WASHINGTON (AP) - The Supreme Court said Tuesday it would
decide whether Hawaii went too far to keep gasoline affordable
for residents when it imposed rent caps on dealer run stations.
Lower courts said the 1997 law, intended to protect independent
dealers and promote competition, was unconstitutional.
In Honolulu, Hawaii Attorney General Mark Bennett lauded
the court's decision to examine the state's action aimed at
taming high gasoline prices in the islands.
"This case raises questions of profound importance concerning
the proper relationship between the courts and institutions
of democratic governance," Bennett said. The federal
court should not "freely second guess the wisdom of state
economic legislation," he said.
The case is being watched across the country, because it
could have a a big impact on states' abilities to regulate
private businesses to help consumers.
The case to be argued early next year will set guidelines
for other states. Nineteen states and many city and legislative
leaders had urged the Supreme Court to hear Hawaii's appeal,
arguing that their own regulations of various types could
"The list could be virtually endless," justices
were told by lawyers for the National Conference of State
Legislatures, National League of Cities and other groups.
Chevron USA filed a challenge to the law, which restricted
lease prices that oil companies could charge their dealer
owned stations and barred the companies from taking over those
The company won, on grounds that the law was an unconstitutional
taking of its property.
In the appeal, Hawaii argues that such economic regulations
are not property takings and that judges should consider states'
authority to determine policy.
Hawaii has been trying to control island motorists' gas prices.
It also passed a law that imposed limits on gas prices, but
the restrictions haven't started yet.
Last month, Honolulu had the highest gas prices in the nation
at $2.26 for self-serve regular. The average national price
was $1.91, according to the Lundberg Survey.
Chevron attorney Craig Stewart of San Francisco told justices
in a filing that Hawaii imposed "fundamentally irrational
restrictions" on lease arrangements between oil companies
and gas station operators.
He said Chevron sells most of its gas in Hawaii through 64
stations which the company leases to independent operators.
The contested law required Chevron to charge less rent than
needed to recover its expenses, Stewart said.
The law was aimed at keeping Chevron from forcing independent
operators out of business, so there would be more stations
setting retail prices that would be more competitive.
Chevron, the largest of two oil refiners in the state, claimed
the state regulations amounted to an unconstitutional state
taking of its property.
The state said the courts should let the Legislature set
economic policy, attracting supporting briefs from the 19
states, Puerto Rico, the Virgin Islands, Guam and major local
Hawaii Gov. Linda Lingle supported that argument.
"The courts should never substitute their opinion for
the legislative branch of government or for the executive
branch of government," Lingle said Tuesday. "That's
a very strong point to make to stand up for the separation
of powers and for the right of the Legislature or the governor
to pass a law and to sign a law and believe it's going to
have a certain impact."
The states that urged the Supreme Court to take the appeal
are: California, Colorado, Connecticut, Delaware, Illinois,
Iowa, Kentucky, Maine, Maryland, Minnesota, Mississippi, Missouri,
Montana, New York, Oklahoma, Oregon, Utah, Vermont, and Washington.
The case is Lingle v. Chevron USA, 04-163.
On the Net:
Supreme Court: http://www.supremecourtus.gov/