OCTOBER TERM, 1996
Syllabus
CAMPS NEWFOUND/OWATONNA, INC.
v. TOWN OF HARRISON ET
AL.
CERTIORARI TO THE SUPREME JUDICIAL COURT OF MAINE No. 94-1988.
Argued October 9, 1996-Decided May 19, 1997
Petitioner, a Maine nonprofit corporation, operates a church
camp for children, most of whom are not Maine residents. Petitioner
is financed through camper tuition and other revenues. From 1989 to
1991, it paid over $20,000 per year in real estate and personal
property taxes. A state statute provides a general exemption from
those taxes for charitable institutions incorporated in Maine. With
respect to institutions operated principally for the benefit of
Maine nonresidents, however, a charity may only qualify for a more
limited tax benefit, and then only if its weekly charge for
services does not exceed $30 per person. Petitioner was ineligible
for any exemption, because its campers were largely nonresidents
and its weekly tuition was roughly $400 per camper. After
respondent town of Harrison (Town) rejected its request for a
refund of taxes already paid and a continuing exemption from future
taxes, which was based principally on a claim that the tax
exemption statute violated the Commerce Clause, petitioner filed
suit and was awarded summary judgment by the Superior Court. The
Maine Supreme Judicial Court reversed, holding that petitioner had
not met its burden of persuasion that the statute is
unconstitutional.
Held: An otherwise generally applicable state property
tax violates the Commerce Clause if its exemption for property
owned by charitable institutions excludes organizations operated
principally for the benefit of nonresidents. Pp.571-595.
(a) Because the Government lacked power to regulate interstate
commerce during the Nation's first years, the States freely adopted
measures fostering local interests without regard to possible
prejudice to nonresidents, resulting in a "conflict of commercial
regulations, destructive to the harmony of the States."
Gibbons v.
Ogden, 9 Wheat. 1,224 (Johnson, J.,
concurring in judgment). Arguably, this was the cause of the
Constitutional Convention.
Ibid. The Commerce Clause not
only granted Congress express authority to override restrictive and
conflicting state commercial regulations, but also effected a
curtailment of state power even absent congressional legislation.
Pp. 571-572.
(b) The Court is unpersuaded by the Town's arguments that the
dormant Commerce Clause is inapplicable here, either because
campers are
565
not "articles of commerce," or more generally because interstate
commerce is not implicated. The camp is unquestionably engaged in
commerce, not only as a purchaser, see,
e. g., Katzenbach v.
McClung, 379 U. S. 294, 300-301, but also as a provider of
goods and services akin to a hotel, see,
e. g., Heart of Atlanta
Motel, Inc. v.
United States, 379 U. S. 241, 244, 258.
Although the latter case involved Congress' affirmative powers, its
reasoning is applicable in the dormant Commerce Clause context.
See,
e. g., Hughes v.
Oklahoma, 441 U. S. 322, 326, n. 2.
The Town's further argument that the dormant Clause is inapplicable
because a real estate tax is at issue is also rejected. Even
assuming, as the Town argues, that Congress could not impose a
national real estate tax, States are not free to levy such taxes in
a manner that discriminates against interstate commerce.
Pennsylvania v.
West Virginia, 262 U. S. 553, 596. Pp.
572-575.
(c) There is no question that if this statute targeted
profit-making entities, it would violate the dormant Commerce
Clause. The statute discriminates on its face against interstate
commerce: It expressly distinguishes between entities that serve a
principally interstate clientele and those that primarily serve an
intrastate market, singling out camps that serve mostly in-staters
for beneficial tax treatment, and penalizing those camps that do a
principally interstate business. Such laws are virtually
per
se invalid.
E. g., Fulton Corp. v.
Faulkner,
516 U. S. 325,
331. Because the Town did not attempt to defend the statute by
demonstrating that it advances a legitimate local purpose that
cannot be adequately served by reasonable nondiscriminatory
alternatives,
e. g., Oregon Waste Systems,
Inc. v.
Department of Environmental Quality of Ore.,
511 U. S. 93, 101,
the Court does not address this question. See
Fulton Corp.,
516 U. S., at 333-334. Pp. 575-583.
(d) The rule applicable to profit-making enterprises also
applies to a discriminatory tax exemption for charitable and
benevolent institutions. The dormant Commerce Clause's
applicability to the nonprofit sector follows from this Court's
decisions holding not-for-profit institutions subject to laws
regulating commerce,
e. g., Associated Press v.
NLRB,
301 U. S. 103,
129, and to the federal antitrust laws,
e. g., National
Collegiate Athletic Assn. v.
Board of Regents of Univ. of
Okla., 468 U. S.
85, 100, n. 22. The Court has already held that the dormant
Clause applies to activities not intended to earn a profit,
Edwards v.
California, 314 U. S. 160,172, n. 1,
and there is no reason why an enterprise's nonprofit character
should exclude it from the coverage of either the affirmative or
the negative aspect of the Clause, see,
e. g., Hughes v.
Oklahoma, 441 U. S., at 326, n. 2. Whether operated on a
for-profit or
566
Syllabus
nonprofit basis, camps such as petitioner's purchase goods and
services in competitive markets, offer their facilities to a
variety of patrons, and derive revenues from a variety of local and
out-of-state sources. Any categorical distinction on the basis of
profit is therefore wholly illusory. Pp. 583-588.
(e) The Town's arguments that the exemption statute should be
viewed as either a legitimate discriminatory subsidy of those
charities that focus on local concerns, see,
e. g., West Lynn
Creamery, Inc. v.
Healy, 512 U. S. 186, 199, or
alternatively as a governmental "purchase" of charitable services
falling within the narrow exception to the dormant Commerce Clause
for States in their role as "market participants," see,
e. g.,
Hughes v.
Alexandria Scrap Corp., 426 U. S. 794;
Reeves,
Inc. v.
Stake, 447 U. S. 429, are
unpersuasive. Although tax exemptions and subsidies serve similar
ends, they differ in important and relevant respects that preclude
approval of the statute at issue. See,
e. g., West Lynn, 512
U. S., at 269, 278 (SCALIA, J., concurring in judgment). As for the
"market participant" argument, the Court has already rejected the
Town's position in
New Energy Co. of Ind. v.
Limbach,
486 U. S. 269,
277, and in any event respondents' open-ended exemption is not
analogous to the industry-specific state actions approved in
Alexandria Scrap and
Reeves. Pp. 588-594.
(f) This case's facts, viewed in isolation, do not appear to
pose any threat to the national economy's health. Nevertheless,
history, including the history of commercial conflict that preceded
the Constitutional Convention as well as the uniform course of
Commerce Clause jurisprudence animated and enlightened by that
early history, has shown that even the smallest discrimination
invites significant inroads on national solidarity. See
Baldwin v. G.
A. F.
Seelig, Inc., 294 U. S. 511, 523.
P.595.
655 A. 2d 876, reversed.
STEVENS, J., delivered the opinion of the Court, in which
O'CONNOR, KENNEDY, SOUTER, and BREYER, JJ., joined. SCALIA, J.,
filed a dissenting opinion, in which REHNQUIST, C. J., and THOMAS
and GINSBURG, JJ., joined,
post, p. 595. THOMAS, J., filed a
dissenting opinion, in which SCALIA, J., joined, and in which
REHNQUIST, C. J., joined as to Part I,
post, p. 609.
William H. Dempsey argued the cause for petitioner.
With him on the briefs were Robert B. Wasserman, William H.
Dale, Emily A. Bloch, and Sally
J. Daggett.
567
William L. Plouffe argued the cause and filed a brief for
respondents. *
JUSTICE STEVENS delivered the opinion of the Court.
The question presented is whether an otherwise generally
applicable state property tax violates the Commerce Clause of the
United States Constitution, Art. I, § 8, cl. 3, because its
exemption for property owned by charitable institutions excludes
organizations operated principally for the benefit of
nonresidents.
I
Petitioner is a Maine nonprofit corporation that operates a
summer camp for the benefit of children of the Christian Science
faith. The regimen at the camp includes supervised prayer,
meditation, and church services designed to help the children grow
spiritually and physically in accordance with the tenets of their
religion. App. 40-41. About 95 percent of the campers are not
residents of Maine.
Id., at 44.
The camp is located in the town of Harrison (Town); it occupies
180 acres on the shores of a lake about 40 miles northwest of
Portland. Brief for Respondents 4, and n. 6. Petitioner's revenues
include camper tuition averaging about $400 per week for each
student, contributions from private donors, and income from a
"modest endowment." App. 42, 51. In recent years, the camp has had
an annual operating deficit of approximately $175,000.
