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At the end of March, Connecticut Attorney General William Tong, along with the state’s Department of Consumer Protection (DCP) and Department of Energy and Environmental Protection, issued a press release regarding an “abnormal market disruption” for gas prices, triggering state price gouging protections. Tong’s release cited the “international crisis” in Iran for the disruption and stated, “[o]vercharging consumers is unacceptable at any time, but during this abnormal market disruption it is illegal.”
During an abnormal market disruption, Connecticut law makes it unlawful for any part of the chain of distribution to charge an “unconscionably excessive price” on energy resources. Prima facie evidence of an “unconscionably excessive” price: “the amount charged represents a gross disparity between the price … immediately prior to … the onset of an abnormal market disruption, or (B) was any period in which an imminent abnormal market disruption is reasonably anticipated, and … the amount charged by the seller was not attributable to additional costs incurred …”
The DCP stated they are monitoring and analyzing complaint activity and will work with the AG’s office to take appropriate actions if needed. Though the AG announcement acknowledges that “not every increase … constitutes price gouging,” it also states that every complaint will be investigated. It is common for AG’s offices during occasions when price gouging laws are activated to coordinate closely with their intake and complaint sections or departments, and such an announcement often will result in even greater numbers of complaints to review.
State AGs have taken action on gasoline price gouging in the past. For example, the Texas AG’s office notably resolved dozens of gas price gouging cases in the wake of Hurricane Harvey in the late 2010s. There, rumors and panic before the storm resulted in gas prices skyrocketing before the hurricane had even reached the coast, and in counties not directly impacted by the storm itself. While there was a declared state of emergency that triggered the state’s price gouging law, the conduct itself was similar to what could occur in an “abnormal market disruption.”
As we have previously discussed, state laws vary on price gouging, including whether the state has price gouging laws at all. Given the scope of potential economic impact with the ongoing conflict, it is possible some state AGs will take an expansive view of their price gouging authority, especially given recent AG emphasis on the importance of pricing. Not all states require an explicit declaration of a market disruption such as in Connecticut. And some states have ambiguous or expansive scopes for products and services that may be covered by their statutes. We recommend businesses review their price change policies for compliance with applicable state laws and consider potential AG enforcement risks.
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