2011."
In recent years, the Attorney General's office has sought to apply consumer protection and
antitrust laws to protect D.C. consumers from anti-competitive practices by sellers of gasoline
that result in higher prices to consumers. Bill 19-299 would provide a major assist to our efforts.
It would amend the provision of the Retail Service Station Act of 1976 that has prohibited
gasoline producers, refiners, and manufacturers from opening or operating gasoline service
stations in D.C. D.C. Official Code 36-302.02. The proposed amendment would extend this
prohibition to "jobbers," which are defined by statute as "wholesale supplier[s] or distributor[s]
of motor fuel." D.C. Official Code 36-301.01(6A). Jobbers that currently operate gasoline
service stations in D.C. would have two years to come into compliance with the new restriction.
The primary benefit of prohibiting jobbers from operating gasoline service stations in D.C. is to
make it more difficult for jobbers to use any market power they may have as the owners of
multiple D.C.-area service stations in a way that increases the retail gasoline prices charged by
D.C. stations. The recent trend towards concentration of D.C. service station ownership in the
hands of a few major jobbers leads the Administration to conclude that additional statutory
protection is needed. For this reason, we support Bill 19-299.
We point out, however, an inconsistency between the caption of the bill and the statute it is
amending. The long title says the intent of the bill is to prohibit gasoline distributors from
441 Fourth Street, NW, Suite 1100S, Washington, D.C. 20001, (202) 724-1301, Fax (202) 741-0580
June 17,2011
Page 2
"owning and operating retail service stations in the District of Columbia." The statute, however,
as it presently exists, simply prevents producers, refiners, and manufacturers from "opening" and
"operating" retail gas stations. The premise of the existing law is that those covered - i. e, the
producers, manufacturers, and refiners - can continue to own the stations but cannot operate
them; the stations need to have independent operators. Thus, if jobbers and wholesalers were
simply added to the list ofthose covered by the law, they could continue to own the stations but
could not operate them. If the intent of the legislation is to prevent jobbers from "owning" the
stations and the real estate on which they are located, as the long title seems to suggest, then the
text of the bill would need to be amended to reflect that intent.
Back in May 2007, at a Council Committee hearing on Bill No. 17-142, the "Retail Service
Station Clarification Amendment Act of2007," the Office of the Attorney General presented
testimony that offered some support for allowing jobbers to own and operate gas stations in D.C.
The focus at that time was to keep producers, manufacturers and refiners from controlling the
price at the pumps. It was believed that jobbers would be a pro-competitive force. According to
the written testimony, "[b]y allowing jobbers to operate their own retail stations in D.C., Bill 17-
142 ha[ d] the potential to encourage retail competition by increasing the number of stations that
[were] not controlled and supplied by the major oil companies." Testimony of Bennett Rushkoff
(May 24,2007). The Committee also received a letter from the Federal Trade Commission staff
in support of allowing jobbers to operate gasoline service stations. The FTC staff stated that
vertical integration of suppliers and service stations is often "based on efficiency concerns," and
that "[l]imiting the ability of suppliers to operate service stations when it is efficient to do so is
likely to lead to higher retail prices." Letter from FTC Office of Policy Planning, Bureau of
Economics, and Bureau of Competition (June 7, 2007).
Since 2007, the landscape has changed dramatically in D.C.'s retail gasoline market. In 2009,
Exxon sold all of its D.C. gasoline stations, resulting in just two major gasoline wholesalers
owning a substantial majority ofD.C.'s gasoline stations. In contrast to 2007, when the Office of
the Attorney General suggested in its written testimony that the Council might "consider
additional statutory changes in order to allow D.C.'s independent [gasoline station] operators to
operate more independently of particular oil companies" (emphasis added), now the primary
concern at the retail level is the high proportion ofD.C. gasoline stations owned by particular
wholesalers. Last month, I indicated publicly that, as part of the District's efforts to try to reduce
the exorbitant prices that D.C. consumers pay for gasoline, this Office is actively investigating
