Opinion ID: 2267265
Heading Depth: 1
Heading Rank: 6

Heading: Conflict with the Federal Emergency Petroleum Allocation Act

Text: The trial court held that Paragraph F of the Maryland Act conflicts with and is therefore preempted by the Federal Emergency Petroleum Allocation Act of 1973. Paragraph F of the Act provides that during periods of shortages, producers, refiners and wholesalers shall apportion uniformly gasoline and special fuels (which, as defined in Art. 56, § 157A (2), includes diesel oils) to all retail service station dealers on an equitable basis and shall not discriminate among the dealers in their allotments. In view of the history of the Act, it is clear that the Legislature by this provision intended to prevent the inequitable distribution of petroleum products, reflected by the Comptroller's study, which occurred during periods when a particular supplier had insufficient supplies to satisfy its dealers' requirements. To prevent a supplier from favoring one dealer over another during a period when the supplier was experiencing a shortage, the Act requires that the available product be alloted to each dealer on the same basis. In other words, when supplies are insufficient to meet dealer requirements, there must be a pro rata reduction to each dealer. In its fundamental purpose, Paragraph F of the Maryland Act is in harmony with the Emergency Petroleum Allocation Act, 15 U.S.C. 751 et seq. The federal act provides for the promulgation of regulations for the allocation of, inter alia, refined petroleum products. 15 U.S.C. 753. The federal act goes on to state that the regulations, to the maximum extent practicable, shall provide for the equitable distribution of ... refined petroleum products ... among all ... sectors of the petroleum industry, including ... non branded independent marketers, [and] branded independent marketers.... 15 U.S.C. 753(b)(1)(F). To achieve this objective of equitable distribution, the federal act further states that regulations should provide, where practicable, for a pro rata reduction in allocation to each branded and unbranded independent marketer where there is insufficient product to supply each with the amounts supplied in a prior corresponding base period. 15 U.S.C. 753(c)(1)(A). As originally enacted, the President's authority to promulgate regulations was to terminate on February 28, 1975. This authority has been extended several times, and has been extended most recently to September 30, 1981, by Pub. L. No. 94-163, § 461 (1975). By its express terms, the federal Emergency Petroleum Allocation Act preempts only such state regulations of allocation of refined petroleum products which are in actual conflict with regulations promulgated pursuant to it. Thus, 15 U.S.C. 755(b) provides that: The regulation under section 753 of this title and any order issued thereunder shall preempt any provision of any program for the allocation of crude oil, residual fuel oil, or any refined petroleum product established by any State or local government if such provision is in conflict with such regulation or any such order. Therefore we need not determine whether the existence of a comprehensive system of federal regulation necessarily precludes state regulation, as Congress has specifically limited the type of state regulation which is preempted. We need only determine whether Paragraph F of the Maryland statute conflicts with any regulation promulgated pursuant to the Emergency Petroleum Allocation Act. The federal regulations promulgated pursuant to the federal act establish a scheme of equitable petroleum allocation. Each supplier must determine its allocation fraction which is equal to its allocable supply ... divided by its supply obligation.... 10 C.F.R. § 211.10(b). This fraction is then applied to each purchaser's base period volume to determine the purchaser's allocation. In other words, each purchaser is allocated petroleum products based upon the seller's total supplies relative to the seller's total obligations. Where the allocation fraction is less than one, that is, where a supplier's allocable supply is less than his supply obligation for a base period, the supplier must reduce on a pro rata basis the amounts sold to purchasers. 10 C.F.R. § 211.10(f). This scheme is applicable to the allocation of motor gasoline, 10 C.F.R. § 211.107(b), as well as diesel fuel, 10 C.F.R. § 211.126(b), and as discussed above, is entirely consistent with Paragraph F of the state Act. The Maryland Act requires that gasoline and special fuels be apportioned uniformly, on an equitable basis to all retail service station dealers during a period of shortage. The oil companies, in arguing that Paragraph F of the Maryland statute is in conflict with the federal regulatory scheme, point to several factors affecting allocations under the federal regulations which may allow allocation on other than a uniform basis which they contend is required by Paragraph F. See, e.g., 10 C.F.R. § 211.14(b), permitting a 5% reduction in monthly allocable supply to an area within a state to meet regional imbalances. We do not believe that the Legislature, in requiring that petroleum products be apportioned uniformly, intended that the Comptroller could not take into account, as do the federal regulations, other factors affecting allocation and distribution of petroleum products which might result in varying allocations to certain dealers. Although petroleum products are to be apportioned uniformly, allocation is also to be on an equitable basis. By thus modifying uniformly, it would appear that the Legislature contemplated that certain equitable factors might require variations in an otherwise uniform scheme of gasoline and special fuel allocation. Consequently, we do not find that Paragraph F of the Maryland statute inherently conflicts with any regulation pursuant to the Emergency Petroleum Allocation Act of 1973. We find that Paragraph F is in harmony with the Emergency Petroleum Allocation Act which expressly preserves the power of the states to regulate the allocation of refined petroleum products. As the State concedes, the Comptroller may not order allocation of petroleum products in conflict with the federal regulations enacted pursuant to the Emergency Petroleum Allocation Act or promulgate regulations pursuant to Art. 56, § 157B (a) which would conflict with present or future federal regulations. Cf. Rice v. Board of Trade of City of Chicago, 331 U.S. 247, 67 S.Ct. 1160, 91 L.Ed. 1468 (1947). However, enforcement of the provisions in accordance with federal standards would be proper.