honoluluadvertiser.com

Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser

Posted at 11:18 a.m., Tuesday, October 12, 2004

Supreme Court to rule on Hawai'i gas law

Associated Press

The U.S. Supreme Court said today it would decide whether Hawai'i 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, promote competition and lower gasoline prices, was unconstitutional. The state Attorney General petitioned the Supreme Court to review the case in July, primarily on grounds the courts should give more deference to the state Legislature on economic and social policy matters.

"This case raises questions of profound importance concerning the proper relationship between the courts and institutions of democratic governance," Attorney General Mark Bennett said in a written statement. "The state is pleased the Supreme Court agreed to resolve this important question."

Regardless of how the Supreme Court rules a decision on the legality of rent caps would come too late for former Shell dealer Warren Higa. One-year ago Higa closed Makiki Shell following a tripling of the station's monthly rent by Shell Oil Co. to $19,000 over a three-year period.

Higa, who's now a manager at Manoa Chevron, said the issue of capping dealer rents needs further review.

"I think here in Hawai'i what Shell did to me was not fair and it was not ethical," he said. "If that's the way oil companies are treating other dealers then I think it should be looked at because, yeah, it does affect the price of gas."

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 Hawai'i's appeal, arguing that their own regulations of various types could be affected.

"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 stations.

The company won, on grounds that the law was an unconstitutional taking of its property.

In the appeal, Hawai'i argues that such economic regulations are not property takings and that judges should consider states' authority to determine policy.

Hawai'i 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 Hawai'i imposed "fundamentally irrational restrictions" on lease arrangements between oil companies and gas station operators.

He said Chevron sells most of its gas in Hawai'i 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 19 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.

Advertiser staff writer Sean Hao contributed to this report.