Id.,
at 41. From 1989 to 1991, it paid over $20,000 in real estate and
personal property taxes each year.1
Id., at 42-43.
*Briefs of
amici curiae urging reversal were filed for
the American Council on Education et al. by
Sheldon Elliot
Steinbach, Carter G.
Phillips, Nathan C.
Sheers,
and
Adam Yarmolinsky; and for the Christian Legal Society et
al. by
James C.
Geoly, Kevin R. Gustafson, and
Steven
1 Most of petitioner's tax bill was for real estate taxes. See,
e. g., App. 43 (petitioner paid 1991 real estate
taxes of $20,770.71 and personal property taxes of $994.70).
568
The Maine statute at issue, Me. Rev. Stat. Ann., Tit. 36, §
652(1)(A) (Supp. 1996), provides a general exemption from real
estate and personal property taxes for "benevolent and charitable
institutions incorporated" in the State. With respect to
institutions that are "in fact conducted or operated principally
for the benefit of persons who are not residents of Maine,"
however, a charity may only qualify for a more limited tax benefit,
and then only if the weekly charge for services provided does not
exceed $30 per person. § 652(1)(A)(1).2 Because most of the campers
come from out
2 The statute provides:
"The following property of institutions and organizations is
exempt from taxation:
"1. Property of institutions and organizations.
"A. The real estate and personal property owned and occupied or
used solely for their own purposes by benevolent and charitable
institutions incorporated by this State, and none of these may be
deprived of the right of exemption by reason of the source from
which its funds are derived or by reason of limitation in the
classes of persons for whose benefit such funds are applied.
"(1) Any such institution that is in fact conducted or operated
principally for the benefit of persons who are not residents of
Maine is entitled to an exemption not to exceed $50,000 of current
just value only when the total amount of any stipends or charges
that it makes or takes during any tax year, as defined by section
502, for its services, benefits or advantages divided by the total
number of persons receiving such services, benefits or advantages
during the same tax year does not result in an average rate in
excess of $30 per week when said weekly rate is computed by
dividing the average yearly charge per person by the total number
of weeks in a tax year during which such institution is in fact
conducted or operated principally for the benefit of persons who
are not residents of Maine. No such institution that is in fact
conducted or operated principally for the benefit of persons who
are not residents of Maine and makes charges that result in an
average weekly rate per person, as computed under this
subparagraph, in excess of $30 may be entitled to tax exemption.
This subparagraph does not apply to institutions incorporated as
nonprofit corporations for the sole purpose of conducting medical
research.
"For the purposes of this paragraph, 'benevolent and charitable
institutions' include, but are not limited to, nonprofit nursing
homes and nonprofit
569
of State, petitioner could not qualify for a complete
exemption.3 And, since the weekly tuition was roughly $400,
petitioner was ineligible for any charitable tax exemption at
all.
In 1992 petitioner made a formal request to the Town for a
refund of taxes paid from 1989 through 1991, and a continuing
exemption from future property taxes, based principally on a claim
that the tax exemption statute violated the Commerce Clause of the
Federal Constitution.4 The request was denied, and petitioner filed
suit in the Superior Court against the Town and its tax assessors
and collectors.5 After the
boarding homes and boarding care facilities licensed by the
Department of Human Services pursuant to Title 22, chapter 1665 or
its successor, nonprofit community mental health service facilities
licensed by the Commissioner of Mental Health, Mental Retardation,
and Substance Abuse Services, pursuant to Title 34-B, chapter 3 and
nonprofit child care centers incorporated by this State as
benevolent and charitable institutions. For the purposes of this
paragraph, 'nonprofit' means a facility exempt from taxation under
Section 501(c)(3) of the Code .... " Me. Rev. Stat. Ann., Tit. 36,
§ 652(1)(A) (Supp. 1996).
3 The statute's language reserving the property tax exemption
for those entities operated "principally for the benefit" of Maine
residents is not without ambiguity. The parties are in agreement,
however, that because petitioner's camp is attended almost entirely
by out-of-staters, it would not qualify for the exemption under any
reading of the language. See Brief for Petitioner 2; Brief for
Respondents 2, n. 3; Tr. of Oral Arg. 36. The courts below appear
to have presumed the same, and we of course accept their
interpretation of state law.
4 Petitioner also argued below that the Maine statute violated
the Equal Protection Clauses of the United States and Maine
Constitutions, and the Privileges and Immunities Clause, Art. IV, §
2, of the Federal Constitution. The Maine Supreme Judicial Court
had already found the statute constitutional under an equal
protection analysis in a prior decision, and adhered to its earlier
view. See
Green Acre Baha'i Institute v.
Eliot, 159
Me. 395, 193 A. 2d 564 (1963); 655 A. 2d 876, 879-880 (1995). As
for the privileges and immunities claim, the Supreme Judicial Court
found petitioner's argument unavailing.
Id., at 880. These
claims are not before us.
5 The Superior Court referred to all of the original defendants
as "Municipal Defendants" because the State of Maine intervened to
defend the constitutionality of its statute. App. to Pet. for Cert.
9a. However, the
570
parties agreed on the relevant facts, they filed cross-motions
for summary judgment. The Superior Court ruled for petitioner,
explaining that under Maine's statute:
"Denial of a tax exemption is explicitly and primarily triggered
by engaging in a certain level of interstate commerce. This denial
makes operation of the institutions serving non-residents more
expensive. This increased cost results from an impermissible
distinction between in-state and out-of-state consumers. See
Commonwealth Edison Co., 453 U. S., at 617-19 .... Maine's
charitable tax exemption is denied, not because there is a
difference between the activities of charitable institutions
serving residents and non-residents, but because of the residency
of the people whom the institutions serve." App. to Pet. for Cert.
14a-15a (footnote omitted).
The Town, but not the State, appealed and the Maine Supreme
Judicial Court reversed. 655 A. 2d 876 (1995). Noting that a Maine
statute 6 characterized tax exemptions as "tax expenditures," it
viewed the exemption for charitable institutions as the equivalent
of a purchase of their services.
Id., at 878. Because the
exemption statute "treats all Maine charities alike"-given the fact
that "all have the opportunity to qualify for an exemption by
choosing to dispense the majority of their charity locally"-it
"regulates evenhandedly with only incidental effects on interstate
commerce."
Id., at 879. In the absence of evidence that
petitioner's camp
"competes with other summer camps outside
of or within Maine," or that the statute "impedes interstate
travel" or that it "provides services that are necessary for
interstate travel," the Court concluded that petitioner had
State did not appeal the adverse decision of the Superior Court
and, therefore, is not a respondent in this Court. We shall use the
term "Town" to refer to the respondents collectively.
6 Me. Rev. Stat. Ann., Tit. 36, § 196 (1990).
571
"not met its heavy burden of persuasion that the statute is
unconstitutional."
Ibid.
We granted certiorari. 516 U. S. 1157. For the reasons that
follow, we now reverse.
II
During the first years of our history as an independent
confederation, the National Government lacked the power to regulate
commerce among the States. Because each State was free to adopt
measures fostering its own local interests without regard to
possible prejudice to nonresidents, what Justice Johnson
characterized as a "conflict of commercial regulations, destructive
to the harmony of the States," ensued. See
Gibbons v.
Ogden, 9 Wheat. 1, 224 (1824) (opinion concurring in
judgment). In his view, this "was the immediate cause that led to
the forming of a [constitutional] convention."
Ibid. "If
there was anyone object riding over every other in the adoption of
the constitution, it was to keep the commercial intercourse among
the States free from all invidious and partial restraints."
Id., at 231.7
We have subsequently endorsed Justice Johnson's appraisal of the
central importance of federal control over interstate and foreign
commerce and, more narrowly, his conclusion that the Commerce
Clause had not only granted Congress express authority to override
restrictive and conflicting commercial regulations adopted by the
States, but that it also had immediately effected a curtailment of
state power. "In short, the Commerce Clause even without
implementing legislation by Congress is a limitation upon the power
of the States.
Southern Pacific Co. v.
Arizona ex
rel.
7 See also
West Lynn Creamery, Inc. v.
Healy,
512 U. S. 186,
193, n. 9 (1994) (noting that "[t]he 'negative' aspect of the
Commerce Clause was considered the more important by the 'father of
the Constitution,' James Madison");
Hughes v.
Oklahoma, 441
U. S. 322, 325-326 (1979);
Hughes v.
