Exxon Corp. v. Governor of Maryland

Background

In response to the 1973 gasoline shortage and a state survey showing preferential treatment for company-owned stations, Maryland passed a law stopping petroleum producers and refiners from operating retail service stations and requiring that all “voluntary allowances” (temporary price reductions) be extended uniformly to all dealers the company supplies. Major oil companies including Exxon sued, saying the law violated the Constitution and conflicted with federal antitrust law; the Maryland courts split but ultimately the Court of Appeals upheld the statute.

Reasoning

The Supreme Court majority, led by Justice Stevens, considered three challenges: due process, the Commerce Clause, and claimed pre-emption by federal antitrust policy. The Court found the law bears a reasonable relation to the State’s goal of fair distribution and pricing and rejected the idea that judges should second-guess economic wisdom. It also held the statute does not unlawfully discriminate against or unduly burden interstate commerce and is not pre-empted by the Robinson-Patman/Clayton Act or broader federal competition policy.

Real world impact

The ruling lets Maryland enforce its ban on producer- or refiner-operated retail stations and the rule on uniform temporary price allowances. That will constrain how integrated oil companies market gasoline in Maryland, could prompt some refiners to withdraw, and shifts the dispute over retail marketing structure to state legislatures and courts rather than forcing a federal override.

Dissents or concurrances

Justice Blackmun concurred in part but dissented on the Commerce Clause, arguing the law in practice protects local independent dealers and significantly discriminates against out-of-state integrated refiners, a result he believed the Court should have rejected.