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Exxon Unit Rejected by High Court in Puerto Rico Gas Case

The U.S. Supreme Court left intact a $70 million award assessed against an Exxon Mobil Corp. (XOM) unit for failing to comply with a Puerto Rico law governing gasoline prices.

The justices today turned down an appeal from the oil company’s Puerto Rico gasoline wholesaler, which said the award in the consumer class-action lawsuit violates the Constitution.

The 1996 law was designed to ensure that wholesalers, in the prices they charge to gas stations, account for the expansion of fuel in warmer climates. The law requires wholesalers to make a “temperature adjustment,” reducing the price.

In its appeal, the Exxon unit said it had no way of complying with the law until regulations implementing the measure were adopted in 2005. The company said the Constitution’s due process clause barred liability until those regulations took effect.

The suing consumers said the regulations concerned prices at the pump and didn’t affect the wholesalers’ obligation to provide the temperature adjustment to retailers. The consumers said the Exxon unit was receiving a windfall of 1.34 cents per gallon before the law was enacted.

Puerto Rico’s Supreme Court let the award stand last year.

The case is Esso Standard Oil Co. (Puerto Rico) v. Trilla Pinero, 12-445.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net

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