State won't appeal 'minimum markup'

MADISON (AP) - Attorney General J.B. Van Hollen won't appeal a federal judge's decision striking down Wisconsin's minimum markup on gasoline.

An appeal wouldn't be wise, Van Hollen said in a statement Tuesday. The state Department of Agriculture, Trade and Consumer Protection, which enforced the markup, hasn't asked the Justice Department to fight the decision. An appeals judge may try to rewrite the markup law, a job better suited to state lawmakers, Van Hollen added.

"We do not appeal every adverse decision," Van Hollen said. "The state lost."

DATCP spokeswoman Janet Jenkins said the agency chose not to appeal because the real issue is whether the minimum markup on gas should even exist. That's a policy choice that doesn't belong in the courts, she said.

"Now that the court has struck it down, we're not going to go into any policy realm," Jenkins said.

Gov. Jim Doyle, a Democrat, said he supported the Republican Van Hollen's decision not to pursue the case. Doyle said his opposition to the law dates back to when he worked as a district attorney in the 1970s.

"It's an outdated law," Doyle said.

The 1939 law prohibits retailers from selling products for less than they paid. Gas stations must tack on 6 percent over what they paid or 9.18 percent over the average wholesale price of gas, whichever is higher. The measure was meant to keep larger companies from selling gas cheaper than smaller competitors and driving them out of business. Violators faced stiff fines and lawsuits from competitors.

But the law has been a point of contention for years. Supporters said it kept little guys in business. Critics countered it needlessly inflated gas prices. Randa estimated the law cost drivers about 30 cents on every gallon during the past two years, when gas prices spiked to nearly $4 per gallon.

His ruling came in a dispute between Flying J and Kenosha-based Lotus Business Group. Lotus argued Flying J's stations did not mark up gas as required.

A federal magistrate judge ruled the gas markup unconstitutional in October 2007. State regulators continued to enforce it, however, and Flying J filed a lawsuit against the state Justice and consumer protection departments in January 2008 to stop enforcement.

Randa found the law violates federal statutes that limit cartels and monopolies. The restrictions on monopolies wouldn't apply to the state if it had a clear policy and a program to monitor gas prices, but it doesn't, Randa said.

The Wisconsin Petroleum Marketers and Convenience Store Association contends the markup law prevents big corporations from underselling small stations and driving them out of business. It asked Randa in late February to reconsider his decision.

The association argues the state as an entity is immune from antitrust laws. So are private companies acting pursuant to state law. The association also maintains that Randa's assertion that the size of the markup increases as gas prices rise is wrong.

Randa is considering the motion.

Flying J's attorney, John W. Mackay, didn't immediately return a message left at his Salt Lake City office Tuesday morning.

Read Van Hollen's statement below:

"Last month, a United States District Court found the minimum markup law unconstitutional with respect to its motor vehicle fuel provisions because they were preempted by federal antitrust law.

As district attorney, my office prosecuted violations of the minimum markup law. As Attorney General, my office provided a vigorous defense of this law. And while we supplied the court with numerous arguments in defense of the statute as is our statutory obligation, the state lost.

Today, I am announcing that the Wisconsin Department of Justice will not be initiating an appeal of this decision to the United States Seventh Circuit Court of Appeals.

A number of factors have weighed into my decision. I cannot at this time comment on my legal analysis of whether the minimum mark up law violates federal antitrust law because legal proceedings continue in the District Court. They continue because the Wisconsin Petroleum Marketers & Convenience Store Association moved to intervene in the case after the District Court issued its judgment. The Association’s motion to intervene is pending.

While I can’t comment on my legal analysis, I can explain how other considerations have weighed in my decision not to appeal.

First, under our statutes, the primary agency charged with enforcing the minimum markup law is DATCP. They have not requested an appeal, and it is very unusual to appeal adverse decisions where the primary administrative agency has not requested me to do so.

Second, the public policy considerations that underlie the minimum markup law can be better addressed by the legislature than by a court through an appeal. It may well be on appeal that the Court would attempt to clarify the statute, in effect, rewriting it. That is the job of the legislature. While the case law supports Wisconsin's ability to craft legislation aimed at preventing gasoline