Prohibits price gouging with respect to fuel, energy, and transportation goods and services; directs the attorney general to promulgate rules and regulations requiring the periodic public disclosure by actors in the chain of distribution for fuel sold in or into the state of the prices charged or proposed to be charged for fuel.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A450
SPONSOR: Rozic TITLE OF BILL:
An act to amend the general business law, in relation to prohibiting
price gouging with respect to fuel, energy, and transportation goods and
services
PURPOSE::
This bill is intended to clarify that the state's price gouging law
reaches fuel, energy, and transportation goods and services, require the
attorney general to obligate public disclosure of prices charged for
fuel to provide transparency and rapid identification of price gougers,
clarify that the attorney general may also require such disclosure of
prices charged in the supply chain for other vital and necessary goods
and services, and clarifies that the statute extends to transactions
made out-of-state for goods and services sold in or into the state.
SUMMARY OF SPECIFIC PROVISIONS::
Section 1 amends section 396-r of the general business law to make three
changes clarifying the existing statutory text. First, the definition
of "goods and services" is amended to clarify that the statute reaches
the entire chain of distribution for goods and services sold in or into
the state.
Second, the definition of "goods and services" is further amended to
clarify that vital and necessary goods include fuel, energy, and trans-
portation goods and services. Third, the section clarifies that product
recalls leading to supply shortages can be a cause of an abnormal
disruption of the market that triggers application of the statute. In
addition, the statute is amended to require the attorney general promul-
gate regulations providing for periodic public disclosure of the prices
charged throughout the chain of distribution for fuel sold in or into
the state. The amendment clarifies that this mandate does not foreclose
the attorney general promulgating regulations imposing such disclosure
requirements or other disclosure requirements on actors in the supply
chain for other goods and services (as that term is defined by the stat-
ute), or alter in any way the attorney general's pre-existing regulatory
authority.
Section 2 provides that this Act shall take effect immediately.
JUSTIFICATION::
The Russian invasion of Ukraine has provided an abnormal disruption of
the market for fuel, among other commodities. Oil and gas companies
have used this disruption to increase fuel prices on consumers, most
notably at the gas pump.
The New York courts have long held that fuel falls within the ambit of
the price gouging statute (see, e.g., People ex rel. Spitzer v My Serv.
Ct., Inc., 14 Misc 3d 1217(A) Sup Ct, Westchester County 2007 Lippman,
J. gas station's prices for gasoline "patently violated GBL § 396-r" and
granting injunction; People ex re. Spitzer v Weyer Petroleum, Inc., 14
Misc 3d 491 Sup Ct, Albany County 2006 finding gross disparity in retail
gas prices following Hurricane Katrina sufficient to warrant injunction
under GBL § 396-r; People ex rel. Spitzer v Oneida Lake Petroleum
Corp., Sup Ct, Oswego County, Dec. 18, 2006, Seiter, J., Index No.
2006-1710 same). Similarly, New York courts have held that other energy
sources, such as portable generators, fall within the ambit of the price
gouging statute (see, e.g., People ex rel. Abrams v Two Wheel Corp., 71
NY2d 693, 697 1988 "If a power failure or shortage is the cause of a
market disruption, the purchase of a generator is precisely the kind of
transaction that the statute was designed to regulate"; accord People ex
rel. Vacco v Beach Boys Equip. Co., Inc., 273 AD2d 850 4th Dept 2000;
People ex rel. Vacco v Chazy Hardware. Inc., 176 Misc 2d 960 Sup Ct,
Clinton County 1998).
This legislation aims to codify this judicial finding and permit public
scrutiny of oil and gas price gouging by requiring that the attorney
general promulgate regulations that would obligate periodic price
disclosure by all actors in the supply chain for fuels, whether gas,
diesel, crude oil, or otherwise, that are being sold in or into the
state.
In the specific context of the oil and gas industry, requiring periodic
disclosure the prices charged at each stage of the supply chain for oil
and gas in New York by every actor in that chain, rather than simply the
spot prices charged at the pump or at the terminal, permits rapid
detection of both unconscionably excessive prices and the actors behind
those unconscionably excessive prices after abnormal disruptions of the
market such as the present Ukrainian crisis.
