Tuesday, January 5, 1999

Oahu dealers
intensify fight
against Texaco

They're seeking an injunction
to block the sale until their
rights are addressed

By Rob Perez


A group of Oahu dealers who lease their gas stations from Texaco Inc. is asking a federal judge to block the sale of the stations until the court decides whether the transaction violates federal law.

The motion for a preliminary injunction, filed late last month, comes on the heels of a lawsuit the dealers filed in November.

The lawsuit alleged the planned sale of Oahu's Texaco stations to Dallas-based U.S. Restaurant Properties Inc. violated the Petroleum Marketing Practices Act, a federal law designed to give dealers certain rights in their relationships with oil companies.

When the 10 Oahu dealers filed the lawsuit, they said they would hold off on seeking a preliminary injunction in hopes of being able to reach agreement with B.C. Oil Ventures, the California company that is supposed to run the stations for the buyer.

But the two sides still are far apart, and the dealers are concerned Texaco will try to close the sale without satisfying the federal requirements, said Beverly Harbin, president of the Hawaii Automobile Repair & Gas Dealers Association.

The law requires that when an oil company pulls out of a geographic market, it must sell its stations to the dealers leasing them or to a company that offers a replacement franchise with a national brand of gasoline. The dealers claim Texaco isn't meeting that requirement.

A Texaco spokesman could not be reached yesterday for comment.

Texaco is selling its 27 Oahu stations and a storage terminal to obtain state approval for a national merger of the marketing and refining arms of Texaco and Shell Oil Co. The state had planned to fight the deal if one of the two companies didn't divest its Oahu assets, arguing that a combination locally without the divestiture would violate antitrust law.

Texaco subsequently agreed to sell its assets. The state must approve the sale.

Because U.S. Restaurant is not an oil company and will not be the dealers' landlord if the sale goes through, the dealers would lose their protections under the federal law, they said.

The dealers also noted in court documents that since being told of the proposed sale, they have been given conflicting information on who their new gas supplier and landlord would be. The confusion has led to "tortured attempts" to try to structure an arrangement that would satisfy Texaco's federal obligations, they said.

If the obligations can't be met, the dealers noted, the consent decree Texaco signed with the state requiring divestiture provides for relief: appointment of a trustee who would find a qualified buyer for the assets.

A hearing on the dealers' preliminary injunction request has been scheduled for Feb. 8 before Judge David Ezra.

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