Attorney General Richard Blumenthal said Monday afternoon that Connecticut’s legislature has the authority to pass a law this week allowing gas stations to offer cash discounts. The law could save motorists about 10 to 12 cents per gallon.
At the request of Gov. M. Jodi Rell, Blumenthal issued a legal opinion saying there’s no federal law to block the legislature from passing a cash discount law during Wednesday’s special session.
About 85 percent of gas station franchise agreements in the state currently prohibit their gas stations from offering a cash discount, Blumenthal said. He said this is because “big oil” makes money off credit card transactions every time someone uses a card issued by the oil company.
Will “big oil” challenge the state’s decision?
Blumenthal said in the short term he thinks a challenge of the law, in the form of a temporary injunction, would fail.
What happens if oil companies decide to crack down on gas station franchisees instead of the state?
“A cash discount has nothing to do with the termination or nonrenewal of a franchise agreement,” Blumenthal wrote in his opinion.
He said state law may nullify contract provisions in the franchise agreements when “there is a legitimate public purpose for such legislation and the public purpose outweighs any substantial impairment of the contract.”
“Even if a court deems the ban on prohibiting cash discounts to be substantial, there is a strong public purpose to providing consumers the option of significantly reducing gasoline costs by paying cash,” Blumenthal wrote in his opinion.
In conclusion, Blumenthal urged the legislature to “unshackle retailers” and give them discretion to offer cash discounts. He said the result would be enhanced competition and benefits to the consumers.
