Colorado governor vetoes anti-gouging bill

| 6/12/2006

Gov. Bill Owens vetoed a bill June 2 that would have protected consumers in Colorado from being gouged at the fuel pump.

The bill, HB1251, was intended to prevent price gouging in the state before, during or after natural disasters. The protections would have applied to retail sales of goods and services, including fuel.

The National Conference of State Legislatures reports nearly 30 states have some type of price-gouging ban with many others pursuing their own rules. The laws in many of those states are triggered by emergency declarations.

The Colorado bill would have made it illegal for retailers to increase prices more than 10 percent above their costs after emergency declarations by the governor. Violators would have faced up to a $10,000 fine per day.

The Colorado attorney general would have been able to file suit in district court to prevent gouging.

Owens said in his veto statement that the bill “violates the fundamental principles of our market-based economy. Basic economics teaches us that in times of shortage or increased demand, prices increase accordingly.”

A similar effort in South Carolina also was vetoed. The bill would have allowed the state attorney general to trigger the state’s anti-price-gouging law if an emergency was declared in another state affecting South Carolina markets. Currently, officials may not investigate such allegations as a criminal matter unless South Carolina is under a state of emergency.

South Carolina Gov. Mark Sanford said in his veto message that the governor “in his role as the state’s chief executive officer, should determine whether an abnormal disruption of pricing for goods and services has occurred to trigger the anti-price-gouging law.”

Despite the failed attempts in Colorado and South Carolina, efforts in Wisconsin and Vermont have been signed into law, while a measure in Louisiana is advancing through the statehouse.

A new law already in effect in Wisconsin prohibits selling consumers goods and services, such as food, medicine and fuel, at unreasonably high prices during an emergency declared by the governor.

Previously, the only anti-gouging rule in Wisconsin prohibited multiple mark-ups in a 24-hour period and charging people in line for fuel a new price posted while they’re waiting.

The new rule allows the Department of Agriculture, Trade and Consumer Protection to draft formulas to determine when prices become unreasonable, The Associated Press reported. Violators will first be issued warnings, and then could face lawsuits seeking up to $10,000 in forfeitures and an injunction.

Vermont Gov. Jim Douglas signed legislation May 29 to prevent sudden jumps in fuel prices. The new protection takes effect July 1.

The new law allows the governor to declare a “market emergency” during such circumstances like severe weather, electrical supply shortages and acts of war or terrorism. The declaration makes it illegal to sell petroleum, including diesel and home heating oil, at “an unconscionably high price.”

Violators would face fines up to $10,000 per occurrence.

In Louisiana, a bill in the state’s House would criminalize price gouging and make it punishable by up to two years in jail and/or up to a $2,000 fine. Those who attempt to gouge customers could be fined as much as $500 and/or spend as much as six months in jail.

Existing Louisiana law imposes civil fines on merchants who overcharge for goods and services, including fuel, during or in the wake of a declared emergency.

Merchants would be permitted to increase prices if the mark up is consistent with similar goods and services outside the state. They would also be allowed to cover the cost of getting items in preparation for or after a disaster.

Merchants would not be able to charge a price that “grossly exceeds the prices ordinarily charged for comparable goods and services” during or before the disaster.

The rule would take effect during an emergency declared by the governor or a local official. It also would take effect when a named tropical storm or hurricane enters the Gulf of Mexico.

The bill – SB502 – is in the House Criminal Justice Committee. The Senate already approved it.

– By Keith Goble, state legislative editor