State's gas price fight shifts to legislative arena
By Frank Cho
Advertiser Staff Writer
The state ended its three-year legal battle with Hawai'i's oil companies over gasoline price-fixing allegations yesterday, saying it has no plans to start any new investigations of the industry and instead will take its case to the Legislature.
Under the settlement, announced earlier this year but officially filed yesterday, five oil companies have agreed to pay the state $20 million, 1 percent of the $2 billion the state was seeking.
Chevron, the market leader in Hawai'i will pay the state $5 million.
Shell and Texaco also agreed to pay $5 million each to settle the case. Unocal and Tosco Corp. will pay $3.3 million and $1.7 million, respectively.
As part of the settlement, the oil companies admit no wrongdoing. The settlement agreement also frees the oil companies from any claims of liabilities prior to yesterday's filing.
State Attorney General Earl Anzai said yesterday that the settlement brings to a close a decade-long investigation of the industry by his office.
Anzai said there are no plans to investigate further Hawai'i gasoline prices, which remain among the highest in the country.
"We wanted to go to trial. We are very disappointed with the settlement, but the reality is we had to settle," Anzai said.
Anzai said the state's chief lawyer on the case, San Francisco attorney Spencer Hosie, recommended the state settle the suit after he became concerned that federal Judge Samuel King was preparing to dismiss the case.
"With recent developments in antitrust law, the likelihood of being able to defeat defendants' motion for summary judgement ... has substantially narrowed since the filing of the case in 1998," wrote state lawyers in motions filed yesterday.
Anzai said he is planning a series of recommendations for the Legislature to help address Hawai'i's high gas prices, but declined to discuss specifics.
He said that while the state's antitrust lawsuit did some good, oil companies continue to overcharge Hawai'i drivers.
"This settlement doesn't solve the problem," Anzai said. "Gas prices in Hawai'i have nothing to do with cost, and (oil companies) finally admitted that."
In written statement after settlement was filed yesterday, Chevron said its gas prices were "lawful and fair."
"This settlement vindicates Chevron and confirms that we have consistently operated within the law, which is what we have maintained throughout the investigation," Chevron said in the statement.
The settlement still needs preliminary approval by a federal judge. Final approval is expected in the next 45 days.
Hawai'i drivers can object to or opt out of the settlement by notifying the court in writing within 35 days of the court's preliminary approval. Notice of the settlement will be printed in daily newspapers around the state within a couple of weeks. Reaction of Hawai'i residents to the proposed settlement will be considered in final approval of the settlement.
Terms of the agreement also will be available on the Internet after preliminary approval is received.
When the state filed the lawsuit in 1998, it accused divisions of Chevron, Shell, Texaco, Unocal and Tosco of fixing gas prices and allocating market share among themselves as early as 1987.
BHP Hawai'i and Tesoro, named in the original suit, were dismissed from the case as part of a $15 million settlement in November 1999.
Excluding attorney fees and expenses — and including $15 million in a settlement with several oil companies earlier in the case — the state will net about $23 million. The state is proposing that money go into the state Highways Fund.
Reach Frank Cho at fcho@honoluluadvertiser.com or 525-8088.
