Opinion of the Justices

• Decision Date: 20 June 1977
• Docket Number: No. 7804,7804
• Parties: , 1977-2 Trade Cases P 61,600 OPINION OF THE JUSTICES.
• Court: New Hampshire Supreme Court

Page 118

376 A.2d 118

117 N.H. 533, 1977-2 Trade Cases P 61,600

OPINION OF THE JUSTICES.

No. 7804.

Supreme Court of New Hampshire.

June 20, 1977.

Donald L. Stone, Pelham, N. Y., for Exxon Corp.

William C. Whittemore, Scarsdale, N. Y., for Mobil Oil Corp.

The following resolution was adopted by the Senate on May 19, 1977, and filed with the supreme court on May 23, 1977:

"Whereas, there is pending in the Senate, Senate Bill Number 75 'An Act imposing certain limitations on oil suppliers doing business in the state'; and

"Whereas, the Senate Committee on Energy and Consumer Affairs has recommended that the bill be passed with an amendment; and

"Whereas, doubt has been expressed as to the constitutionality of the provisions of said bill and the proposed amendment; now, therefore, be it

"Resolved by the Senate:

"That the justices of the supreme court be respectfully requested to give their opinion on the following important questions of law:

"1. Can the General Court within the provisions of the constitution of New Hampshire enact a statute as proposed in Senate Bill Number 75 with its amendments?

"2. Would any provision of the Constitution of the United States be violated by the provision of this bill and its amendment?

"Further resolve that the clerk of the Senate be instructed to transmit to the clerk of the Supreme Court 6 copies of this resolution and 6 copies of Senate Bill Number 75 together with the proposed amendment."

The following answers were returned:

To The Honorable Senate :

The undersigned justices of the supreme court submit the following answers to the questions contained in your resolution submitted to this court on May 23, 1977. Memoranda on behalf of various interested individuals and corporations were filed on or before June 1, 1977, in accordance with the previous order of this court.

The questions submitted to this court are: "Can the general court within the provisions of the constitution of New Hampshire enact a statute as proposed in Senate Bill Number 75 with its amendments?" and "Would any provision of the Constitution of the United States be violated by the provisions of this bill and its amendments?"

1. N.H.Const. pt. II, art. 83.

Under N.H.Const. pt. II, art. 83, the general court may enact laws ". . . to prevent the operations within the state of all . . . trusts and corporations . . . who endeavor to raise the price of any article of commerce or to destroy free and fair competition . . . ." This broad mandate allows the general court to enact laws which prevent abuse in the marketplace and promote free competition. Senate bill 75, which imposes certain limitations on oil suppliers doing business in the state, is within the power of the general court. Other statutes have been enacted by the legislature to promote free competition. See RSA 356:2, which outlaws all trusts which restrict trade or commerce, and RSA 358, the Unfair Sales Act, prohibiting wholesalers and retailers from selling below the wholesale or retail price, and which parallels the requirement of RSA 339-C:12 of the proposed bill. This bill will amend various provisions of RSA 339-C (Supp.1975), regulating gasoline franchises. The existence of other non-conflicting statutes which promote free and fair competition does not preclude the general court from enacting the proposed bill. Brunswick Corporation v. Pueblo Bowl-o-Mat., Inc., 429 U.S. 477, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977).

2. Due Process of Law.

The function of courts in reviewing state economic legislation is limited; the wisdom and expediency of statutes are not subject to judicial review. If there is an evil to be corrected, and the legislative measure enacted in response is rational and does not abridge fundamental rights, the statute is constitutional. Opinion of the Justices, 102 N.H. 106, 108, 151 A.2d 236, 238 (1959); Williamson v. Lee Optical Co., 348 U.S. 483, 488, 75 S.Ct. 461, 99 L.Ed. 563 (1954). Although some contend that the bill may not succeed completely in achieving its purpose of promoting free and fair competition, the general court may reasonably conclude that suppliers' control of the retail gasoline market would adversely affect free competition. Statistics presented to the Senate Committee on Energy and Consumer Affairs show a 300% increase in company-operated stations from 1974 to 1976. (Mobil Oil Corporation exhibit B, at 2.) This increase, coupled with a 25% decrease in the number of stations leased to dealers, may well indicate to the general court that suppliers' operation of retail outlets is an increasing danger to free competition and thus merits curtailment. Limiting suppliers in the retail marketplace is a rational means of preventing monopolistic control of the retail gasoline market. The bill's requirements of uniform extension of voluntary allowances to dealers and equitable allocation of petroleum products would prevent suppliers from giving favorable treatment to some retail dealers to the detriment of others, thus promoting fair competition.