whether there have been antitrust law violations in the D.C. gasoline market that have resulted in
unnecessarily high prices. That investigation is continuing.
In D.C., as in most other large cities; a major constraint on retail gasoline competition is the
relatively small number of retail stations. In addition, in many parts of D.C., it is not easy to find
suitable sites for new stations. Given the significant barriers to entry into D.C.'s retail gasoline
June 17,2011
Page 3
market, the recent concentration of gasoline station ownership in the hands of a small number of
wholesalers has the potential to enable those wholesalers to exercise market power, resulting in
higher retail prices for consumers.
The District's current law on gasoline marketing agreements makes it harder than it would
otherwise be for a wholesaler to exercise market power through direct manipulation of gasoline
prices. The law does so by prohibiting a distributor from requiring a station operator - including
the operator of a station owned by the wholesaler itself - to buy gasoline from that distributor.
D.C. Official Code 36-303.01(a)(6). Under this law, a distributor may seek to secure a station
operator's loyalty through better prices or better service, but not through contractual restraints on
the station operator's ability to buy gasoline from other suppliers. Put another way, while District
law does not permit a gasoline station operating under the Brand "X" trademark to purchase
Brand "Y" gasoline and dispense it from a Brand X pump, the law does give the Brand X
gasoline station the right to purchase Brand X gasoline from any available supplier.
The threat to consumer welfare posed by these market conditions calls for vigorous enforcement
of federal and District antitrust laws, careful antitrust review of transactions that could further
increase market concentration, and serious efforts to reduce unnecessary barriers (including
regulatory barriers) to the opening of new gasoline stations. Bill 19-299 is an important step in
the right direction. By forbidding wholesalers from directly operating their D.C. gas stations,
Bill 19-299, together with the District's existing restrictions on gasoline marketing agreements,
would help to prevent wholesalers from exercising market power. If not restricted in this way,
wholesalers could maintain their positions as the exclusive suppliers of particular gasoline
stations simply by becoming the operators of those stations and choosing themselves as their
suppliers. Accordingly, the Administration supports Bill 19-299.
We fully support the bill as written. We further suggest that, either as part of this bill or as part
of a future bill, the Council may wish to consider additional statutory measures that could offer
consumers more effective long-term protection from the combination of (1) high concentration in
the ownership of D. C. gasoline stations and (2) significant barriers to the entry of new retail
gasoline stations in D.C. First, we respectfully request the Council to consider providing the
Attorney General with express authority to seek injunctions and civil penalties, on behalf of the
public, against distributors that violate the District's gasoline marketing agreement law or engage
in any other presumptively anti-competitive practices that could have the effect of increasing
prices at the pump. Second, if the current bill is intended to allow wholesalers to own gasoline
stations, but not operate them, then a new bill should provide that wholesalers with a high
concentration of gasoline station ownership may not use their market power, over time, in other
ways besides increasing wholesale gasoline prices. 'For example, a wholesaler with a high
enough concentration of gasoline stations could choose to raise rents and/or provide little or no
facility maintenance. The station operators would probably have little choice but to pass on their
higher rental and maintenance costs in the form of higher retail prices to consumers.
June 17,2011
Page 4
In conclusion, passage of Bill 19-299 should increase the effectiveness of the District's gasoline
marketing agreement law as a means of preventing gasoline wholesalers, at least in the short
term, from exercising market power to the detriment of consumers. We support Bill 19-299,
commend the Members of the Council for its introduction, and urge its favorable consideration
by the Committee, and, ultimately, by the full Council.
Sincerely,
/\ (
C _ J ,\ I (l
/ ,;t..VV "--t ~ L- ~ L~ ;::...= -_ _
Irvin B. Nathan
Attorney General
for the District of Columbia
Attachment H