Alexandria Scrap
Corp., 426 U. S.
794, 807, n. 16 (1976) (quoting W. Rutledge, A Declaration of
Legal Faith 25-26 (1947)).
572
Sullivan, 325 U. S. 761 [(1945)];
Morgan v.
Virginia, 328 U. S. 373 [(1946)]."
Freeman v.
Hewit, 329 U. S. 249, 252
(1946). Our decisions on this point reflect, "upon fullest
consideration, the course of adjudication unbroken through the
Nation's history."
Ibid. See also
H. P. Hood &
Sons, Inc. v.
Du Mond, 336 U. S. 525, 534-535
(1949). Although Congress unquestionably has the power to repudiate
or substantially modify that course of adjudication,S it has not
done so.
This case involves an issue that we have not previously
addressed-the disparate real estate tax treatment of a nonprofit
service provider based on the residence of the consumers that it
serves. The Town argues that our dormant Commerce Clause
jurisprudence is wholly inapplicable to this case, because
interstate commerce is not implicated here and Congress has no
power to enact a tax on real estate. We first reject these
arguments, and then explain why we think our prior cases make it
clear that if profit-making enterprises were at issue, Maine could
not tax petitioner more heavily than other camp operators simply
because its campers come principally from other States. We next
address the novel question whether a different rule should apply to
a discriminatory tax exemption for charitable and benevolent
institutions. Finally, we reject the Town's argument that the
exemption should either be viewed as a permissible subsidy or as a
purchase of services by the State acting as a "market
participant."
III
We are unpersuaded by the Town's argument that the dormant
Commerce Clause is inapplicable here, either because campers are
not "articles of commerce" or, more generally, because the camp's
"product is delivered and 'consumed' entirely within Maine." Brief
for Respondents
8See
New York v.
United States, 505 U. S. 144, 171
(1992);
Quill Corp. v.
North Dakota, 504 U. S. 298, 318
(1992);
Prudential Ins. Co. v.
Benjamin,
328 U. S. 408, 429-430,
434-435 (1946).
573
17-18. Even though petitioner's camp does not make a profit, it
is unquestionably engaged in commerce, not only as a purchaser, see
Katzenbach v.
McClung, 379 U. S. 294, 300301
(1964);
United States v.
Lopez, 514 U. S. 549, 558
(1995), but also as a provider of goods and services. It markets
those services, together with an opportunity to enjoy the natural
beauty of an inland lake in Maine, to campers who are attracted to
its facility from all parts of the Nation. The record reflects that
petitioner "advertises for campers in [out-of-state] periodicals
... and sends its Executive Director annually on camper recruiting
trips across the country." App. 49-50. Petitioner's efforts are
quite successful; 95 percent of its campers come from out of State.
The attendance of these campers necessarily generates the
transportation of persons across state lines that has long been
recognized as a form of "commerce."
Edwards v.
California, 314 U. S. 160, 172
(1941); see also
Caminetti v.
United States, 242 U. S. 470, 491
(1917);
Hoke v.
United States, 227 U. S. 308, 320
(1913).
Summer camps are comparable to hotels that offer their guests
goods and services that are consumed locally. In
Heart of
Atlanta Motel, Inc. v.
United States, 379 U. S. 241 (1964), we
recognized that interstate commerce is substantially affected by
the activities of a hotel that "solicits patronage from outside the
State of Georgia through various national advertising media,
including magazines of national circulation."
Id., at 243.
In that case, we held that commerce was substantially affected by
private race discrimination that limited access to the hotel and
thereby impeded interstate commerce in the form of travel.
Id., at 244, 258; see
Lopez, 514 U. S., at 558-559.
Official discrimination that limits the access of nonresidents to
summer camps creates a similar impediment. Even when business
activities are purely local, if "'it is interstate commerce that
feels the pinch, it does not matter how local the operation which
applies the squeeze.'"
Heart of Atlanta, 379 U. S., at
258
574
(quoting United States v. Women's Sportswear Mfrs. Assn.,
336 U. S. 460,
464 (1949)).
Although
Heart of Atlanta involved Congress' affirmative
Commerce Clause powers, its reasoning is applicable here. As we
stated in
Hughes v.
Oklahoma, 441 U. S. 322 (1979):
"The definition of 'commerce' is the same when relied on to
strike down or restrict state legislation as when relied on to
support some exertion of federal control or regulation."
Id., at 326, n. 2. That case in turn rested upon our
reasoning in
Philadelphia v.
New Jersey, 437 U. S. 617 (1978), in
which we rejected a "two-tiered definition of commerce."
Id., at 622. "Just as Congress ha[d] power to regulate the
interstate movement of [the] wastes" at issue in that case, so too
we held were States "not free from constitutional scrutiny when
they restrict that movement."
Id., at 622-623. See also
Sporhase v.
Nebraska ex rel. Douglas, 458 U. S. 941, 953
(1982).
The Town's arguments that the dormant Commerce Clause is
inapplicable to petitioner because the campers are not "articles of
commerce," or more generally that interstate commerce is not at
issue here, are therefore unpersuasive. The services that
petitioner provides to its principally out-ofstate campers clearly
have a substantial effect on commerce, as do state restrictions on
making those services available to nonresidents. Cf. C &
A
Carbone, Inc. v.
Clarkstown, 511 U. S. 383, 391
(1994).
The Town also argues that the dormant Commerce Clause is
inapplicable because a real estate tax is at issue. We disagree. A
tax on real estate, like any other tax, may impermissibly burden
interstate commerce. We may assume as the Town argues (though the
question is not before us) that Congress could not impose a
national real estate tax. It does not follow that the States may
impose real estate taxes in a manner that discriminates against
interstate commerce. A State's "power to lay and collect taxes,
comprehensive and necessary as that power is, cannot be exerted in
a way which
575
involves a discrimination against [interstate] commerce."
Pennsylvania v.
West Virginia, 262 U. S. 553, 596
(1923).
To allow a State to avoid the strictures of the dormant Commerce
Clause by the simple device of labeling its discriminatory tax a
levy on real estate would destroy the barrier against protectionism
that the Constitution provides. We noted in
West Lynn Creamery,
Inc. v.
Healy, 512 U. S. 186 (1994),
that "[t]he paradigmatic ... law discriminating against interstate
commerce is the protective [import] tariff or customs duty, which
taxes goods imported from other States, but does not tax similar
products produced in State."
Id., at 193. Such tariffs are
"so patently unconstitutional that our cases reveal not a single
attempt by a State to enact one."
Ibid. Yet, were the Town's
theory adopted, a State could create just such a tariff with ease.
The State would need only to pass a statute imposing a special real
estate tax on property used to store, process, or sell imported
goods. By gearing the increased tax to the value of the imported
goods at issue, the State could create the functional equivalent of
an import tariff. As this example demonstrates, to accept the
Town's theory would have radical and unacceptable results.
We therefore turn to the question whether our prior cases
preclude a State from imposing a higher tax on a camp that serves
principally nonresidents than on one that limits its services
primarily to residents.
IV
There is no question that were this statute targeted at
profit-making entities, it would violate the dormant Commerce
Clause. "State laws discriminating against interstate commerce on
their face are 'virtually
per se invalid.' "
Fulton
Corp. v.
Faulkner, 516 U. S. 325, 331 (1996)
(quoting
Oregon Waste Systems, Inc. v.
Department of
Environmental Quality of Ore., 511 U. S. 93, 99 (1994)).
It is not necessary to look beyond the text of this statute to
determine that it
576
discriminates against interstate commerce. The Maine law
expressly distinguishes between entities that serve a principally
interstate clientele and those that primarily serve an intrastate
market, singling out camps that serve mostly instaters for
beneficial tax treatment, and penalizing those camps that do a
principally interstate business. As a practical matter, the statute
encourages affected entities to limit their out-of-state clientele,
and penalizes the principally nonresident customers of businesses
catering to a primarily interstate market.
If such a policy were implemented by a statutory prohibition
against providing camp services to nonresidents, the statute would
almost certainly be invalid. We have "consistently ... held that
the Commerce Clause ... precludes a state from mandating that its
residents be given a preferred right of access, over out-of-state
consumers, to natural resources located within its borders or to
the products derived therefrom."
New England Power Co. v.
New Hampshire, 455 U. S. 331, 338
(1982). Our authorities on this point date to the early part of the
century.9 Petitioner's "product" is
9 In
West v.