3. Equal Protection of the Law.

Unless a legislative classification is drawn upon an inherently suspect distinction, or abridges fundamental personal rights, the sole requirement is that the challenged classification rationally relates to a legitimate state interest. Valley Bank v. State, 115 N.H. 151, 154, 335 A.2d 652, 654 (1975); City of New Orleans v. Dukes, 427 U.S. 297, 303, 96 S.Ct. 2513, 49 L.Ed.2d 511 (1976). Senate bill 75, which prohibits suppliers of petroleum products as a class from operating retail gasoline stations, involves neither a suspect classification nor a fundamental right. Because the legislation may promote free and fair competition by eliminating suppliers from the retail marketplace, the classification is rational and sufficiently related to the achievement of the legislative goal.

4. Just Compensation Clause.

Senate bill 75 if applied prospectively only is not a compensable taking, but rather a permissible legislative regulation. A regulation becomes a taking when it rises to the level where private property is appropriated for public use. The amended bill would bar suppliers from one particular phase of business retail operations. They may still lease or sell their retail outlets. Deprivation of the most profitable use of property does not necessarily constitute a taking. United States v. Central Eureka Mining Co., 357 U.S. 155, 168, 78 S.Ct. 1097, 2 L.Ed.2d 1228 (1958). The restrictions imposed by Senate bill 75 applied prospectively would not constitute a taking, because suppliers may use their property for retail purposes so long as they do not operate the stations themselves or through company employees. The property may still be owned; only its mode of operation is altered.

In our opinion, however, the proposed legislation, if applied retrospectively to the thirteen retail gasoline stations which are presently operated by suppliers would violate N.H.Const. pt. I, art. 2 and N.H.Const. pt. I, art. 23 because it takes away the property right of suppliers in existing retail businesses and is not justified under N.H.Const. pt. II, art. 83. Although they may still own the stations and may lease them, they must nevertheless divest themselves of their existing retail businesses which in themselves are property rights.

5. Commerce Clause.

The state may regulate matters of local concern if there is no discrimination against interstate commerce, a state interest is being served, and that interest outweighs any national interest in the prevention of state restrictions. Cities Service Co. v. Peerless Co., 340 U.S. 179, 186-87, 71 S.Ct. 215, 95 L.Ed. 190 (1950). Unlike the statutes struck down in H. P. Hood & Sons v. DuMond, 336 U.S. 525, 69 S.Ct. 657, 93 L.Ed. 865 (1949), and Baldwin v. G. A. F. Seelig, 294 U.S. 511, 55 S.Ct. 497, 79 L.Ed. 1032 (1935), the purpose of Senate bill 75 is to preserve free competition, not to protect local economic interests by discriminating against interstate commerce. In Dean Milk Co. v. Madison, 340 U.S. 349, 71 S.Ct. 295, 95 L.Ed. 329 (1951), a statute which effectively raised an economic bar to protect local industries was struck down as a violation of the commerce clause. Here, the statute even-handedly excludes all New Hampshire and out-of-state suppliers from retail operations. Products may flow unrestrictedly in interstate commerce under the proposed bill; the only limitation is placed upon the mode of retail operation within the state. An out-of-state non-supplier may operate retail gasoline stations. Thus, there is no discrimination against out-of-state interests, no burden on the free flow of goods in commerce, and the state's goal of promoting free competition is furthered. The Maryland Court of Appeals, in upholding a similar statute, stated, ". . . it has long been recognized that the states have the power to pass legislation to promote competition by preventing monopolistic activity in restraint of trade." Governor of Maryland v. Exxon Corp., 370 A.2d 1102, 1116 (Md.1977).

6. Preemption.

a. Federal Emergency Petroleum Allocation Act.

Senate bill 75 is proposed to promote free competition, provide for the uniform availability of voluntary allowances and rental equipment, and require that petroleum products be allocated on an equitable basis during periods of shortage. The Federal Emergency Petroleum Allocation Act, 15 U.S.C. §§ 751-756 (Supp.1975), provides that regulations for the equitable allocation of refined petroleum products will be promulgated. Under 15 U.S.C. § 753(c)(1)(A), the mandatory allocation program must be structured so as to allocate among marketers an amount based on the amount sold to them during a specified base period, with a pro-rata reduction in allocation when there is an insufficient supply to meet the demand for the amount purchased during the specified base period. The act attempts to ensure the ". . . equitable distribution of . . . refined petroleum...