Fr om: Cary Ridder
To: Cheh, Mary (COUNCI L)
Cc: Mendelson, Phil (COUNCI L); Brown, Kwame (COUNCI L) ; j evans@ddcouncil.us ; Wells, Thomas
(COUNCI L); mbrown@ddcouncil.us ; Bowser, Muriel (COUNCI L); yaleexander@ddcouncil.us ; Barry,
Marion (COUNCI L); Graham, Jim (COUNCI L); Thomas, Harry (COUNCI L); Cat ania, David A. (COUNCI L);
Orange, Vincent B. (Council)
Sent : Tue Jun 14 14: 44: 13 2011
Subj ect : Jobbers bill

Dear Mary:

As a 30 year resident of the Palisades, I fully endorse your legislation to prohibit jobbers from
also owning gas stations in the District of Columbia. I cant tell you what a loss it would be to
the community if Lynn Cook were forced to close his business. He is a tremendous asset to our
community: he not only services our vehicles in a caring and thoughtful way (I know it sounds
silly but it does make a difference) but he contributes regularly to the community whether it be
contributing to the playground renovation, providing internships for kids at the nearby schools,
supporting the local 4
th
of July parade or simply knowing that the local homeless guy is actually
ok. He is the personification of what a good small business owner contributes to their
community. He cares about his customers and the Palisades. To lose him is not just to lose a
service station but to lose somebody who sees himself and his business as part of a community.

We do not need a fast service food mart or an uncaring owner we need Lynn and his full
service gas station.

Please do pass this legislation which will protect small business operators who make such a
difference to a community.

Thank you,

Cary Ridder
5520 Carolina Place NW
Fr om: JWVARDAMAN@aol.com
Sent : Mon Jun 13 21: 26: 22 2011
Subj ect : (no subj ect )

Please continue your efforts on behalf of 19-0299 - support the amendment to prohibit gas distributors
from owning and operating retail service stations in DC. Thank you. Marianne and Jack Vardaman

Fr om: Kat hy Koerner
To: Cheh, Mary (COUNCI L) ; Evans, Jack (COUNCI L); Orange, Vincent B. (Council); Wells, Thomas
(COUNCI L); Brown, Michael (Council); Bowser, Muriel ( COUNCI L); Alexander, Yvet t e (COUNCI L); Barry,
Mendelson, Phil (COUNCI L) ; Brown, Kwame (COUNCI L)
Sent : Sun Jun 12 21: 17: 52 2011
Subj ect : Bill 19-0299 Amendment

I support Bill 19-0299, the "Retail Service Station Amendment Act of 2011". I support the
amendment to prohibit gasoline distributors from owning and operating retail service stations in
the District of Columbia. We need Lynn Cook and others like him to continue to run Parker's
Exxon. Lynn has shown extraordinary commitment to service and the community. Do not let
Joe Mamo monopolize, distribute, own and run all the DC service stations. Please vote for this
amendment.

Kathy Koerner
5529 Sherier PL NW
Washington DC 20016

Fr om: Wat Judes@aol.com
To: Cheh, Mary (COUNCI L) ; Evans, Jack (COUNCI L); Wells, Thomas (COUNCI L); Mendelson, Phil
(COUNCI L); Brown, Kwame (COUNCI L); Brown, Michael (Council); Bowser, Muriel (COUNCI L); Alexander,
Yvet t e (COUNCI L); Barry, Marion (COUNCI L); Graham, Jim (COUNCI L); Thomas, Harry (COUNCI L);
Cat ania, David A. (COUNCI L); Orange, Vincent B. (Council)
Sent : Sun Jun 12 14: 11: 26 2011
Subj ect : Bill 19-0299

Alec and Judy Watson from 3030 Arizona Ave Washington DC, 20016 support our neighborhood Parker
Exxon and the following bill! The Bill is 19-0299, the "Retail Service Station Amendment Act of 2011".

Please help our neighbor in this fight .

Judy and Alec Watson

Fr om: arnecp@aol.com
Cc: Evans, Jack (COUNCI L) ; Wells, Thomas (COUNCI L); Mendelson, Phil (COUNCI L); Brown, Kwame
(COUNCI L); Cat ania, David A. (COUNCI L); Orange, Vincent B. (Council)
Sent : Sun Jun 12 15: 06: 51 2011
Subj ect : Bill 19-0299

Mary:

Just to let you know that I fully support the Retail Service Station Amendment Act of 2011,
known as Bill 19-0299. We have just one gas station left in my neighborhood (Parker's Exxon)
and we like it just the way it is.

