{"ID":52623,"name":"Exxon Corporation v. Eagerton","href":"https:\/\/api.oyez.org\/cases\/1982\/81-1020","view_count":0,"docket_number":"81-1020","additional_docket_numbers":null,"manner_of_jurisdiction":"Appeal","first_party":"Exxon Corporation","second_party":"Ralph P. Eagerton Jr.","timeline":[{"event":"Argued","dates":[414741600],"href":"https:\/\/api.oyez.org\/case_timeline\/case_timeline\/34250"},{"event":"Decided","dates":[423896400],"href":"https:\/\/api.oyez.org\/case_timeline\/case_timeline\/34251"}],"lower_court":{"ID":22,"name":"Supreme Court of Alabama","href":"https:\/\/api.oyez.org\/taxonomy\/term\/22"},"facts_of_the_case":"\u003Cp\u003ESince 1945, Alabama had imposed a severance tax on oil and gas operations. Exxon Corporation (Exxon), along with other gas and oil producers in Alabama, had contractual agreements regarding the tax with the owners of the land on which operations occurred and with oil and gas purchasers. The owners were paid a royalty on all gas and oil produced, but were contractually assessed a portion of the severance tax, and the purchasers were required to reimburse the producers for any severance tax paid by them. In 1979, the Alabama Legislature passed a statute altering the severance tax. The statute increased the severance tax, exempted royalty landowners from the increase, and prohibited gas and oil operators from passing the tax increase on to oil and gas purchasers.\u003C\/p\u003E\n\u003Cp\u003EExxon and other oil and gas producers sued Ralph Eagerton, the Commissioner of Revenue in Alabama and argued that the National Gas Policy Act, which allowed natural gas producers to take steps to recoup state severance tax, preempted the prohibitions on passing along the costs to purchasers. Furthermore, the oil and gas producers argued that the exemption and the prohibition violated the oil and gas producers\u2019 Constitutional rights under the Contract Clause and the Equal Protection Clause of the Fourteenth Amendment. The Circuit Court of Montgomery County ruled the new severance tax provisions unconstitutionally violated the Equal Protection Clause of the 14th amendment and the Contract Clause. The state appealed to the Supreme Court of Alabama, which reversed the lower court\u2019s decision, holding any constraints imposed by the new tax were generally applicable and therefore valid.\u003C\/p\u003E\n\u003Cp\u003E\u00a0\u003C\/p\u003E\n","question":"\u003Cp\u003E(1) Does the National Gas Policy Act of 1978, preempt state regulation of oil and gas operations?\u003C\/p\u003E\n\u003Cp\u003E(2) Does the royalty owner exemption violate oil and gas operators\u2019 rights under the Contract Clause of the U.S. Constitution?\u003C\/p\u003E\n\u003Cp\u003E(3) Does the pass-through prohibition violate oil and gas operators\u2019 rights under the Contract Clause of the U.S. Constitution?\u003C\/p\u003E\n\u003Cp\u003E(4)Do the pass-through prohibition and royalty-owner exemption violate oil and gas producers\u2019 rights under the Equal Protection Clause of the U.S. Constitution?\u003C\/p\u003E\n\u003Cp\u003E\u00a0\u003C\/p\u003E\n","conclusion":"\u003Cp\u003EYes, no, no, no. Justice Thurgood Marshall delivered the opinion for the unanimous court. The Court held that federal law entirely preempts state law either when Congress explicitly declares it or when federal regulation is so pervasive that it is reasonable to infer that there is no space for a state to supplant federal regulation. Specific state laws are preempted to the extent that they stand in conflict or as an obstacle to federal law. The Court held that the National Gas Policy Act preempted the pass-through prohibition as they applied to interstate transactions. The pass-through prohibition could however be applied to intrastate transactions because Congress did not intend the National Gas Policy Act to preempt state regulation of state gas and oil markets. The Court also held that the exemption for royalty landowners did not violate the Contract Clause of the Constitution, because the exemption does not prohibit land owners and oil and gas producers from contractually shifting the tax burden Additionally, the Court held that a statute does not violate the Contract Clause simply because it has an effect on contractual obligations undertaken prior to passage of a statute. Because the pass-through prohibition only created incidental effects on pre-existing contractual obligations, it was not unconstitutional. The Court also held that, the statute only had to pass rational basis review because it did not affect a fundamental interest or create a suspect categorization. Because the royalty landowner exemption and the pass-through prohibition were both rationally related to Alabama\u2019s legitimate interest in protecting consumers from excessive prices, neither provision violated the oil and gas producers\u2019 rights under the Equal Protection Clause.\u003C\/p\u003E\n","advocates":[{"advocate":{"ID":38944,"name":"Rae M. Crowe","href":"https:\/\/api.oyez.org\/people\/rae_m_crowe","view_count":0,"last_name":"Crowe","roles":null,"thumbnail":null,"length_of_service":0,"identifier":"rae_m_crowe"},"advocate_description":"on behalf of the Appellants","href":"https:\/\/api.oyez.org\/case_advocate\/case_advocate\/12566"},{"advocate":{"ID":28960,"name":"John J. 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