Station owners file
suit against gas cap
Two Big Island gas station owners filed suit yesterday to challenge the state's "gas cap" law that goes into effect July 1.
Bob Dixson, of Dixson Service Inc., and Betty Tomori, of Ken's Service Station, filed suit yesterday in U.S. District Court alleging that the law will put them out of business and will not lower gas prices for consumers.
Named as defendants in the suit are the state Department of Business, Economic Development & Tourism; the Public Utilities Commission; and the state attorney general.
The state Legislature passed Act 77 in May 2002, which establishes wholesale and retail gas price caps, but postponed enactment of the law until this year.
The act establishes prices based on a formula "tied to a specially calculated index which averages three West Coast gasoline spot markets, plus location and marketing factors," the suit said.
Bridget Holthus, special assistant to Attorney General Mark Bennett, declined comment. The chief legal counsel for the state Public Utilities Commission, Kris Nakagawa, also declined comment.
Under Act 77 the commission is charged with determining the prices on a weekly basis. The law also requires the Department of Business, Economic Development & Tourism to oversee profit margins in the oil industry and conduct periodic audits.
Last month, the state Senate approved amendments to the law that would base the caps on a national average instead of the West Coast average and put caps only on wholesale prices and apply them to all grades of gas, not just regular unleaded. A bill now in the Legislature would further postpone enactment.
Gov. Linda Lingle opposes the gas caps.
The plaintiffs allege that their businesses have lost value since the act was passed because they have been unable to obtain financing for capital and other improvements. They say they expect to be out of business within a year of the law taking effect.
"The low-volume variety of gasoline retailers, such as plaintiffs, face the most severe consequences of the price caps, including closure, due to their lesser economies of scale and resulting higher per-gallon fixed operating costs," the suit said.
The plaintiffs allege that the law amounts a "regulatory taking" of their property without due process, in violation of the Fifth and 14th amendments to the U.S. Constitution.
The suit asks that the court declare the gas cap law unconstitutional and declare that the law violates federal laws.