Court upholds ruling
against gas station rent cap
A federal appeals court yesterday upheld a lower court ruling that Hawaii's 1997 law to place rent caps on dealer-run gasoline stations is unconstitutional.
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.
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.