P. R. Consumer Affairs v. Isla Petroleum, 485 U.S. 495 (1988)

Puerto Rico Department of Consumer Affairs v. Isla Petroleum Corp.

No. 86-1406

Argued February 29, 1988
Decided April 19, 1988
485 U.S. 495

CERTIORARI TO THE UNITED STATES TEMPORARY

EMERGENCY COURT OF APPEALS

Syllabus

In 1973, Congress passed the Emergency Petroleum Allocation Act (EPAA), which required the President to promulgate regulations governing allocation and pricing of petroleum products, and expressly preempted state and local regulation of allocation and pricing that conflicted with those regulations. Under the EPAA, the President’s regulatory authority was to terminate in 1975, but subsequent amendments (including an amendment by the Energy Policy and Conservation Act (EPCA) in 1975) extended his authority until September 30, 1981, when it expired. In 1986, Puerto Rico, which had suspended its regulation of petroleum products when the EPAA was passed, imposed an excise tax on oil refiners, and petitioner Puerto Rico Department of Consumer Affairs issued regulations requiring that advance notice of price increases be given to the Department’s Secretary, prohibiting wholesalers from passing on the cost of the tax to retailers, and imposing maximum profit margins on sales by wholesalers to retailers. Respondent oil companies brought actions, which were consolidated by the District Court, alleging that the Department’s regulations were unconstitutional on preemption grounds. The court enjoined enforcement of the regulations, holding that the Department’s authority was preempted by the decision of Congress to decontrol petroleum prices. The Temporary Emergency Court of Appeals affirmed.

Held: The Department’s regulations are not preempted. The test for federal preemption of Puerto Rico law is the same as the test under the Supremacy Clause for preemption of the law of a State. There is no merit to respondents’ contention that the EPAA evinced a federal intent to enter the field of petroleum allocation and price regulation, and that the EPCA never countermanded that intent, but merely changed the nature of the federally imposed regime from one of federal hands-on regulation to one of federally mandated free-market control. Although the Constitution permits congressional creation of such a regime, it is to be assumed that the historic police powers of the States are not superseded by a federal statute unless that is the clear and manifest purpose of Congress. Transcontinental Pipe Line Corp. v. State Oil and Gas Bd. of Miss., 474 U.S. 409, does not announce a new rule of burden-shifting whenever the Federal Government terminates or reduces its regulation of a field of commerce, replacing the normal need for finding a federal intent to preempt with a need to find a federal intent to retransfer authority to the States. Since Congress has withdrawn from all substantial involvement in petroleum allocation and price regulation, there is no extant action that can create an inference of preemption in an unregulated segment of an otherwise regulated field, and preemption, if it is intended, must be explicitly stated. Pp. 499-504.

811 F.2d 1511, reversed.

SCALIA, J., delivered the opinion of the Court, in which all other Members joined, except O’CONNOR, J., who took no part in the consideration or decision of the case.