Idaho Retailers Defeat Price-Gouging Claims

The Attorney General’s office may not consider a business’s margin during an emergency declaration.

March 25, 2021

Boise, Idaho

BOISE, Idaho—A fight in Idaho over price-gouging claims brought forth by the state Attorney General’s office has ended with a victory for convenience retailers. On March 17, Gov. Brad Little signed into law legislation that clarifies fuel margins cannot be used as the basis for a price-gouging claim against businesses. Only actual price increases can result in a legal claim of price gouging.

During the pandemic, the state AG investigated three convenience retailers operating in Idaho in 2020. The state AG claimed that their profit margins were excessive, despite the average price per gallon being among the lowest in the United States. To counter the claim and bring clarity to state law, Senate Bill 1041 was brought before the state legislature.

Legal counsel Hawley Troxell Ennis & Hawley LLP, Givens Pursley LLP and Stoel Rives LLP noted in a letter to Suzanne Budge, executive director of the Idaho Petroleum Marketers & Convenience Store Association, that during the early months of the pandemic, “convenience stores were considered essential and remained open to serve their communities even though most of the State of Idaho simply shut down because of COVID-19.”

The firms wrote that at a time when the demand for fuel dropped 50%, the state AG arbitrarily selected companies “to investigate for no other reason than they were prominent convenience store retailers and even though their price of gas at the pumps was not unique.”

After receiving the requested business and financial records from the three convenience retail companies, “the Attorney General’s Office wrongfully accused the convenience stores of charging excessive prices. Its sole basis for accusation was that the margins had increased despite fuel prices dropping—in some weeks—to historic lows. Frankly, their reliance on margins instead of price increases was contrary to the plain language and legislative intent of Idaho Code Section 48-603(19),” wrote the firms.

Idaho Senate Bill 1041 clarifies that the language in Idaho Code Section 48-603(19) is consistent with its intent: “While the pricing of consumer goods and services is generally best left to the marketplace under ordinary conditions, when a declared state of emergency or disaster results in abnormal disruptions of the market, the public interest requires that excessive and unjustified increases in the prices” of essential consumer goods and services—the price of fuel, as well as food, medicine and water for human consumption—be prohibited, noted the firms. 

Therefore, the firms said that the state AG’s action “based only on margins and without consideration of actual price decreases, ignored the plain language and the intent of the statute.” 

Ultimately the state legislature agreed and passed Senate Bill 1041, which Gov. Little signed into law.

“On behalf of all our members, the hundreds of convenience stores across Idaho, and the thousands of essential employees at those stores, we’d like to thank the Idaho Senate,” said Matt Berry, president of the Idaho Petroleum Marketers & Convenience Store Association.

To learn more about what is impacting gas prices, read “Will Gas Demand Rebound to Pre-COVID-19 Levels?” in NACS Daily.

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