Entrepreneur Challenges Wisconsin’s Unconstitutional Ban on Cheap Gas

J. Justin Wilson
J. Justin Wilson · June 26, 2007

Arlington, Va.—Even as consumers nationwide suffer under record gas prices, the state of Wisconsin is barring filling stations there from offering lower gas prices to consumers. Wisconsin’s actions are not only arbitrary and irrational; they are unconstitutional according to the Institute for Justice (IJ), a national public interest law firm with a history of defending economic liberty and the rights of entrepreneurs. Today, IJ filed suit in Dane County Circuit Court in Madison on behalf of Wisconsin gas station owner Raj Bhandari looking to restore common sense to gas pricing in the state and constitutionally enshrined limits on government power.

In 2006, Raj purchased and renovated a gas station on the verge of bankruptcy. He quickly turned the business around, in part by offering high quality service at competitive prices. He also began building ties with the community by offering discounted gas to senior citizens and supporters of a youth sports group. Raj soon learned that, incredibly, these popular discounts could subject him to fines of up to $2,500 per gallon.

The Wisconsin Unfair Sales Act, a 1930s relic, makes it illegal to sell gasoline without marking it up either 6 percent over cost or 9.18 percent over the local wholesale price—whichever is higher. This not only stifles competition and harms consumers; it is unconstitutional.

“It’s ridiculous in these days of skyrocketing gas prices that Raj is being threatened with thousands of dollars in fines because the government says his gas prices weren’t high enough,” said IJ Staff Attorney Robert McNamara. “Protecting consumers from gasoline that is too inexpensive is like protecting them from pillows that are too soft.”

“Raj Bhandari has a right to earn an honest living without being subject to arbitrary and unconstitutional regulations,” said Dana Berliner, an IJ senior attorney. “Consumers and entrepreneurs—not state capital bureaucrats—should set the price of gas in Wisconsin, like they do in most states.”

More than 30 states allow the kind of competition Wisconsin now outlaws, and three different state supreme courts have struck down similar laws without any negative effects on consumers or small businesses.

IJ President and General Counsel Chip Mellor concluded, “Small businesses are the heart of the American economy and the American Dream. Yet across the nation, the power of government is being abused to deny entrepreneurs their right to earn an honest living. The Institute for Justice will not rest until this fundamental right—the right to economic liberty—is secure for all Americans.”