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Exxon Corp. v. Governor of Maryland

Supreme Court of the United States · 1978 · Constitutional Law

Constitutional LawDormant Commerce ClauseDue ProcessFederal PreemptionCommerce ClauseDormant Commerce Clausesubstantive due processeconomic regulation

Facts

Maryland enacted a statute providing that a producer or refiner of petroleum products may not operate any retail service station in the State and must extend all voluntary allowances uniformly to all retail service stations it supplies. The statute followed a state survey indicating that producer- or refiner-operated stations had received preferential treatment during the 1973 gasoline shortage. Exxon and other oil companies sold gasoline in Maryland that had been refined outside the State, and some operated company-owned retail stations there; several challenged especially the divestiture requirement, and some also challenged the uniform-voluntary-allowance provision. The record showed that Maryland produced or refined no petroleum products, that only about 5% of stations were refiner-operated, and that there was no evidence the total quantity of petroleum products shipped into Maryland would be affected by the statute.

Issue

Whether Maryland's statute barring producers and refiners from operating retail gasoline stations and requiring uniform voluntary allowances violates the Due Process Clause or the Commerce Clause, or is preempted by § 2(b) of the Clayton Act as amended by the Robinson-Patman Act or by federal antitrust policy more generally.

Rule

A state economic regulation is valid under substantive due process if it bears a reasonable relation to a legitimate state purpose, even if its economic wisdom is debatable. Under the Commerce Clause, a statute is not invalid absent discrimination against interstate commerce, an impermissible burden on the interstate market, or a basis for field preemption requiring national uniformity; the Clause protects the interstate market, not particular interstate firms or a preferred retail market structure. Preemption is not warranted by speculative conflicts, and § 2(b) of the Robinson-Patman Act creates only a limited defense to price-discrimination liability, not an affirmative federal right that displaces state regulation.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Nevada enacts a statute providing that any company that mines lithium may not operate retail battery stores anywhere in Nevada. Nevada has no lithium mines, and all battery cells sold in the State are shipped in from other states or abroad. Several mining companies based in Arizona and Chile challenge the law because only firms engaged in interstate supply chains are affected.

Under the governing doctrine, which is the strongest argument that the statute does not discriminate against interstate commerce?

Explanation. The majority's rule is that a statute does not discriminate against interstate commerce merely because its burden falls on some interstate firms. What matters is whether the law favors in-state interests, erects barriers against interstate goods or firms as such, or imposes added costs on interstate goods. If there are no local miners to favor and interstate nonmining retailers remain free to compete, the law is not discriminatory in the constitutional sense.