Under the new law, all sellers in a certain area have the same “cost” for minimum markup purposes. All sellers must base their price on the average terminal price. This change leads to an equilibrium retail price that may be a couple pennies higher per gallon than the scenario discussed above because the 9.18% is over the average terminal price. This may result in higher revenues for some gasoline dealers.
Petroleum Pricing Service
The new definitions of cost rely on the “average posted terminal price.” This price is valuable proprietary information that, until recently, could only be obtained by subscribing to a service. The minimum cost of this service is roughly $55 per month. The service will report prices via fax, e-mail, satellite, or allow their customers to search through the database (requires a modem and computer). Motor vehicle fuel sellers who wish to make their pricing decisions based on statutory costs (as opposed to competition) will need to subscribe to this service.
Shortly after Act 55 went into effect, the Wisconsin Petroleum Marketers Association arranged for one of the services (Axxiss - a Minnesota firm) to provide an 800 number that reports the average posted terminal price. Therefore, small business currently are able to obtain this service free of charge. However, it is uncertain whether or not this is a permanent arrangement.
Many petroleum dealers already subscribe to one of the services to determine where and when to buy fuel. At first glance 1997 Wis. Act 55 does not present an additional expense to this group. However, many of these business receive their prices early in the day. But these prices are irrelevant for determining minimum markup. The new law specifies that the average posted terminal price is at the “close of business” on the determination date. Therefore, petroleum dealers who already subscribe to the service must carefully determine whether the information they are already getting is relevant to the Unfair Sales Act. They may have to increase their spending on this service to get the information needed to comply with the statute.
Other petroleum dealers, typically small business, rely on a distributor or jobber to sell them fuel. These people have had no need for a subscription to a pricing service until now. Under the new law, a subscription to a pricing service will be essential to determine whether or not their price is in compliance with the law.
Although this could be a significant cost to the seller, it should be stressed that the neither the department nor the new statute requires small business to absorb this expense. Sellers could choose to simply always meet their competitor's prices or estimate the “average posted terminal price” based on their own invoices or price reports pulled earlier in the day. However, if they chose one of these options, they must submit a notice to the department to take advantage of the meeting competition defense.
Private cause of action
Beginning August 1, 1998, sellers of motor vehicle fuel who are injured or threatened with injury may bring suit against their competitors who violate the Unfair Sales Act. Maximum damages are treble any monetary loss or $2,000 per day, whichever is greater, plus attorney fees. Obviously, this could significantly impact small business. All business who sell gasoline will need to carefully asses their pricing policies and procedures and determine their level of risk of having to pay damages. In addition there will be a cost associated with bringing a suit or successfully defending against a suit.
Notification for meeting competition
The Unfair Sales Act has always granted certain exceptions where sales below cost are acceptable. The exception most widely used by motor vehicle fuel sellers is the “meeting competition defense.” It is acceptable to sell fuel below cost if the seller is doing so to meet the price of a competitor. However, under the new statute, sellers who “notify the department” that they are lowering their price below the minimum in order to meet a competitor's price enjoy immunity from liability under private and state enforcement actions.
There will be a cost associated with submitting notifications. The department will accept notices via: fax, e-mail, U.S. mail, courier, or hand delivery. Because of the immunity that sellers will receive if they submit a notice, the department predicts that many sellers will wish to submit a notice on a very regular basis, simply as a risk management precaution. This will involve a significant paperwork burden for small business.
It should be stressed that submitting a notice is decision that the motor vehicle fuel sellers make for themselves. It is not mandated by the department or by the statute. Alternatively, a seller could chose to not sell below the minimum markup -- regardless of what their competitors are doing -- or they could simply take their chances on being sued for selling fuel below the minimum markup. Failing to provide notice does not mean that the seller will automatically lose any case that may be brought against them. However, there is a small forfeiture ($50 to $200) penalty for failing to provide notice.
Conclusion
It is very difficult to estimate the statute and rule's overall impact on small businesses. There may be a potential for increased revenues. However this could be offset by increases in expenses for a subscription to an oil pricing service and the expense of filing a notification with the department. These potential increases in expenses are entirely at the discretion of the business.
Rule Contents
“Cost” of motor vehicle fuel
Act 55 extensively changed the method sellers use to determine their “cost” as defined in the statute. This rule clarifies and interprets some portions of the new rule. For example, the rule defines new statutory phrases such as: “terminal located closest to the retail station.” In addition, the rule states some basic cost accounting methodology that must be used when determining the “cost of doing business
“Meeting competition” notice
This rule prescribes the form and content of the notice which a motor vehicle fuel seller must file with the department to establish a presumptive “meeting competition” defense under the Unfair Sales Act.
Under Act 55, a person who lowers their price to meet the price of a direct competitor must file a “meeting competition” notice with the department. This rule prescribes the form and manor of notice required by the department.
Summary of Comments of Legislative Review Committees:
On March 11, 1999, the Assembly Committee on Consumer Affairs held a hearing on this rule. Several people offered testimony in support and nobody registered or spoke in opposition to the rule. The committee did not take action on the rule and the legislative review period expired on April 11, 1999.
5.
