Exxon Corp. v. Governor of Maryland
437 U.S. 117 (1978)

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U.S. Supreme Court

Exxon Corp. v. Governor of Maryland, 437 U.S. 117 (1978)

Exxon Corp. v. Governor of Maryland

No. 77-10

Argued February 28, 1978

Decided June 14, 1978*

437 U.S. 117


Responding to evidence that, during the 1973 petroleum shortage, oil producers or refiners were favoring company-operated gasoline stations, Maryland enacted a statute prohibiting producers or refiners from operating retail service stations within the State, and requiring them to extend all "voluntary allowances" (temporary price reductions granted to independent dealers injured by local competitive price reductions) uniformly to all stations they supply. In actions by several oil companies challenging the validity of the statute on various grounds, the Maryland trial court held the statute invalid primarily on substantive due process grounds, but the Maryland Court of Appeals reversed, upholding the validity of the statute against contentions, inter alia, that it violated the Commerce and Due Process Clauses and conflicted with § 2(b) of the Clayton Act, as amended by the Robinson-Patman Act, which prohibits price discrimination, with the proviso that a seller can price in good faith to meet a competitor's equally low price.


1. The Maryland statute does not violate the Due Process Clause, since, regardless of the ultimate efficacy of the statute, it bears a reasonable relation to the State's legitimate purpose in controlling the gasoline retail market. Pp. 124-125.

2. The divestiture provisions of the statute do not violate the Commerce Clause. Pp. 437 U. S. 125-129.

(a) That the burden of such provisions falls solely on interstate companies does not, by itself, establish a claim of discrimination against interstate commerce. The statute creates no barrier against interstate independent dealers, nor does it prohibit the flow of interstate goods, place added costs upon them, or distinguish between in-state and out-of-state companies in the retail market. Hunt v. Washington Apple

Page 437 U. S. 118

Advertising Comm'n, 432 U. S. 333; and Dean Milk Co. v. Madison, 340 U. S. 349, distinguished. Pp. 437 U. S. 125-126.

(b) Nor does the fact that the burden of state regulation falls on interstate companies show that the statute impermissibly burdens interstate commerce, even if some refiners were to stop selling in the State because of the divestiture requirement and even if the elimination of company-operated stations were to deprive consumers of certain special services. Interstate commerce is not subjected to an impermissible burden simply because an otherwise valid regulation causes some business to shift from one interstate supplier to another. The Commerce Clause protects the interstate market, not particular interstate firms, from prohibitive or burdensome regulations. Pp. 437 U. S. 127-128.

(c) The Commerce Clause does not, by its own force, preempt the field of retail gasoline marketing, but, absent a relevant congressional declaration of policy, or a showing of a specific discrimination against, or burdening of, interstate commerce, the States have the power to regulate in this area. Pp. 437 U. S. 128-129.

3. The "voluntary allowances" requirement of the Maryland statute is not preempted by § 2(b) of the Clayton Act, as amended by the Robinson-Patman Act, or the Sherman Act. Pp. 437 U. S. 129-134.

(a) Any hypothetical "conflict" arising from the possibility that the Maryland statute may require uniformity in some situations in which the Robinson-Patman Act would permit localized price discrimination is not sufficient to warrant preemption. Pp. 437 U. S. 130-131.

(b) Neither § 2(b) nor the federal policy favoring competition establishes a federal right to engage in discriminatory pricing in certain situations. Section 2(b)'s proviso is merely an exception to that statute's broad prohibition against discriminatory pricing, and does not create any new federal right, but rather defines a specific, limited defense. Pp. 437 U. S. 131-133.

(c) While, in the sense that the Maryland statute might have an anticompetitive effect, there is a conflict between that statute and the Sherman Act's central policy of "economic liberty," nevertheless this sort of conflict cannot, by itself, constitute a sufficient reason for invalidating the Maryland statute, for if an adverse effect on competition were, in and of itself, enough to invalidate a state statute, the States' power to engage in economic regulation would be effectively destroyed. Pp. 437 U. S. 133-134.

279 Md. 410, 370 A.2d 1102 and 372 A.2d 237, affirmed.

STEVENS, J., delivered the opinion of the Court, in which BURGER, C.J., and BRENNAN, STEWART, WHITE, MARSHALL, and REHNQUIST, JJ.,

Page 437 U. S. 119

joined. BLACKMUN, J., filed an opinion concurring in part and dissenting in part, post, p. 437 U. S. 134. POWELL, J., took no part in the consideration or decision of the cases.

Primary Holding
Burdens on interstate commerce created by a facially neutral law that has a disparate impact may not be discriminatory for that reason alone.
Producers or refiners of petroleum products were prevented by Maryland law from operating gas stations within the state. Almost all of these companies were located outside Maryland, so the law forced them to give up their gas stations in the state and abandon attempts to sell their products there. The companies brought a claim against the law under the Dormant Commerce Clause, arguing that it had a discriminatory effect on companies from outside the state and imposed an impermissible burden on interstate commerce. The lower courts differed in their conclusions.



  • John Paul Stevens (Author)
  • Warren Earl Burger
  • William Joseph Brennan, Jr.
  • Potter Stewart
  • Byron Raymond White
  • Thurgood Marshall
  • William Hubbs Rehnquist

In contrast to other state laws that had been found to be discriminatory, this law does not prevent the flow of goods across state lines, create a barrier against independent dealers from outside the state, place added costs on that movement, or distinguish between companies from inside the state or outside the state in retail. Forcing some of the oil companies to stop selling their products in the state does not necessarily create an impermissible burden on interstate commerce. The effect of the law is to shift some business from one interstate supplier to another. The overall interstate market, which is the subject of Commerce Clause protections, is not affected if certain interstate businesses are hampered.

Concurrence/Dissent In Part

  • Harry Andrew Blackmun (Author)

The law's impermissible discriminatory effect arises from its favoritism to in-state retail service station dealers at the expense of out-of-state providers. There is no legitimate state interest at stake that cannot be achieved by using less discriminatory means.


  • Lewis Franklin Powell, Jr. (Author)

Case Commentary

The statute applied to all petroleum producers and refiners equally, rather than separating them according to their places of origin. There is no legal basis to challenge this law unless the state had no rational grounds for imposing it, which is a standard that is hard for private parties to meet.

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