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Court upholds ruling on gas station rent cap law Federal appeals court agrees with lower court ruling that Hawaii’s 1997 law to place rent caps on dealer-run gasoline stations is unconstitutional Bruce Dunford Associated Press Writer
A federal appeals court upheld a lower court ruling April 1 that Hawaii’s 1997 law to place rent caps on dealer-run gasoline stations is unconstitutional.
Hawaii State Senate Minority Leader Fred Hemmings said the legal theory in the 9th U.S. Circuit Court of Appeals’ ruling raises serious constitutional questions about a state law that will impose price caps on gasoline prices in Hawaii effective July 1.
The Legislature is considering delaying the price caps for one year to consider changes, including imposing them only at the wholesale level and pegging the caps on national instead of West Coast fluctuations.
U.S. District Judge Susan Mollway two years ago invalidated the 1997 rent caps law in a lawsuit filed by Chevron Corp., ruling it unfairly infringed on the company’s ability to use its property. The appeals court agreed.
“Mollway’s findings in the (rent cap) case, first and foremost, put out the biggest message regarding the foolhardiness of gas caps,” Hemmings, R-Lanikai-Waimanalo, said. “In her findings, she found very clearly that gas is no more egregiously priced than most other consumer products.”
Hemmings said the latest proposal to cap wholesale prices of gasoline can’t guarantee lower retail prices, and doesn’t meet the public interest requirement to override the constitutional prohibition against taking someone’s property without just compensation. Law first ruled unconstitutional in 1998 U.S. District Judge Alan Kay in 1998 held in a Chevron challenge that the law was unconstitutional, but the appeals court overturned his ruling in 2000, deciding it was premature since the factual dispute over whether the law would lower gasoline prices — the legislative intent — hadn’t been argued in court.
Mollway in 2002 ruled the law, which was never enforced because of the legal challenge, would have had the opposite effect, because oil companies would have raised wholesale gasoline prices to make up for reduced rental income.
Lawmakers passed the 1997 law after concerns were raised that island motorists were paying too much for gasoline. The law restricted what lease rents oil companies could charge for their dealer-owned stations and prohibited the companies from taking over those stations.
In its ruling April 1, the appeals court rejected the state’s arguments that Chevron’s claim was an issue of due process and not one of wrongful taking of property, that the state law advanced a legitimate state interest and that Mollway erred in finding the law wouldn’t reduce retail gasoline prices.
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