Barbering & Cosmetology Examining Board
(CR 98-133)
BC Code - The licensure, examinations and practice of barbering and cosmetology practitioners, managers, manicurists, electrologists, aestheticians and apprentices, and renewal and reinstatement of licenses.
Summary of Final Regulatory Flexibility Analysis:
The proposed rules will have no significant economic impact on small businesses, as defined in s. 227.114 (1)(a), Stats.
Summary of Comments:
No comments were reported.
Ch. HSS 51 - The applicability of the Department's rules that establish criteria and procedures for placement of special needs children in adoptive homes.
Summary of Final Regulatory Flexibility Analysis:
These rules will not directly affect small businesses as “small business” is defined in s. 227.114 (1) (a), Stats. The amendments make clear that the rules apply to county agencies providing adoption services under contract to the Department, and not only to the Department and private child-placing agencies, and in the process define “child-placing agency” and “county agency” and update addresses and organization names that appear in ch. HSS 51.
Summary of Comments:
No comments were reported.
Ch. HSS 98 - Lie detector testing of sex offenders who are in community placements.
Summary of Final Regulatory Flexibility Analysis:
These rules are not directly affect small businesses as “small business” is defined in s. 227.114 (1)(a), Stats. The rules apply to the Department and to persons who are sex offenders, that is, who meet any of the criteria under s. 301.45 (1), Stats., and are committed to the Department for treatment, and who are in or are scheduled to be in community placements under supervision of agents of the Department.
Summary of Comments:
No comments were reported.
Ch. Ins 51 - Risk based capital for health insurers.
Summary of Final Regulatory Flexibility Analysis:
The Office of the Commissioner of Insurance has determined that this rule will not have a significant economic impact on a substantial number of small business and therefore a final regulatory flexibility analysis is not required.
Summary of Comments of Legislative Standing Committees:
The legislative standing committees had no comments on this rule.
Ch. NR 20 - Sport fishing regulations.
Summary of Final Regulatory Flexibility Analysis:
The proposed rule will not directly affect small business; therefore, a final regulatory flexibility analysis is not required.
Summary of Comments by Legislative Review Committees:
The proposed rules were reviewed by the Assembly Committee on Natural Resources and the Senate committee on Agriculture, Environmental Resources and Campaign Finance Reform. There were no comments.
Chs. NR 20 & 23 - Wisconsin-Michigan boundary waters.
Summary of Final Regulatory Flexibility Analysis:
Although this rule will have no direct effect on small business, guides, bait shops and other tourism business will benefit from uniform regulations with the State of Michigan.
Summary of Comments by Legislative Review Committees:
The rule was reviewed by the Assembly Committee on Natural Resources and the Senate Committee on Agriculture, Environmental Resources and Campaign Finance Reform. There were no comments.
S. NR 20.20 (73) (j) 4. - Sport fishing for yellow perch.
Summary of Final Regulatory Flexibility Analysis:
This rule will apply only to sport fishers and will not directly affect small businesses.
Summary of Comments by Legislative Review Committees:
The rule was reviewed by the Assembly Committee on Natural Resources and the Senate Committee on Agriculture, Environmental Resources and Campaign Finance Reform. There were no comments.
Ch. NR 47 - Forestry grant programs.
Summary of Final Regulatory Flexibility Analysis:
The proposed amendments will not have an impact on small businesses because all the amendments are on grant programs. Therefore, a final regulatory flexibility analysis is not required.
Summary of Comments by Legislative Review Committees:
The proposed rules were reviewed by the Assembly Committee on Rural Affairs and Forestry and the Senate Committee on Agriculture, Environmental Resources and Campaign Finance Reform. There were no comments.
S. NR 50.23 - Wildlife abatement and control grants for urban communities.
Summary of Final Regulatory Flexibility Analysis:
The proposed rule relates to grants to urban municipalities; therefore, a final regulatory flexibility analysis is not required.
Summary of Comments by Legislative Review Committees:
The proposed rule was reviewed by the Assembly Committee on Natural Resources and the Senate Committee on Agriculture, Environmental Resources and Campaign Finance Reform. On February 17, 1999, the Assembly Committee on Natural Resources extended the review period for 30 days. No public hearing was scheduled during that time.
Ch. NR 167 - Land recycling loan program.
Summary of Final Regulatory Flexibility Analysis:
The proposed rule does not affect small businesses; therefore, a final regulatory flexibility analysis is not required.
Summary of Comments by Legislative Review Committees:
The proposed rule was reviewed by the Assembly Committee on Conservation and Land Use and the Senate Committee on Agriculture, Environmental Resources and Campaign Finance Reform. There were no comments.
Ch. NR 809 - Water system capacity for community and nontransient noncommunity water systems.
Summary of Final Regulatory Flexibility Analysis:
The expected financial impacts of the proposed rule changes to small businesses are negligible as it does not require additional monitoring or increase construction requirements. The requirements in the proposed rule are mandated by federal regulations.
Summary of Comments by Legislative Review Committees:
The proposed rule was reviewed by the Assembly Committee on Environment and the Senate Committee on Agriculture, Environmental Resources and Campaign Finance reform. There were no comments.