Arne Paulson

Fr om: Ginny and Sidney
Sent : Sun Jun 12 16: 32: 50 2011
Subj ect : Service st at ion act

Dear Councilmember Cheh: Please add us to the list of Kent-Palisades residents concerned
about keeping Parker Exxon alive. It is important to our community. We fully support your
proposed legislation. Sid & Virginia Levy, 5110 Cathedral.

Fr om: Aseidlit z1@aol.com
To: Cheh, Mary (COUNCI L) ; Evans, Jack (COUNCI L); Wells, Thomas (COUNCI L); Mendelson, Phil
(COUNCI L)
Cc: Brown, Kwame (COUNCI L); Brown, Michael (Council); Bowser, Muriel (COUNCI L); Alexander, Yvet t e
(COUNCI L); Barry, Marion ( COUNCI L); Graham, Jim (COUNCI L); Thomas, Harry ( COUNCI L); Cat ania,
David A. (COUNCI L); Orange, Vincent B. (Council)
Sent : Sun Jun 12 16: 47: 40 2011
Subj ect : Bill 19-0299/ Ret ail Service St at ion Amendment Act of 2011

Dear Councilmembers:

I am writing in support of Bill 19-0299, the Retail Service Station Amendment Act of 2011, and encourage
you to do all in your power to see that it is passed. Gasoline distributors should not be allowed to take
over retail service stations in the District, either by owning them or by operating them.

Every neighborhood should have a real neighborhood gas station, one that is there to serve the
community and not just to make a buck. In my neighborhood, the Palisades, it's Parker's Exxon,
managed by Lynn Cook. I've lived here long enough to remember Mr. Parker, who was a wonderful
man. Lynn took over many years ago and has become a cherished member of our community.

Parker's Exxon isn't just a gas station--it's a place where you know you'll be greeted warmly and taken
care of by people you know and trust. In addition, Lynn had the faith and the decency to employ a man
through one of my favorite non-profits, Jublilee Jobs--a free employment service for the poor. I don't see
someone like Mr. Mamo doing that.

The Palisades is a special place where residents care deeply about one another and about everyone's
quality of life. Our little gas station is a big part of our lives and we don't want it to change in any way.
Hopefully, your legislation will help preserve such an important fixture--not just in the Palisades,
but similar stations in every DC neighborhood. Thank you very much for introducing it.

Sincerely,

Anne Seidlitz
5014 Lowell St., NW

Fr om: Richard Higgins
Sent : Sun Jun 12 17: 39: 05 2011
Subj ect : Ret ail Service St at ion Amendment Act of 2011

Dear Councilmember Cheh,
I hope your Bill 19-0299 will pass and that we will keep Parker's Exxon Station open as a full
service station. Your bill is an aspect of the efforts to improve the quality of life in the District.
Thank you,
Richard Higgins
4615 Fulton St., NW

Fr om: Melinda Gardner
Cc: Evans, Jack (COUNCI L) ; Wells, Thomas (COUNCI L); Mendelson, Phil (COUNCI L); Brown, Kwame
(COUNCI L); Brown, Michael (Council); Bowser, Muriel ( COUNCI L); Alexander, Yvet t e (COUNCI L); Barry,
Orange, Vincent B. (Council)
Sent : Sun Jun 12 18: 55: 43 2011
Subj ect : Bill 19-0299, t he "Ret ail Service St at ion Amendment Act of 2011

Dear Councilwoman Cheh:

This is to let you know that as longtime patrons of Lynn Cooks fabulous Parkers station, we
strongly support the Retail Service Station Amendment Act of 2011, especially including the
amendment to prohibit gasoline distributors from owning and operating retail service stations in
DC. He has kept one of our cars running for 15 years!

Melinda and Bill Gardner
Laura Gardner
Ward 3 residents

From: Loretta Schaeffer <lsrenew@aol.com>
To: Cheh, Mary (COUNCIL)
Sent: Thu Jun 09 18:35:36 2011
Subject: Parkersburg exxon

Dear Ms Cheh,
Thank you very much for your proposed amendment. Our community needs Parkers Exxon.
We hope you succeed. Thanks again.
Loretta Schaeffer Guarda &Gian Carlo Guarda. 5711 Potomac Ave NW

From: Jim Hansen <hansen1965@yahoo.com>
To: Cheh, Mary (COUNCIL)
Sent: Thu Jun 09 19:20:30 2011
Subject: Parker's Exxon

I would like to voice my support for Parker's and your amendment. They're my go to place for
the last 17 years for anything related to my car.

