U.S. Supreme Court
should uphold
rental-cap law


U.S. Supreme Court justices appear inclined to overturn an appeals court ruling that struck down controls of rents charged to independent gasoline dealers.

ARGUMENTS before the U.S. Supreme Court that the price caps on rents charged by oil companies to independent dealers in Hawaii violate the Constitution appear to be have been unpersuasive. Most of the justices recognize the long-standing regulatory authority of states, whose laws should not be subjected to effectiveness tests in courts. If the dealer rental caps don't work to create competition, as intended, they can be dropped or voters can elect new legislators.

Chevron U.S.A. contended before the high court this week that the rent controls would amount to a "regulatory taking" of private property in violation of the Fifth Amendment provision that private property not be "taken for public use without just compensation." The court ruled in 1980 that a regulation must "substantially advance legitimate state interests" in order to pass muster.

On that basis, U.S. District Judge Susan Mollway struck down the rent-control measure in 2002, agreeing with a Chevron-called expert that the company "would try to raise the wholesale price (of gasoline) to recoup as much of the lost rent as they could." Attorney General Mark Bennett contended that judges should not "freely second-guess the wisdom of state economic legislation."

Edwin S. Kneedler, a deputy U.S. solicitor general, agreed, telling the justices that the case "goes to the heart of the role of courts in our democratic society." He said courts are ill equipped to make the kind of "predictive judgments" made by Mollway and upheld by the 9th U.S. Circuit Court of Appeals.

The justices had few questions for Bennett and Kneedler but subjected Chevron's attorney to sharp interrogation. Justice Stephen G. Breyer asked why a judge should be concerned about where the government had "a very good reason or a barely adequate one" for a regulation.

The only two justices who may side with Chevron are arch-conservatives Clarence Thomas and Antonin Scalia, perhaps clinging to a century-old high court ruling that New York's attempt to regulate hours of labor in bakeries unconstitutionally interfered with "the right of contract between employer and employee." That concept was discarded by the court in later years, and government has routinely imposed rules ranging from environmental controls to apartment rental rates.

A ruling in favor of Chevron would threaten a wide range of government regulation. That is why legal briefs in support of Bennett's position were submitted by 30 states, the National Conference of State Legislatures, the National League of Cities and the National Governors Association.

Legitimate questions also have been raised about gasoline price caps scheduled to begin in Hawaii in September. A petroleum consulting company has contended that the caps "would bring volatility, market distortions and opportunities for profiteers to game the market." That may be true, but it should be up to legislators, not a judge, to decide.

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