Kansas Natural Gas Co., 221 U. S. 229 (1911), we
held invalid under the Commerce Clause an Oklahoma statute that had
the effect of preventing out-of-state consumers from purchasing
Oklahoma natural gas. We ruled similarly in
Pennsylvania v.
West Virginia, 262 U. S. 553 (1923),
that a West Virginia statute limiting out-of-state users' access to
West Virginia gas to that not "required to meet the local needs for
all purposes,"
id., at 594, violated the Commerce Clause. We
found those cases directly analogous in
New England Power,
ruling invalid a state law that reserved for state citizens
domestically generated hydroelectric power. In
Philadelphia
v.
New Jersey, 437 U. S. 617 (1978), we
struck down a New Jersey statute prohibiting certain categories of
out-of-state waste from flowing into the State's landfills, noting
that "a State may not accord its own inhabitants a preferred right
of access over consumers in other States to natural resources
located within its borders."
Id., at 627. And, in
Hughes v.
Oklahoma, 441 U. S., at 338, we ruled that
a statute prohibiting the export of minnows for sale out of State
violated the Commerce Clause. We held similarly in
Sporhase
v.
Nebraska ex rel. Douglas, 458 U. S. 941, 958
(1982), that a provision preventing the export of ground water to
States not allowing reciprocal export rights was an impermissible
barrier to com-
577
in part the natural beauty of Maine itself and, in addition, the
special services that the camp provides. In this way, the Maine
statute is like a law that burdens out-of-state access to
domestically generated hydroelectric power,
New England
Power, or to local landfills,
Philadelphia v.
New
Jersey, 437 U. S. 617 (1978). In those cases, as in this case,
the burden fell on out-of-state access both to a natural resource
and to related services provided by state residents.1o
Avoiding this sort of "economic Balkanization,"
Hughes
v.
Oklahoma, 441 U. S., at 325, and the retaliatory acts of
other States that may follow, is one of the central purposes of our
negative Commerce Clause jurisprudence. See
ibid.; West v.
Kansas Natural Gas Co., 221 U. S. 229, 255 (1911)
(expressing concern that "embargo may be retaliated by embargo, and
commerce will be halted at state lines"). And, as we noted in
Brown-Forman Distillers Corp. v.
New York State Liquor
Authority, 476 U.
S. 573, 580 (1986): "Economic protectionism is not limited to
attempts to convey ad van-
merce. Insofar as
Sporhase suggests certain narrow
circumstances in which the reservation of natural resources for
state citizens may be permissible, see
id., at 956-957,
these concerns are not implicated here.
lOWe have long noted the applicability of our dormant Commerce
Clause jurisprudence to service industries. See,
e. g., C
&
A Carbone, Inc. v.
Clarkstown, 511 U. S. 383, 391 (1994)
("[T]he article of commerce is not so much the solid waste itself,
but rather the service of processing and disposing of it");
Fort
Gratiot Sanitary Landfill, Inc. v.
Michigan Dept. of Natural
Resources, 504 U.
S. 353, 359 (1992) (noting that "arrangements between
out-of-state generators of waste and the ... operator of a waste
disposal site" may be "viewed as 'sales' of garbage or 'purchases'
of transportation and disposal services");
Boston Stock
Exchange v.
State Tax Comm'n, 429 U. S. 318, 337 (1977)
("[N]o State may discriminatorily tax ... the business operations
performed in any other State");
Lewis v.
BT Investment
Managers, Inc., 447 U. S. 27, 42 (1980)
(striking down state statute under dormant Commerce Clause that
favored in-state over outof-state entities in the investor services
market). Given the substantial portion of the national economy now
devoted to service industries, see Bureau of Census, Statistical
Abstract of the United States 1995, p. 779 (Table 1288) (noting
service industries constituted approximately 20 percent of gross
domestic product in 1992), this is a natural development in our
dormant Commerce Clause jurisprudence.
578
tages on local merchants; it may include attempts to give local
consumers an advantage over consumers in other States." 11 By
encouraging economic isolationism, prohibitions on out-of-state
access to in-state resources serve the very evil that the dormant
Commerce Clause was designed to prevent.
Of course, this case does not involve a total prohibition.
Rather, the statute provides a strong incentive for affected
entities not to do business with nonresidents if they are able to
so avoid the discriminatory tax. In this way, the statute is
similar to the North Carolina "intangibles tax" that we struck down
in
Fulton Corp. v.
Faulkner, 516 U. S., at 327. That
case involved the constitutionality under the Commerce Clause of a
state "regime that taxe[d] stock [held by in-state shareholders]
only to the degree that its issuing corporation participates in
interstate commerce."
Id., at 333. We held the statute
facially discriminatory, in part because it tended "to discourage
domestic corporations from plying their trades in interstate
commerce."
Ibid. Maine's statute has a like effect.
To the extent that affected Maine organizations are not deterred
by the statute from doing a principally interstate business, it is
clear that discriminatory burdens on interstate commerce imposed by
regulation or taxation may also violate the Commerce Clause. We
have held that special fees assessed on nonresidents directly by
the State when they attempt to use local services impose an
impermissible burden on interstate commerce. See,
e. g.,
Chemical Waste Management, Inc. v.
Hunt, 504 U. S. 334, 342 (1992)
(discriminatory tax imposed on disposal of out-of-state hazardous
waste). That the tax discrimination comes in the form of a
deprivation of a generally available tax benefit, rather than
11 The Town argues that "the Commerce Clause protects
out-of-state competitors but does not protect out-of state
consumers." Brief for Respondents 16. As the discussion above
indicates, our cases have rejected this view.
579
a specific penalty on the activity itself, is of no moment.
Thus, in
New Energy Co. of Ind. v.
Limbach, 486 U. S. 269, 274
(1988), the Court invalidated an Ohio statute that provided a tax
credit for sales of ethanol produced in State, but not ethanol
produced in certain other States; the law "deprive[d] certain
products of generally available beneficial tax treatment because
they are made in certain other States, and thus on its face
appear[ed] to violate the cardinal requirement of
nondiscrimination." 12 Given the fact that the burden of Maine's
facially discriminatory tax scheme falls by design in a predictably
disproportionate way on outof-staters,13 the pernicious effect on
interstate commerce is
12 See
Bacchus Imports, Ltd. v.
Dias, 468 U. S. 263, 268 (1984)
(discriminatory excise tax exemption);
Maryland v.
Louisiana, 451
U. S. 725, 756 (1981) (tax scheme "unquestionably discriminates
against interstate commerce ... as the necessary result of various
tax credits and exclusions");
Westinghouse Elec. Corp. v.
Tully, 466 U.
S. 388, 399-400, and n. 9 (1984)
(per curiam); see also
West Lynn Creamery, Inc. v.
Healy, 512 U. S., at 210
(SCALIA, J., concurring in judgment).
13 Because the Maine tax is facially discriminatory, this case
is unlike
Commonwealth Edison Co. v.
Montana,
453 U. S. 609
(1981). There, we held permissible under the Commerce Clause a
generally applicable Montana severance tax on coal extracted from
in-state mines. Appellants challenged the tax arguing,
inter
alia, that it discriminated against interstate commerce because
90 percent of the coal happened to be shipped to out-of-state
users, and the tax burden was therefore borne principally by
nonresidents. We rejected this claim, noting that "there is no real
discrimination in this case; the tax burden is borne according to
the amount of coal consumed and not according to any distinction
between in-state and out-of-state consumers."
Id., at 619.
We recognized that an approach to the dormant Commerce Clause
requiring an assessment of the likely demand for a particular good
by nonresidents and a State's ability to shift its tax burden out
of State "would require complex factual inquiries about such issues
as elasticity of demand for the product and alternative sources of
supply,"
id., at 619, n. 8, and declined to adopt such a
difficult to police test. Here, in contrast, the tax scheme
functions by design and on its face to burden out-of-state users
disproportionately. Our analysis in
Commonwealth Edison is
therefore inapplicable.
CTS Corp. v.
Dynamics Corp. of America, 481 U. S. 69 (1987), is
also inapposite. In that case, we rejected the argument that a
facially nondis-
580
the same as in our cases involving taxes targeting out-ofstaters
alone.
Unlike in
Chemical Waste, we recognize that here the
discriminatory burden is imposed on the out-of-state customer
indirectly by means of a tax on the entity transacting business
with the non-Maine customer. This distinction makes no analytic
difference. As we noted in
West Lynn Creamery discussing the
general phenomenon of import tariffs: "For over 150 years, our
cases have rightly concluded that the imposition of a differential
burden on any part of the stream of commerce-from wholesaler to
retailer to consumer-is invalid, because a burden placed at any
point will result in a disadvantage to the out-of-state producer."
