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Judge: Miss. price gouging law unconstitutional

By SHELIA BYRD

Associated Press Writer

JACKSON, Miss. (AP) - A Mississippi oil company accused of

charging too much for fuel in the aftermath of Hurricane Katrina

has won its challenge to the state's price-gouging law after a

judge ruled it unconstitutional because it's too vague.

Attorney General Jim Hood said Thursday he would appeal the

decision handed down by Winston County Chancery Judge J. Max

Kilpatrick.

Kilpatrick's ruling came in a case involving Louisville-based

Fair Oil, one of two companies Hood sued in 2007. The lawsuit

accused the company of gouging consumers after Katrina struck in

2005.

The law states that during an emergency, goods and services

shouldn't cost more than what's ordinarily charged for comparable

items "in the same market area at or immediately before the

declaration of a state of emergency or local emergency."

Fair Oil had argued in a counterclaim for declaratory judgment

the phrase "same market area" isn't defined. The company also

said the language "at or immediately before" wasn't definitive.

But Hood contended that the law has a clear, plain meaning. Hood

said in court documents that Fair Oil is aware of its market area

prices for fuel and sets its own retail prices.

In his ruling on Wednesday, Kilpatrick said the law "is too

vague to pass constitutional muster."

Kilpatrick said other states' price gouging laws use clear

terms. New York and Florida use the phrase "trade area" and

Alabama's law refers to "affected area." Kilpatrick said it's not

clear whether the law requires a company to keep prices the same as

on the day of the emergency or hold prices to some average of the

prior week or month.

"It simply does not provide adequate notice as to the standards

that potential violators in the oil industry will be judged by when

faced with an investigation of their pricing methods during a state

of emergency," Kilpatrick wrote.

Hood said the ruling was flawed because usually when a court

finds an ambiguity in the law, the first step is to construe the

statute as constitutional and give it a reasonable interpretation.

"Although I have tremendous respect for the judge, in this case

the court failed to follow this long-standing rule by stating what

was a reasonable time before the hurricane hit to determine the

average price of fuel during that period," Hood said in an e-mail

to The Associated Press. "Had the court set the period at one day

or 30 days prior to Katrina, the defendant far exceeded the average

price of fuel in violation of the price gouging law."

Hood said he already has proposed a bill for the upcoming

legislative session that sets the period at 30 days before the

event.

Fair Oil was pleased with the decision, said Charles Winfield, a

Starkville attorney representing the company.

"We believe Mississippi's price-gouging statute is in need of

significant improvement and revision, and we look forward to

working with the Legislature and the attorney general to make that

happen," Winfield said.

After the Katrina struck in 2005, Hood said his office was

inundated with complaints alleging price gouging by oil

distributors. He said many companies did raise prices, but that

some did to cover their increased costs.

Hood initially charged seven companies with wrongdoing, but five

agreed to cooperate and pay thousands of dollars in penalties.

Fair Oil and Wilburn Oil, owned by former state Rep. Jerry

Wilburn of Mantachie, wouldn't negotiate with Hood so he sued the

companies. The ruling on Wednesday was only in Fair Oil's case.

(Copyright 2008 by The Associated Press. All Rights Reserved.)

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