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Legislative Memo

Darren Suarez
Director of Government Affairs
T 518.465.7511
www.bcnys.org

BILL:

S.3815 (Lavalle) Same as Uni. A.5331 (Thiele)

Support

SUBJECT:

Prohibits a producer or refiner from selling, transferring, or assigning interest in a retail outlet leased to a motor fuel dealer

 

DATE:

May 9, 2016

 

The bill amends the General Business Law to prohibit a gasoline producer, refiner or wholesaler from selling, transferring or assigning its business interest in a retail gasoline outlet that is leased to a motor fuel dealer unless it first makes a bona fide effort to sell the outlet to the dealer, or provides the dealer a “right of first refusal” of any offer to buy the outlet by a third party.

While the legislation targets a narrow component of the commercial sector, it raises contract and property right issues of broad interest to the state's business community.

The Business Council opposes the legislation on a number of grounds including:

While this "first right of refusal" seems innocent on its face, it could have a devastating impact on minority participation in the oil and gas industry.. As the major companies like Shell, Exxon and others move to divest themselves of these gas stations and distributorships, African American entrepreneurs for the first time have broken through the segregation barrier and been able to acquire these retail assets.
- Rainbow Push Coalition Veto Request Memo for S.7410-B (2010)

Finally, Existing federal law governs these transactions: The Petroleum Marketing Practices Act (PMPA) was enacted in 1978 to provide franchisees with a level playing field with in contract disputes with  their  franchisors. Furthermore Article  11-B of the General Business Law already prohibits franchise terminations, except for good cause shown (e.g., fraud, mismanagement).

For these reasons, The Business Council recommends against advancement of this legislation.