512 U. S., at 202 (citing cases). So too here, it matters little
that it is the camp that is taxed rather than the campers. The
record demonstrates that the economic incidence of the tax falls at
least in part on the campers, the Town has not contested the point,
and the courts below based their decision on this presumption. App.
49; 655 A. 2d, at 879; App. to Pet. for Cert. 14a, n. 2.14
With respect to those businesses-like petitioner's-that continue
to engage in a primarily interstate trade, the Maine statute
therefore functionally serves as an export tariff that targets
out-of-state consumers by taxing the businesses that
criminatory state law deterring hostile tender offers violated
the dormant Commerce Clause because most such offers "are launched
by offerors outside Indiana."
Id., at 88. We explained that
"nothing
in the ... Act imposes a greater burden on
out-of-state offerors than it does on similarly situated Indiana
offerors."
Ibid. (emphasis added). Here, the discrimination
appears on the face of the Maine statute.
Exxon Corp. v.
Governor of Maryland, 437 U. S. 117 (1978), is
similarly distinguishable. See
id., at 126 ("The fact that
the burden of a state regulation falls on some interstate companies
does not, by itself, establish a claim of discrimination against
interstate commerce").
14 We therefore have no need to consider these matters further.
Cf.
Fulton Corp. v.
Faulkner, 516 U. S. 325, 341 (1996)
(noting "complexity of economic incidence analysis").
581
principally serve them. As our cases make clear, this sort of
discrimination is at the very core of activities forbidden by the
dormant Commerce Clause. "'[A] State may not tax a transaction or
incident more heavily when it crosses state lines than when it
occurs entirely within the State.'"
Chemical Waste, 504 U.
S., at 342 (quoting
Armco Inc. v.
Hardesty, 467 U. S. 638, 642
(1984)); see
West Lynn Creamery, Inc. v.
Healy, 512
U. S., at 193 (tariffs forbidden by the dormant Commerce
Clause).
Ninety-five percent of petitioner's campers come from out of
State. Insofar as Maine's discriminatory tax has increased tuition,
that burden is felt almost entirely by outof-staters, deterring
them from enjoying the benefits of camping in Maine.15 In sum, the
Maine statute facially discriminates against interstate commerce,
and is all but
per se invalid. See,
e. g., Oregon
Waste, 511 U. S., at 100-10l.
We recognize that the Town might have attempted to defend the
Maine law under the
per se rule by demonstrating that it
"'advances a legitimate local purpose that cannot be adequately
served by reasonable nondiscriminatory alternatives.'"
Id.,
at 101 (quoting
New Energy Co., 486 U. S., at 278). In
assessing respondents' arguments, we would have applied our
"strictest scrutiny."
Hughes v.
Oklahoma, 441
15 The Town argues that these effects are entirely speculative,
because the record does not reflect any decision by a potential
camper not to attend petitioner's camp as a result of the burden
imposed. Brief for Respondents 16. The Supreme Judicial Court
appears to have adopted similar reasoning. 655 A. 2d, at 879. This
misconstrues the proper analysis. As we made clear most recently in
Fulton Corp. v.
Faulkner, 516 U. S., at 333, n. 3,
there is no
"'de minimis' defense to a charge of
discriminatory taxation under the Commerce Clause." A
particularized showing of the sort respondent seeks is not
required. See
Associated Industries of Mo. v.
Lohman,
511 U. S. 641,
650 (1994) ("[A]ctual discrimination, wherever it is found, is
impermissible, and the magnitude and scope of the discrimination
have no bearing on the determinative question whether
discrimination has occurred");
Maryland v.
Louisiana,
451 U. S., at 756; see also
Boston Stock Exchange v.
State Tax Comm'n, 429 U. S., at 334, n. 13.
582
u. S., at 337. This is an extremely difficult burden, "so heavy
that 'facial discrimination by itself may be a fatal defeet.'"
Oregon Waste, 511 U. S., at 101 (quoting
Hughes, 441
U. S., at 337); see
Chemical Waste Management, Inc. v.
Hunt, 504 U. S., at 342 ("Once a state tax is found to
discriminate against out-of-state commerce, it is typically struck
down without further inquiry"). Perhaps realizing the weight of its
burden, the Town has made no effort to defend the statute under the
per se rule, and so we do not address this question. See
Fulton Corp. v.
Faulkner, 516 U. S., at 333-334.16 We
have no doubt that if petitioner's camp were
16 JUSTICE SCALIA submits that we err by following our precedent
in
Fulton and declining to address an argument that the Town
itself did not think worthy of pressing.
Post, at 602-603.
But even if there were reason to consider the State's compliance
with the
per se rule, the Town would not prevail. In the
single case JUSTICE SCALIA points to in which we found the
per
se standard to have been met,
Maine v.
Taylor,
477 U. S. 131
(1986), the State had no "'reasonable nondiscriminatory
alternatives,'"
Oregon Waste, 511 U. S., at 101 (quoting
New Energy Co., 486 U. S., at 278), to the action it had
taken. Absent a bar on the import of certain minnows, there was no
way for Maine to protect its natural environment from the hazard of
parasites and nonnative species that might have been accidentally
introduced into the State's waters.
Taylor, 477 U. S., at
141.
In contrast, here Maine has ample alternatives short of a
facially discriminatory property tax exemption to achieve its
apparent goal of subsidizing the attendance of the State's children
at summer camp. Maine could, for example, achieve this end by
offering direct financial support to parents of resident children.
Cf.
Shapiro v.
Thompson, 394 U. S. 618 (1969).
Though we have not had the occasion to address the issue, it might
also be permissible for the State to subsidize Maine camps directly
to the extent that they serve residents. See
West Lynn Creamery,
Inc. v.
Healy, 512 U. S., at 199, n. 15;
New Energy
Co. of Ind. v.
Limbach, 486 U. S. 269, 278 (1988)
(noting that "[d]irect subsidization of domestic industry does not
ordinarily run afoul" of the Commerce Clause);
Hughes
While the Town does argue its case under the less exacting
analysis set forth in,
e. g., Pike v.
Bruce Church,
Inc., 397 U. S.
137, 142 (1970), "this lesser scrutiny is only available 'where
other [nondiscriminatory] legislative objectives are credibly
advanced
and there is
no patent discrimination
583
a profit-making entity, the discriminatory tax exemption would
be impermissible.
v
The unresolved question presented by this case is whether a
different rule should apply to tax exemptions for charitable and
benevolent institutions. Though we have never had cause to address
the issue directly, the applicability of the dormant Commerce
Clause to the nonprofit sector of the economy follows from our
prior decisions.
Our cases have frequently applied laws regulating commerce to
not-for-profit institutions. In
Associated Press v.
NLRB, 301 U.
S. 103 (1937), for example, we held the National Labor
Relations Act as applied to the Associated Press' (A. P.'s)
newsgathering activities to be an enactment entirely within
Congress' Commerce Clause power, despite the fact that the A. P.
"does not sell news and does not operate for a profit."
Id.,
at 129. Noting that the A. P.'s activities "involve[d] the constant
use of channels of interstate and foreign communication," we
concluded that its operations "amount[ed] to commercial
intercourse, and such intercourse is commerce within the meaning of
the Constitution."
Id.,
against interstate trade.'''
Chemical Waste, 504 U. S.,
at 343, n. 5 (quoting
Philadelphia v.
New Jersey, 437
U. S., at 624 (emphasis added)). Because the Maine statute is
facially discriminatory, the more deferential standard is
inapplicable. Contrary to JUSTICE SCALIA'S suggestion, this case is
quite unlike
General Motors Corp. v.
Tracy, 519 U. S. 278 (1997).
There, the Court premised its holding that the statute at issue was
not facially discriminatory on the view that sellers of "bundled"
and "unbundled" natural gas were principally competing in different
markets. See
id., at 297-298, 300 ("dormant Commerce Clause
protects markets and participants in markets, not taxpayers as
such"). While it may be true that "[d]isparate treatment
constitutes discrimination only if the objects of the disparate
treatment are ... similarly situated,"
post, at 601, there
is no question that the statute at issue here is facially
discriminatory because it disparately treats identically situated
Maine nonprofit camps depending upon whether they favor in-state,
as opposed to out-of-state, campers.
584
at 128. See also Polish National Alliance of United States
We have similarly held that federal antitrust laws are
applicable to the anticompetitive activities of nonprofit
organizations. See
National Collegiate Athletic Assn. v.
