Attorney General: The Honorable George Jepsen, Legislative Office Building, 2001-020 Formal Opinion, Attorney General of Connecticut

Attorney General's Opinion

Attorney General, Richard Blumenthal

August 31, 2001

The Honorable George Jepsen
Senate Majority Leader
Room 3350
Legislative Office Building
Hartford, CT 60106-1591

Dear Senator Jepsen:

You have requested our opinion on whether or not the provisions of Chapter 250a of the Connecticut General Statutes would prohibit a proposed business joint venture involving the Pilot Corporation ("Pilot") and Marathon Ashland Petroleum ("MAP") from operating a retail service station at the Pilot travel center in Milford, Connecticut. In our opinion, the joint venture would be prohibited by the provisions of Chapter 250a from operating the retail service station in question.

According to your letter, dated July 16, 2001, Pilot proposes to enter into a joint venture with MAP to operate approximately 250 retail motor fuel outlets in 38 states, including the Pilot travel center in Milford. MAP is a petroleum refiner. It is your understanding that MAP will not have the majority of the stock nor a majority of the board of directors of the joint venture, but rather both will be evenly split between Pilot and MAP. You further state your understanding that most of the senior management of the joint venture will come from Pilot, including Pilotís President and CEO, James Haslam, who will become the President and CEO of the joint venture. Furthermore, the joint venture will not be obligated to buy gasoline or diesel fuel from MAP.

You correctly note that Section 14-344b of the Connecticut General Statutes (the "divorcement law") prohibits a producer or refiner of petroleum products from operating a retail service station in Connecticut. That section reads:

After July 1, 1980, no producer or refiner of petroleum products shall operate a major brand, secondary brand or unbranded retail service station in the state with employees of such producer or refiner, a subsidiary company, commissioned agent or under a contract with any person, firm or corporation managing a service station on a fee arrangement with such producer or refiner. Any such station shall be operated only by a retail service station dealer.

In reviewing the language of Section 14-344b to ascertain the legislative purpose of the statute, we are guided by the Supreme Court's oft repeated instruction to look first at the language of the statute.

We must interpret statutes as they are written. See Rosnick v. Aetna Casualty & Surety Co., 172 Conn. 416, 422, 374 A.2d 1076 (1977); Liistro v. Robinson, 170 Conn. 116, 129, 365 A.2d 109 (1976); Mancinone v. Warden, 162 Conn. 430, 439, 294 A.2d 564 (1972). It has often been said that the legislative intent is to be found not in what the legislature meant to say, but in the meaning of what it did say. Wiegand v. Heffernan, 170 Conn. 567, 581, 368 A.2d 103 (1976); Colli v. Real Estate Commission, 169 Conn. 445, 452, 364 A.2d 167 (1975); Sillman v. Sillman, 168 Conn. 144, 148, 358 A.2d 150 (1975). Where the language used by the legislature is plain and unambiguous, there is no room for construction by the courts and the statute will be applied as its words direct. Baston v. Ricci, 174 Conn. 522, 528, 391 A.2d 161 (1978); Johnson v. Personnel Appeal Board, 174 Conn. 519, 521-22, 391 A.2d 168 (1978); Clark v. Mulcahy, 162 Conn. 332, 338, 294 A.2d 504 (1972).

Muha v. United Oil Co., Inc.,180 Conn. 720, 730-731, 433 A.2d 1009 (1980).

The clear language of Section 14-344b thus precludes MAP, as a refiner of petroleum products, from operating a retail service station in Connecticut in its own name, or through a subsidiary, agent or contractor. The specific question you pose is whether MAPís membership in the proposed joint venture with Pilot would prevent the joint venture from operating a retail service station. After reviewing the legislative history of Section 14-344b, Waterbury Petroleum Products, Inc. v. Canaan Oil and Fuel Co., Inc., 193 Conn. 208, 231, 477 A.2d 988 (1984), in conjunction with the clear statutory language, I conclude that the answer to this question is that it does so.

The legislative history of Section 14-344b confirms that the legislature intended to require petroleum producers and refiners to divest themselves of any interest in the operation of retail service stations. Substitute House Bill 5141, An Act Prohibiting Oil Providers from Acting as Retail Dealers, became law when it was enacted as Public Act 79-437. During the floor debates in the House, Representative Migliaro summarized the intent of the bill as foreclosing the anti- competitive effect of a petroleum producer or refiner vertically integrating its separate operations to the detriment of the small, independent gas retailer as well as the consumer. "[A] very important thing that should be remembered is that we're talking about people being in competition when there is no competition, not under the present format. The major oil companies today have the privilege of being three things in one. A wholesaler, a distributor and a retailer. And they make it on all ends. Where the average gas man.....the independent is trying to make a go of it, he's in direct competition with the retailer, but also the wholesaler and the distributor, which [makes it]...impossible for him to compete." 22 H.R. Proc., Pt. 21, 1979 Sess., p.7391-92.

Representative Grande stated that the bill would take the retail operations "out of the hands of the major oil companies who really hold the big stick." 22 H.R. Proc., Pt.21, 1979 Sess., p.7391. In the other chamber, Senator Knous summarized the bill by calling it "...a proposal...which will prevent an industry from controlling a product from its source to its retail sale." 22 S. Proc., Pt. 12, 1979 Sess., p.3998.

In the present situation, MAP and Pilot have entered into a joint venture to operate a retail service center in Connecticut. Connecticut law defines "[a] joint venture [as] a special combination of two or more persons who combine their property, money, efforts, skill and knowledge to seek a profit jointly in a single business enterprise without any actual partnership or corporate designation." Electronic Associates, Inc. v. Automatic Equipment Development Corp., 185 Conn. 31, 35, 440 A.2d 249 (1981). "Although regarded as an informal partnership, joint ventures are generally governed by the same principles that govern common-law partnerships." Doe v. Yale University, 252 Conn. 641, 673-674, 748 A.2d 834 (2000). See also, Travis v. St. John, 176 Conn. 69, 73, 404 A.2d 885 (1978). "As in a partnership, the members of a joint venture Ďundertake fiduciary duties to each other concerning matters within the scope of the joint venture.í" 252 Conn. at 674.

Although we have not been provided with details as to the financial and legal relationship involved in this particular endeavor, the general characteristics of a joint venture mean that MAP would effectively operate a retail service station in Connecticut in conjunction with Pilot, in violation of Section 14-344b. The legislature did not specifically exempt -- and could not have intended indirectly to do so -- a joint venture that includes as a member a producer or refiner of petroleum products from the prohibition found in Section 14-344b. Indeed, Section 14-344b expressly includes within its prohibition a subsidiary, agent or contractor of a producer or refiner -- which relationships may be less directly intertwined with the producer or refiner than the "partnership" relationship underlying a joint venture. In light of the legislative intent that Section 14-344b prevent the anti-competitive effects of the vertical integration of the petroleum industry, the purpose of the statute would be gravely undermined if a producer or refiner could engage in the business of operating a retail service station by the simple device of establishing a joint venture with a non-producer or non-refiner.

I trust this answers your question.

Very truly yours,

RICHARD BLUMENTHAL
ATTORNEY GENERAL

Charles H. Walsh
Assistant Attorney General


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