Fr om: Pat ricia Hass
Sent : Tue Jun 14 15: 33: 24 2011
Subj ect : Parker's Exxon

Ms. Cheh,

I have lived within a mile of Parker's Exxon for over forty years. The maintenance crew there and
especially the manager, Lynn Cook, have rescued me and/or my vehicles numerous times, in all weather
conditions. I have depended upon their accessibility, professionalism, and friendliness and am grateful
for having a full-service station still available in the district.
I fully support support Bill 19-0299, the "Retail Service Station Amendment Act of 2011", prohibiting
gasoline distributors from owning and operating retail service stations in the District of Columbia.

Sincerely,
Mrs. Anthony Hass
1815 45th Street, NW

Fr om: penny.pagano@verizon.net [ mailt o: penny.pagano@verizon.net ]
Sent : Thursday, June 16, 2011 10: 49 AM
Cc: Faust , Jeremy (COUNCI L); Newman, Andrew (Council)
Subj ect : Bill 19-299 Ret ail Service Amendment Act of 2011

Dear Councilmember Cheh,
I would like to add my support for Bill 19-299, the Retail Service Amendment Act of 2011. As a
long time resident of the District and the Palisades neighborhood, I have watched as gas stations
disappeared from our community and the city. Parker's Exxon on MacArthur Blvd., has been
operated for 20 years by Lynn Cook, who has been an invaluable asset and resource for our
community. He would like to continue his business at this location. His station provides repairs
and assistance for many people in this community. Without these services, people would need to
go elsewhere -- probably out of the District. Prohibiting gasoline distributors from operating
retail service stations in the District is important to keep local businesses like this one viable, and
to keep the services we need in the city and in our neighborhoods.
Penny Pagano

Fr om: Thomas Adams
Sent : Sat Jun 18 10: 48: 58 2011
Subj ect : Parker's Exxon
Dear Ms. Cheh:

Sorry not to respond before the Friday June 17 hearing but I wanted to weigh in in favor of a measure that would
keep the Parker Exxon service station in business. I am not familiar with debate about Joe Mamo's role as a supplier
but I do think that city government has a role to even the scales when small owners are at the mercy of big business.
I have used the service station for various emergencies, as when finding I had a flat tire from the Safeway lot,
changed it there to the emergency tire, and took it to Parker's Exxon for a quick fix! Without Parker's Exxon, we
would have a long way to go out of neighborhood to get a full service facility.

Thanks,

Tom Adams

Thomas or Peggy Adams
adamspt@earthlink.net
EarthLink Revolves Around You.

Fr om: Ross, St u
To: Thomas, Harry (COUNCI L); mowser@dccouncil.us ; Graham, Jim (COUNCI L)
Cc: Cheh, Mary (COUNCI L)
Sent : Tue Jun 21 15: 08: 53 2011
Subj ect : Amendment t o t he ret ail service st at ion act
Dear council members..i support the amendment to amend the above act. This amendment not only
protects the independence of those operators of service stations in the district, it also protects consumers,
assuring that they will get a fair price based upon competitive conditions in a free market. The addition of
"jobbers" will expand the protections afforded by the Act and insure that auto repair bays, a vital part of
d.c. commerce in every ward, do not become carry outs. I hope you can support the bill too

Stu Ross vice chairman of ANC 3D ...