Board of Regents of Univ. of Okla., 468 U. S. 85, 100, n. 22
(1984) (Sherman Act § 1 applies to nonprofits);
American Soc. of
Mechanical Engineers, Inc. v.
Hydrolevel Corp., 456 U. S. 556, 576 (1982)
("[I]t is beyond debate that nonprofit organizations can be held
liable under the antitrust laws");
Goldfarb v.
Virginia
State Bar, 421 U.
S. 773 (1975). The nonprofit character of an enterprise does
not place it beyond the purview of federal laws regulating
commerce. See also
NLRB v.
Yeshiva Univ., 444 U. S. 672, 681, n. 11
(1980) (noting that in context of amendments to National Labor
Relations Act "Congress appears to have agreed that nonprofit
institutions 'affect commerce' under modern economic
conditions").
We have already held that the dormant Commerce Clause is
applicable to activities undertaken without the intention of
earning a profit. In
Edwards v.
California, 314 U. S. 160 (1941), we
addressed the constitutionality of a California statute prohibiting
the transport into that State of indigent persons. We struck the
statute down as a violation of the dormant Commerce Clause,
reasoning that "the transportation of persons is 'commerce,'" and
that the California statute was an "unconstitutional barrier to
[that] interstate commerce."
Id., at 172-173. In determining
whether the transportation of persons is "commerce," we noted that
"[i]t is immaterial whether or not the transportation is commercial
in character."
Id., at 172, n. 1.
We see no reason why the nonprofit character of an enterprise
should exclude it from the coverage of either the affirmative or
the negative aspect of the Commerce Clause. See
Hughes, 441
U. S., at 326, n. 2;
Philadelphia v.
New Jersey, 437
U. S., at 621-623 (rejecting "two-tiered definition of commerce");
Sporhase, 458 U. S., at 953; see also
supra, at
585
572-574. There are a number of lines of commerce in which both
for-profit and nonprofit entities participate. Some educational
institutions, some hospitals, some child care facilities, some
research organizations, and some museums generate significant
earnings; and some are operated by not-for-profit corporations. See
Hansmann, The Role of Nonprofit Enterprise, 89 Yale L. J. 835, 835,
and n. 1, 865 (1980).
A nonprofit entity is ordinarily understood to differ from a
for-profit corporation principally because it "is barred from
distributing its net earnings, if any, to individuals who exercise
control over it, such as members, officers, directors, or
trustees."
Id., at
838.17 Nothing intrinsic to the
nature of nonprofit entities prevents them from engaging in
interstate commerce. Summer camps may be operated as for-profit or
nonprofit entities; nonprofits may depend-as here-in substantial
part on fees charged for their services. Clotfelter, The
Distributional Consequences of Nonprofit Activities, in Who
Benefits from the Nonprofit Sector? 1, 6 (C. Clotfelter ed. 1992)
(nonprofits in some sectors are "heavily dependent on fees by
paying customers, with private payments accounting for at least
half of total revenues"). Whether operated on a for-profit or
nonprofit basis, they purchase goods and
17Maine's law governing nonprofits embraces this conception, see
Me.
Rev. Stat. Ann., Tit. 13-B, § 102(9) (1981), as does the tax
exemption statute at issue here. The exemption applies to
"benevolent and charitable institutions." Me. Rev. Stat. Ann., Tit.
36, § 652(1)(A) (Supp. 1996). To qualify, the entity must devote
"[a]ll profits derived from [its] operation ... and the proceeds
from the sale of its property ... exclusively to the purposes for
which it is organized." §
652(1)(C)(3). "A director,
trustee, officer or employee of an organization claiming exemption
is not entitled to receive directly or indirectly any pecuniary
profit from the operation of that organization, excepting
reasonable compensation for services in effecting its purposes." §
652(1)(C)(2). The statute also expressly designates certain
categories of entities (nonprofit nursing homes, boarding homes,
community mental health service facilities, and child care centers)
that qualify for tax exempt status under federal law, 26 U. S. C. §
501(c)(3), as falling within its ambit. See Me. Rev. Stat. Ann.,
Tit. 36, § 652(1)(A) (Supp. 1996) (" '[B]enevolent and charitable
institutions' include, but are not limited to, [the specified
entities]").
586
services in competitive markets, offer their facilities to a
variety of patrons, and derive revenues from a variety of sources,
some of which are local and some out of State.
For purposes of Commerce Clause analysis, any categorical
distinction between the activities of profit-making enterprises and
not-for-profit entities is therefore wholly illusory. Entities in
both categories are major participants in interstate markets. And,
although the summer camp involved in this case may have a
relatively insignificant impact on the commerce of the entire
Nation, the interstate commercial activities of nonprofit entities
as a class are unquestionably significant.18 See
Wickard v.
Filburn, 317
U. S. 111, 127128 (1942);
Lopez, 514 U. S., at 556,
559-560.
18We are informed by
amici that "the nonprofit sector
spends over $389 billion each year in operating
expenses-approximately seven percent of the gross national
product." Brief for American Council on Education et al. as
Amici Curiae 19. In recent years, nonprofits have employed
approximately seven percent of the Nation's paid workers, roughly
9.3 million people in 1990. V. Hodgkinson, M. Weitzman, C. Toppe,
& S. Noga, Nonprofit Almanac 1992-1993: Dimensions of the
Independent Sector 29 (1992) (Table 1.5).
JUSTICE SCALIA wrongly suggests that Maine's law offers only a
"narrow tax exemption,"
post, at 598, which he implies has
no substantial effect on interstate commerce and serves only "to
relieve the State of its burden of caring for its residents,"
post, at 596. This characterization is quite misleading. The
statute expressly exempts from tax property used by such important
nonprofit service industries as nursing homes and child care
centers. See Me. Rev. Stat. Ann., Tit. 36, § 652(1)(A)(1) (Supp.
1996). Nonprofit participation in these sectors is substantial.
Nationally, nonprofit nursing homes had estimated revenues of $18
billion in 1994. U. S. Bureau of the Census, Service Annual Survey:
1994 (1996) (Table 7.3). These entities compete with a sizeable
for-profit nursing home sector, which had revenues of approximately
$40 billion in 1994.
Id., at Table 7.1. Similarly, the $5
billion nonprofit market in child day care services competes with
an $11 billion for-profit industry.
Id., at Tables 8.1, 8.3
(1994 data).
Nonprofit hospitals and health maintenance organizations also
receive an exemption from Maine's property tax. See Me. Rev. Stat.
Ann., Tit.
587
From the State's standpoint it may well be reasonable to use tax
exemptions as a means of encouraging nonprofit institutions to
favor local citizens, notwithstanding any possible adverse impact
on the larger markets in which those in-
36, §§ 652(1)(A), (K) (Supp. 1996). While operating as nonprofit
entities, their activities are serious business. In
Maine
Medical Center v.
Lucci, 317 A. 2d 1 (1974), the Supreme
Judicial Court presumed that a "large hospital" employing 2,000
people qualified as a "benevolent and charitable institution" for
purposes of the § 652(1)(A) exemption, and held that a newly
constructed $3.3 million parking facility-which patients, visitors,
and staff were charged a fee to use-was also exempt from the tax.
Though the garage was being operated at an immediate loss,
"projected estimates of income and expense indicated a possible
recovery of the capital investment over a period of twenty years."
Id., at 2. Nonprofit hospitals had national revenues of
roughly $305 billion in 1994, considerably more than the $34
billion in revenues collected by hospitals operated on a for-profit
basis. U. S. Bureau of the Census, Service Annual Survey: 1994
(1996) (Tables 7.1, 7.3).
Maine law further permits qualifying nonprofits to rent out
their property on a commercial basis at market rates in order to
support other activities, so long as that use of the property is
only incidental to their own purposes. See
Maine Medical
Center, 317 A. 2d, at 2 (citing with approval
Curtis v.
Androscoggin Lodge, No. 24,
Independent Order of Odd
Fellows, 99 Me. 356, 360, 59 A. 518, 520 (1904));
State
Young Men's Christian Assn. v.
Winthrop, 295 A. 2d 440,
442 (Me. 1972). Although Maine's tax exemption statute was amended
in 1953 to specify that the property need not be occupied by the
charity to qualify for the exemption, but may also be "used solely"
for its own purposes, see
ibid., this extension did not
alter the "well defined rul[e] of exemption" permitting "occasional
or purely incidental" renting.
