Senate advances bill to make Motor Fuel Marketing Act enforceable, replaces 6% markup with 'not-below-cost' standard

SALT LAKE CITY — The Utah Senate on Jan. 27 passed amendments to Senate Bill 46 on second reading, moving the measure to the third-reading calendar after a floor debate about market fairness, enforceability and administrative enforcement.

Senator Hallowell, sponsor of the measure, told colleagues the bill rewrites the Motor Fuel Marketing Act to make it enforceable by eliminating an old 6% markup rule and instead prohibiting sales below cost. "This bill is to amend ... the main thing that we wanted to do was, make this law so that it could be enforced," Hallowell said on the floor, adding the language was drafted with input from the attorney general's office.

The amended bill includes several specific changes: refiners must establish a posted rack price and a transfer price for affiliate sales (disclosure available to the attorney general, the Division of Consumer Protection or by court order); affiliates may not sell motor fuel to their own stations at a lower price than they charge others; and a limited 72-hour "grand opening" exception (with a one-time remodel exception) allows temporary below-cost pricing.

Sponsor and supporters said the changes are intended to protect small independent service-station owners from large corporate operators that can sustain losses in one market while subsidizing low pump prices with profits elsewhere. "These small businesses would be out of business if we didn't," Hallowell said.

Opponents argued the bill risks government overreach into private pricing and could be applied too broadly. Senator Spencer said the state should not regulate how businesses price individual products and suggested predatory-pricing complaints belong in court. "I don't want government stepping in and telling individual companies how to ... price individual products within their business operation," Spencer said.

Senator Allen voiced concern about a rebuttable-presumption clause in the bill that he said shifts the burden of proof to accused sellers. "People who fall under this provision of your bill [are] immediately guilty until proven innocent," Allen said, and said he would vote no until convinced the provision is properly calibrated.

Senators who supported the measure said the attorney general's office assisted in reworking the language to address constitutionality and enforceability. The bill gives the Division of Consumer Protection authority to seek cease-and-desist orders and civil penalties when it has reason to believe below-cost selling is intended to injure competition; it also establishes a rebuttable presumption that affiliate sales below the price charged others tend to injure competition, subject to presentation of evidence to the contrary.

The floor adopted a sponsor amendment package (six amendments, described on a January 27 colored sheet) and then called the question on whether SB 46 should be read for the third time. The clerk announced: "Senate bill 46 has 23 aye votes, 5 nay votes, and 1 being absent." The bill was placed on the third-reading calendar.

The Senate did not resolve all substantive concerns on the floor: questions remained about the scope of administrative penalties, how the rebuttable presumption would play out in practice, and protections for lawful volume discounts and internal affiliate accounting. Supporters said those issues were considered in drafting and that the change from a 6% mark-up to a not-below-cost rule makes enforcement practicable.

The third-reading date will determine whether the bill becomes final; as of the Jan. 27 session the measure had cleared second reading with the announced tally and no further floor action that day.