D.C. gas mogul Joe Mamo finds increasing support of business model from council

Correction: An earlier version of this article about D.C. Council legislation that tries to infuse more competition into the local retail gasoline market stated that the bill would prohibit wholesalers from owning retail service stations. Under a measure by Council member Mary M. Cheh (D-Ward 3), wholesalers would be allowed to own retail stations, but they would be barred from operating the stations or collecting the profits associated with gasoline sales. This version has been corrected.

September 28, 2011

A D.C. Council effort to break up what some members call a near monopoly of the local gasoline market has stalled as a result of aggressive lobbying on behalf of Eyob “Joe” Mamo — whose company owns, operates or supplies 164 stations in the Washington area.

As the primary owner in Capitol Petroleum Group, Mamo has built a regional powerhouse in the fuel market, netting $778 million in revenue last year. And in May, as area gas prices soared past $4 a gallon, council member Mary M. Cheh (D-Ward 3) sponsored antitrust legislation under which wholesalers would own retail stations, but would be barred from operation them or collecting the profits associated with gasoline sales.

Concerned that the District has among the highest fuel prices in the nation, the council’s Committee on Government Operations and the Environment in July approved Cheh’s legislation, which was widely expected to come to up for a full council vote this month.

But Cheh has struggled to round up a majority because of growing skepticism from mostly African American council members concerned that the bill unfairly targets a successful black entrepreneur.

“The case hasn’t been made that Joe Mamo is causing gas prices to be higher than neighboring jurisdictions,” said council member Vincent B. Orange (D-At Large). “After participating in the hearing, it’s very clear to me we should be supporting businesses like Joe Mamo’s.”

Mamo could not be reached for comment Wednesday but has previously denied that he is responsible for setting prices at the pump. He has donated $40,000 to District candidates in the past decade, including $1,500 to Orange.

Mamo is also well connected in national political circles — donating $12,000 to Democratic members of Congress or presidential candidates since 2000. Mamo and his family have also contributed $25,000 to the Keep Hope Alive Political Action Committee, which is affiliated with the Rev. Jesse L. Jackson’s Rainbow Push Coalition.

Over the summer, the Rainbow Push Coalition urged the council to reject Cheh’s bill, arguing in a letter that it “appears to be aimed at only one business.”

“It is unfair and over-reaching government interference,” read the letter, submitted on stationery identifying Jackson as president of the coalition and “Martin L. King” as chairman. “The District should be a beacon for minority business participation and not a barrier to it.”

This month, some council members said they were also stunned by a letter from the Congressional Black Caucus urging the bill be rejected because it was “threatening’” Mamo’s livelihood as a minority business owner and undermined recent legal and political gains to get more minorities in the petroleum industry.

“We . . . believe the gains made through the hard work of civil rights groups and others should not be wiped out by such legislation,” said the letter said, signed by Rep. Emanuel Cleaver II (D-Mo.), CBC chairman, and Rep. Yvette D. Clarke (D-N.Y.), secretary.

A week later, amid concerns from Del. Eleanor Holmes Norton (D-D.C.) about congressional meddling in District affairs, the CBC sent another letter saying the previous one should be “disregarded” because it was sent because of a “staff error.”

Still, Cheh said the pressure appears to have made it more difficult to round up the seven votes necessary to pass the legislation. “The bill was delayed because I wasn’t ready to go forward on it in terms of checks with all the council members,” said Cheh, adding Mamo has “been engaged in an all-out effort from the beginning.”

In addition to external pressure, Mamo has turned to a veteran insider, former council member John L. Ray, to head up his lobbying effort. Some members said they have also been contacted by David “Corky” Calhoun, who played NBA basketball in the 1970s and became a dealer recruiter for ExxonMobil.

Council member Phil Mendelson (D-At Large), who supports the legislation, cautioned Wednesday that “the bill is not dead” but warned “there is going to be a lot of money poured into defeating it.”

“This bill goes straight at a monopoly,” said Mendelson, who claims that Mamo’s company requires a “30- to 35-cent markup per gallon” on the gas it sells to area service stations.

Orange said little evidence has been produced to support Mendelson’s claims that Mamo’s company is driving up the price of gas. Instead, Orange said, he suspects that the retailers are responsible for the price increases.

Council members Marion Barry (D-Ward 8), Yvette M. Alexander (D-Ward 7) and Muriel Bowser (D-Ward 4) said they oppose the bill.

“He is a very successful businessman, and we should not punish him for that,” Alexander said.

In May, D.C. Attorney General Irvin B. Nathan announced he was investigating Mamo’s company for possible violation of antitrust laws. But Orange sent Nathan a letter this summer that said the investigation should be expanded to individual service stations.

The owner of one of those stations, Roland Joun, who operates the Exxon near the Watergate complex in Northwest, is fighting back by mounting a last-ditch effort to get the council to approve Cheh’s bill.

Joun, whose station routinely posts among the highest gas prices in the region, cornered Orange and council member Harry Thomas Jr. (D-Ward 5) at a political event to plead his case that his prices are higher because he has to buy his fuel from Mamo’s company.

“Our business has been suffering and bleeding from these outrageous, high wholesale gas prices from CPG,” Joun wrote to Orange the next day.

Several service-station owners have hired Bruce Bereano, who was one of Mayor Vincent C. Gray’s (D) fraternity brothers, to lobby on their behalf to counter Ray and Calhoun.

On Wednesday afternoon, Bereano was spotted talking to Mendelson about the bill. Mendelson urged Bereano to talk to Cheh to see she if she would compromise with the bill’s opponents.

With the debate expected to accelerate in the coming days, Joun said he feels like an “ant up against an elephant.”

“We are outmatched,” Joun said. “He has Jesse Jackson and a lot of council members.”

Staff writer Mike DeBonis contributed to this report.

Tim Craig is The Post’s bureau chief in Pakistan. He has also covered conflicts in Iraq, Afghanistan and within the District of Columbia government.
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