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January 1, 2005
Legal Briefs

Lingle v. Chevron

by Mark Moller

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Chevron, the largest oil refiner and marketer in Hawaii, controlled 60% of the commercial and 30% of the wholesale market for gasoline products in 1997. That year, in attempt to control oligopolies, the Hawaii state legislature passed a law restricting the amount of rent that an oil company can charge its dealer-lessee to 15% of the dealer's gross profits from sales, plus an additional 15% of gross sales of other products. Chevron sued, claiming that this law constituted an illegal regulatory taking, in violation of the Fifth and Fourteenth Amendments. This Cato Institute brief supports Chevron's position, arguing that the law fails to serve any conceivable public interest. Because the law gives tenants rather than owners the right to profit from any increases in the value of the property, it constitutes an unjustifiable wealth transfer that violates the Takings and Due Process clauses.

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