p. 2 Jun 161 1 09:29a Parkers Exxon 2023373004
STUART PHi liP ROSS TROUTMAN SAf;OERS U.P
202.652.2CO; telephone Morneys at Law
TROUTMAN
202.654.5837 facs;m!t e 401 9th N. W .. leOO
C() m Vla,hlngl on. O.C. 200042134
202.214.2950 lelephone
SANDERS
IrOlltrr an50a ooBls.com
June 15,2011
Hon. Mary M. Cheh
Chairperson, The Committee on Government
1350 Pennsylvanja Ave. , NW
Suite 108
Re: Amendment to the Retail Service Station Act of 1976 (the "Act")
Dear Chair Cheh and Members of the Committee:
The undersigned members of ANC 3D, present a,nd fonner, write this letter in support of
the bill submjtted by Council Members Cheh, Mende1soI4 Evans and Wells to add "jobbers" to
the list of those covered by the Act. The addition of "jobbers" will expand the protections
afforded by the Act to those operating retail service stations throughout the District of Colwnbia.
In every Ward jn the City independent operators provide unique automotive servkes to locals
with a daily myriad of car issues; they contribute to neighborhood associations and causes; t:hey
extend credit and help; and are important parts of commercial life in our City. It is our view that
the independence of retail service station operators is good for both commerce and the
community.
In our ANC, Lynn Cook, who runs Parker's Exxon on MacArthur Boulevard, should
have his commercial independence protected. He has serviced an average of 30 neighborhood
cars a day for 20 years. His station is a vital component of our community and the thought of his
being unable to keep those service bays active because "jobbers" are not covered by the Act
protecting independent operators is frightening. His station is an important part of our
community and makes a valuable contribution to dffily life in the Palisades.
ATLANTA CHICAGO HONG KONG LONDON NEW NEW"RK NORFOLK ORANGE COUNTY
RALEIGH RICHMOND SAN DIEGO SHANGHAI TYSONS CORNER VIRGINIA BEACH WASH I NGTON, DC
p.3
Jun 16 11 09:29a Parkers Exxon 2023373004
TROUTMAN
SANDERS
Hon. Mary M. Cheh
June 15,2011
Page 2
We urge adoption of the Act to insure that independent operation of stations and service
bays remain a part of our landscape in the District of Columbia.
Very truly yours,
4/ut. qa1Co
W. Philip ffhomas Ann Heuer Alma Gates
ANC 3D 05 ANC 3D 06 Former ANC 3D
Commissioner; Member ANC
3D Zoning Committee
11 12210vl
Attachment I

Attachment J
Government of the District of Columbia
Office of the Chief Financial Officer

Natwar M. Gandhi
1350 Pennsylvania Avenue, NW, Suite 203, Washington, DC 20004 (202)727-2476
www.cfo.dc.gov

MEMORANDUM

TO: The Honorable Kwame R. Brown
Chairman, Council of the District of Columbia

FROM: Natwar M. Gandhi

DATE: July 5, 2011

SUBJECT: Fiscal Impact Statement Retail Service Station Amendment Act of
2011

REFERENCE: Bill 19-299, Committee Print shared with the OCFO on June 29, 2011
______________________________________________________________________________________________________________

Conclusion

Funds are sufficient in the proposed FY 2012 through FY 2015 budget and financial plan to
implement the proposed legislation. Enactment of the proposed legislation does not have an impact
on the Districts budget and financial plan.

Background

The proposed legislation would amend the Retail Service Station Act of 1976
1
to prevent jobbers
(wholesale suppliers or distributors of motor fuel) from operating retail gas stations or serving as a
landlord, supplier, and competitor of an independent station operator in the District. A jobber
would have two years to comply with the proposed legislation.

Second, the proposed legislation would clarify that under existing District law, marketing
agreements are not exclusive and cannot prohibit a retailer from purchasing any brand of fuel from
any supplier. Third, it would expressly empower the Attorney General to bring action for violations
of the proposed legislation in the name of the District of Columbia. Finally, the proposed legislation
would reinstate a franchisees right of first refusal when the franchisor considers selling the service
station. The original right of first refusal provision sunset on January 1, 2011.

1
Effective April 19, 1977 (D.C. Law 1-123; D.C. Official Code 36-301.01 et seq.).
The Honorable Kwame R. Brown
FIS: B19-299 Retail Service Station Amendment Act of 2011, shared with the OCFO on June 29, 2011

Page 2 of 2

Financial Plan Impact

Funds are sufficient in the proposed FY 2012 through FY 2015 budget and financial plan to
implement the proposed legislation. Enactment of the proposed legislation does not have an
impact on the Districts budget and financial plan, but regulates the ownership of retail service
stations.

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