At the same time, the bill clarifies that the fuel disclosure mandate
does not diminish the attorney general's regulatory authority to require
periodic disclosure of prices throughout the supply chain for any other
goods or services covered by the statute. This bill also does not dimin-
ish or alter any other aspect of the attorney general's pre-existing
regulatory authority.
At the same time, the State is experiencing other egregious instances of
price gouging, as seen in recent deeply disturbing reports that parents
are being price gouged for infant formula owing to a shortage caused by
an abnormal disruption of the market linked to the COVID-19 pandemic and
bacterial contamination of some portion of the existing supply. This
bill accordingly amends the statute to clarify that a product recall may
be the cause of an abnormal disruption of the market for a vital and
necessary good.
Although the statute already covers such causes, the express clarifica-
tion made in this bill sends a strong message to all actors in this
supply chain: the despicable practice of exploiting product recalls to
force desperate parents to pay staggering sums to feed their babies is
not merely morally repugnant but flatly illegal, and always has been.
Finally, the statute is amended to clarify that any actor in the chain
of distribution for vital and necessary goods and services, wherever
situated, is subject to the price gouging statute if the goods and
services at issue are sold in or into New York state. The legislature
intends for the ambit of the statute to reach the entire supply chain
for goods and services sold in or into New York state, to the maximum
extent permitted by the U.S. Constitution and federal law.
PRIOR LEGISLATIVE HISTORY::
2022: A10597 (Rozic) - Consumer Affairs and Protection
FISCAL IMPLICATIONS::
None.
EFFECTIVE DATE::
This section shall take effect immediately.
STATE OF NEW YORK
________________________________________________________________________
450
2023-2024 Regular Sessions
IN ASSEMBLY
January 9, 2023
___________
Introduced by M. of A. ROZIC -- read once and referred to the Committee
on Consumer Affairs and Protection
AN ACT to amend the general business law, in relation to prohibiting
price gouging with respect to fuel, energy, and transportation goods
and services
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subdivisions 2 and 5 of section 396-r of the general busi-
2 ness law, subdivision 2 as amended and subdivision 5 as added by chapter
3 90 of the laws of 2020, are amended to read as follows:
4 2. During any abnormal disruption of the market for goods and services
5 vital and necessary for the health, safety and welfare of consumers or
6 the general public, no party within the chain of distribution of such
7 goods or services or both shall sell or offer to sell any such goods or
8 services or both for an amount which represents an unconscionably exces-
9 sive price. For purposes of this section, the phrase "abnormal
10 disruption of the market" shall mean any change in the market, whether
11 actual or imminently threatened, resulting from stress of weather,
12 convulsion of nature, failure or shortage of electric power or other
13 source of energy, product recall leading to supply shortages, strike,
14 civil disorder, war, military action, national or local emergency, or
15 other cause of an abnormal disruption of the market which results in the
16 declaration of a state of emergency by the governor. For the purposes of
17 this section, the term goods and services shall include all goods and
18 services sold in or into the state that are (a) consumer goods and
19 services used, bought or rendered primarily for personal, family or
20 household purposes, (b) essential medical supplies and services used for
21 the care, cure, mitigation, treatment or prevention of any illness or
22 disease, (c) fuel, energy, and transportation goods and services, and
23 [(c)] (d) any other essential goods and services used to promote the
24 health or welfare of the public. This prohibition shall apply to all
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD02764-01-3
A. 450 2
1 parties within the chain of distribution for any good or service that is
2 sold in or into the state, including any manufacturer, supplier, whole-
3 saler, distributor or retail seller of goods or services or both [sold
4 by one party to another when the product sold was located in the state
5 prior to the sale]. Goods and services shall also include any repairs
6 made by any party within the chain of distribution of goods on an emer-
7 gency basis as a result of such abnormal disruption of the market.
8 5. The attorney general shall promulgate rules and regulations requir-
9 ing the periodic public disclosure by actors in the chain of distrib-
10 ution for fuel sold in or into the state of the prices charged or
11 proposed to be charged for fuel. The attorney general may also promul-
12 gate rules and regulations requiring the periodic public disclosure by
13 actors in the chain of distribution for any goods or services sold in or
14 into the state of the prices charged or proposed to be charged for such
15 goods and services. The attorney general may promulgate such other rules
16 and regulations as are necessary to effectuate and enforce the
17 provisions of this section.
18 § 2. This act shall take effect immediately.