Green Acre Baha'i Institute,
150 Me., at 354, 110 A. 2d, at 584; see also
Alpha Rho Zeta of
Lambda Chi Alpha, Inc. v.
Waterville, 477 A. 2d 1131,
1141 (Me. 1984). But cf.
Nature Conservancy of the Pine Tree
State, Inc. v.
Bristol, 385 A. 2d 39,43 (Me. 1978)
(holding that requirement that property be used "solely" for
institution's own purposes prohibits tax exemption where grantor of
property to charity maintains private rights of use). Maine's
statute expressly contemplates that entities receiving the benefit
of the tax exemption may well earn profits, though of course these
must be plowed back into the enterprise or otherwise appropriately
used. See Me. Rev. Stat. Ann., Tit. 36, §
652(1)(C)(3)
(Supp. 1996).
588
stitutions participate. Indeed, if we view the issue solely from
the State's perspective, it is equally reasonable to use
discriminatory tax exemptions as a means of encouraging the growth
of local trade. But as our cases clearly hold, such exemptions are
impermissible. See,
e. g., Bacchus Imports,
Ltd. v.
Dias, 468 U. S. 263, 273
(1984). Protectionism, whether targeted at for-profit entities or
serving, as here, to encourage nonprofits to keep their efforts
close to home, is forbidden under the dormant Commerce Clause.19 If
there is need for a special exception for nonprofits, Congress not
only has the power to create it,20 but also is in a far better
position than we to determine its dimensions.21
VI
Rather than urging us to create a categorical exception for
nonprofit entities, the Town argues that Maine's exemption statute
should be viewed as an expenditure of government money designed to
lessen its social service burden and to foster the societal
benefits provided by charitable organizations. So characterized,
the Town submits that its tax exemption scheme is either a
legitimate discriminatory subsidy
19 Contrary to JUSTICE SCALIA'S suggestion, nothing in our
holding today "prevent[s] a State from giving a tax break to
charities that benefit the State's inhabitants."
Post, at
595. The States are, of course, free to provide generally
applicable nondiscriminatory tax exemptions without running afoul
of the dormant Commerce Clause.
20 See n. 8,
supra.
21 We must admit to some puzzlement as to the force of the
argument underlying JUSTICE SCALIA'S dissent. On the one hand, he
suggests that a categorical exemption of nonprofit activities from
dormant Commerce Clause scrutiny would be proper.
Post, at
607-608. Yet at the same time, he makes a great effort to
characterize
this statute as being so narrow that, whatever
the appropriate generally applicable rule, the dormant Commerce
Clause ought not to apply here.
Post, at 598. As we have
explained, the argument in favor of a
categorical exemption
for nonprofits is unpersuasive, and we disagree with JUSTICE
SCALIA'S characterization of this statute's effects. Accordingly,
we reject his position on either of these theories.
589
of only those charities that choose to focus their activities on
local concerns, or alternatively a governmental "purchase" of
charitable services falling within the narrow exception to the
dormant Commerce Clause for States in their role as "market
participants," see,
e. g., Hughes v.
Alexandria Scrap
Corp., 426 U. S.
794 (1976);
Reeves, Inc. v.
Stake, 447 U. S. 429 (1980). We
find these arguments unpersuasive. Although tax exemptions and
subsidies serve similar ends, they differ in important and relevant
respects, and our cases have recognized these distinctions. As for
the "market participant" argument, we have already rejected the
Town's position in a prior case, and in any event respondents'
openended exemption for charitable and benevolent institutions is
not analogous to the industry-specific state actions that we
reviewed in
Alexandria Scrap and
Reeves.
The Town argues that its discriminatory tax exemption is, in
economic reality, no different from a discriminatory subsidy of
those charities that cater principally to local needs. Noting our
statement in
West Lynn Creamery that "[a] pure subsidy
funded out of general revenue ordinarily imposes no burden on
interstate commerce, but merely assists local business," 512 U. S.,
at 199, the Town submits that since a discriminatory subsidy may be
permissible, a discriminatory exemption must be, too. We have
"never squarely confronted the constitutionality of subsidies,"
id., at 199, n. 15, and we need not address these questions
today. Assuming,
arguendo, that the Town is correct that a
direct subsidy benefiting only those nonprofits serving principally
Maine residents would be permissible, our cases do not sanction a
tax exemption serving similar ends.22
22 As the Supreme Judicial Court made clear, 655 A. 2d, at 878,
under Maine law an exemption is categorized as a "tax expenditure."
Me. Rev. Stat. Ann., Tit. 36, § 196 (1990). The Town's effort to
argue that this state statutory categorization allows it to elide
the federal constitutional distinction between tax exemptions and
subsidies is unavailing. We recognized long ago that a tax
exemption can be viewed as a form of government
590
In
Walz v.
Tax Comm'n of City of New York,
397 U. S. 664
(1970), notwithstanding our assumption that a direct subsidy of
religious activity would be invalid,23 we held that New York's tax
exemption for church property did not violate the Establishment
Clause of the First Amendment.24 That holding rested, in part, on
the premise that there is a constitutionally significant difference
between subsidies and tax exemptions.25 We have expressly
recognized that this distinction is also applicable to claims that
certain state action designed to give residents an advantage in the
marketplace is prohibited by the Commerce Clause.
In
New Energy Co. of Ind. v.
Limbach, 486 U. S. 269 (1988), we
found unconstitutional under the Commerce Clause an Ohio tax scheme
that provided a sales tax credit for ethanol produced in State, or
manufactured in another State to the extent that State gave similar
tax advantages to ethanol produced in Ohio. We recognized that the
party challenging the Ohio scheme was "eligible to receive a cash
subsidy"
spending. See
Regan v.
Taxation with Representation of
Wash., 461 U. S.
540, 544 (1983). The distinction we have drawn for dormant
Commerce Clause purposes does not turn on this point.
23We noted: "Obviously a direct money subsidy would be a
relationship pregnant with involvement and, as with most
governmental grant programs, could encompass sustained and detailed
administrative relationships for enforcement of statutory or
administrative standards, but that is not this case."
Walz,
397 U. S., at 675.
24 We reasoned that "New York's statute [cannot be read] as
attempting to establish religion; it ... simply spar[es] the
exercise of religion from the burden of property taxation levied on
private profit institutions."
Id., at 673.
25 "The grant of a tax exemption is not sponsorship since the
government does not transfer part of its revenue to churches but
simply abstains from demanding that the church support the state.
No one has ever suggested that tax exemption has converted
libraries, art galleries, or hospitals into arms of the state or
put employees 'on the public payroll.'''
Id., at 675. As
Justice Brennan noted: "Tax exemptions and general subsidies ...
are qualitatively different."
Id., at 690 (concurring
opinion).
591
from its home State, and was therefore "the potential
beneficiary of a scheme no less discriminatory than the one that it
attacks, and no less effective in conferring a commercial advantage
over out-of-state competitors."
Id., at 278. That was of no
importance. We noted: "The Commerce Clause does not prohibit all
state action designed to give its residents an advantage in the
marketplace, but only action of that description
in connection
with the State's regulation of interstate commerce. Direct
subsidization of domestic industry does not ordinarily run afoul of
that prohibition; discriminatory taxation ... does."
Ibid.
(emphasis in original). See also
West Lynn, 512 U. S., at
210 (SCALIA, J., concurring in judgment) (drawing similar
distinction between forbidden generally applicable tax with
discriminatory "exemption" and permissible "subsidy ... funded from
the State's general revenues"). This distinction is supported by
scholarly commentary as well as precedent, and we see no reason to
depart from it. See Enrich, Saving the States from Themselves:
Commerce Clause Constraints on State Tax Incentives for Business,
110 Harv. L. Rev. 377, 442-443 (1996); Hellerstein & Coenen,
Commerce Clause Restraints on State Business Development
Incentives, 81 Cornell L. Rev. 789, 846-848 (1996).26 The Town's
claim that its discriminatory tax scheme should be viewed as a
permissible subsidy is therefore unpersuasive.27
26 The distinction provides a sufficient response to the Town's
argument that our ruling today would invalidate a State's
subsidization of all or part of its residents' tuition at
state-owned universities.
27 JUSTICE SCALIA,
post, at 605-606, and n. 4, would
distinguish this line of authority by holding that it should not
apply where a State is giving tax relief to charitable enterprises.
As explained in Part V,
supra, we see no categorical reason
to treat for-profit and nonprofit entities differently under the
dormant Commerce Clause. JUSTICE SCALIA'S heavy reliance upon
Board of Ed. of Ky. Annual Conference of Methodist Episcopal
Church v.
Illinois, 203 U. S. 553 (1906), is
misplaced. In that case, a bequest to a Kentucky charitable
corporation did not qualify for an exemp-
592
Finally, the Town argues that its discriminatory tax exemption
scheme falls within the "market-participant" exception. As we
explained in
New Energy Co.: "That doctrine differentiates
between a State's acting in its distinctive governmental capacity,
and a State's acting in the more general capacity of a market
participant; only the former is subject to the limitations of the
negative Commerce Clause." 486 U. S., at 277. See
White v.
Massachusetts Council of Constr. Employers, Inc., 460 U. S. 204, 208
(1983);
Reeves, Inc. v.
Stake, 447 U. S., at 436-437;
Hughes v.
Alexandria Scrap Corp., 426 U. S., at
810.
In
Alexandria Scrap we concluded that the State of
Maryland had, in effect, entered the market for abandoned
automobile hulks as a purchaser because it was using state funds to
provide bounties for their removal from Maryland streets and
junkyards.
Id., at 809-810. In
Reeves, the State of
South Dakota similarly participated in the market for cement as a
seller of the output of the cement plant that it had owned and
operated for many years. 447 U. S., at 431-432. And in
White, the city of Boston had participated in the
construction industry by funding certain projects. 460 U. S., at
205-206. These three cases stand for the proposition that, for
purposes of analysis under the dormant Commerce Clause, a State
acting in its proprietary capacity as a pur-
tion from the Illinois inheritance tax because the corporate
legatee was not incorporated in Illinois. In this case, the
petitioner is a Maine corporation, and the validity of the portion
of the Maine statute that denies the exemption to out-of-state
corporations is not at issue. Moreover, unlike the situation in
Board of Ed. of Ky., in which none of the charitable
activities of the legatee were performed in Illinois, all of the
benefits of attending petitioner's camp in Maine are "bestowed
within her borders."
Id., at 563. While the dictum that
JUSTICE SCALIA quotes,
post, at 606, is consistent with his
analysis, it does not purport to address the applicability of the
dormant Commerce Clause to charities in general, to resident
charities, or to nonresident charities that provide benefits for
both residents and nonresidents.
593
chaser or seller may "favor its own citizens over others."
Alexandria Scrap, 426 U. S., at 810.
Maine's tax exemption statute cannot be characterized as a
proprietary activity falling within the market-participant
exception. In
New Energy Co., Ohio argued similarly that a
discriminatory tax credit program fell within the exception. We
noted that the tax program had "the purpose and effect of
subsidizing a particular industry, as do many dispositions of the
tax laws." 486 U. S., at 277. "That," we explained, "does not
transform it into a form of state participation in the free
market."
Ibid. "The Ohio action ultimately at issue is
neither its purchase nor its sale of ethanol, but its assessment
and computation of taxes-a primeval governmental activity."
Ibid. As we indicated in
White: "[I]n this kind of
case there is 'a single inquiry: whether the challenged "program
constituted direct state participation in the market." ", 460 U.
S., at 208 (quoting
Reeves, 447 U. S., at 436, n. 7). A tax
exemption is not the sort of direct state involvement in the market
that falls within the marketparticipation doctrine.
Even if we were prepared to expand the exception in the manner
suggested by the Town, the Maine tax statute at issue here would be
a poor candidate. Like the tax exemption upheld in
Walz-which applied to libraries, art galleries, and
hospitals as well as churches 28-the exemption that has been denied
to petitioner is available to a broad category of charitable and
benevolent institutions.29 For that reason, nothing short of a
dramatic expansion of the "market-
28 See
Walz, 397 U. S., at 666-667, and n. 1.
29 See Me. Rev. Stat. Ann., Tit. 36, § 652(1)(A) (Supp. 1996)
("For the purposes of this paragraph, 'benevolent and charitable
institutions'
include, but are not limited to, nonprofit
nursing homes and nonprofit boarding homes and boarding care
facilities ... , nonprofit community mental health service
facilities ... [,] and nonprofit child care centers") (emphasis
added).
594
participant" exception would support its application to this
case.
Alexandria Scrap involved Maryland's entry into the
market for automobile hulks, a discrete activity focused on a
single industry. Similarly, South Dakota's participation in the
market for cement was-in part because of its narrow scope-readily
conceived as a proprietary action of the State. In contrast,
Maine's tax exemption-which sweeps to cover broad swathes of the
nonprofit sector-must be viewed as action taken in the State's
sovereign capacity rather than a proprietary decision to make an
entry into all of the markets in which the exempted charities
function. See
White, 460 U. S., at 211, n. 7 (noting that
"there are some limits on a state or local government's ability to
impose restrictions that reach beyond the immediate parties with
which the government transacts business"). The Town's version of
the "market-participant" exception would swallow the rule against
discriminatory tax schemes. Contrary to the Town's submission, the
notion that whenever a State provides a discriminatory tax
abatement it is "purchasing" some service in its proprietary
capacity is not readily confined to the charitable context. A
special tax concession for liquors indigenous to Hawaii, for
example, might be conceived as a "purchase" of the jobs produced by
local industry, or an investment in the unique local cultural value
provided by these beverages. Cf.
Bacchus, 468 U. S., at
270-271. Discriminatory schemes favoring local farmers might be
seen as the "purchase" of agricultural services in order to ensure
that the State's citizens will have a steady local supply of the
product. Cf.
West Lynn, 512 U. S., at 190 (striking down
statute protecting in-state milk producers designed to "preserve
... local industry," "thereby ensur[ing] a continuous and adequate
supply of fresh milk for our market" (internal quotation marks
omitted)). Our cases provide no support for the Town's radical
effort to expand the marketparticipant doctrine.
595
VII
As was true in
Bacchus Imports, Ltd. v.
Dias, the
facts of this particular case, viewed in isolation, do not appear
to pose any threat to the health of the national economy.
Nevertheless, history, including the history of commercial conflict
that preceded the Constitutional Convention as well as the uniform
course of Commerce Clause jurisprudence animated and enlightened by
that early history, provides the context in which each individual
controversy must be judged. The history of our Commerce Clause
jurisprudence has shown that even the smallest scale discrimination
can interfere with the project of our Federal Union. As Justice
Cardozo recognized, to countenance discrimination of the sort that
Maine's statute represents would invite significant inroads on our
"national solidarity":
"The Constitution was framed under the dominion of a political
philosophy less parochial in range. It was framed upon the theory
that the peoples of the several states must sink or swim together,
and that in the long run prosperity and salvation are in union and
not division." Baldwin v. G. A. F. Seelig, Inc.,
294 U. S. 511,
523 (1935).
The judgment of the Maine Supreme Judicial Court is
reversed.
It is so ordered.
JUSTICE SCALIA, with whom THE CHIEF JUSTICE, JUSTICE THOMAS, and
JUSTICE GINSBURG join, dissenting.
The Court's negative Commerce Clause jurisprudence has drifted
far from its moorings. Originally designed to create a national
market for commercial activity, it is today invoked to prevent a
State from giving a tax break to charities that benefit the State's
inhabitants. In my view, Maine's tax exemption, which excuses from
taxation only that property
596
SCALIA, J., dissenting
used to relieve the State of its burden of caring for its
residents, survives even our most demanding Commerce Clause
scrutiny.
I
We have often said that the purpose of our negative Commerce
Clause jurisprudence is to create a national market. As Justice
Jackson once observed, the "vision of the Founders" was "that every
farmer and every craftsman shall be encouraged to produce by the
certainty that he will have free access to every market in the
Nation, that no home embargoes will withhold his exports, and no
foreign state will by customs duties or regulations exclude them."
H. P. Hood &
Sons, Inc. v.
Du Mond,
336 U. S. 525,
539 (1949). In our zeal to advance this policy, however, we must
take care not to overstep our mandate, for the Commerce Clause was
not intended "to cut the States off from legislating on all
subjects relating to the health, life, and safety of their
citizens, though the legislation might indirectly affect the
commerce of the country."
Huron Portland Cement Co.
Our cases have struggled (to put it nicely) to develop a set of
rules by which we may preserve a national market without needlessly
intruding upon the States' police powers, each exercise of which no
doubt has some effect on the commerce of the Nation. See
Oklahoma Tax Comm'n v.
Jefferson Lines, Inc.,
514 U. S. 175,
180-183 (1995). The rules that we currently use can be simply
stated, if not simply applied:
Where a state law facially discriminates against interstate
commerce, we observe what has sometimes been referred to as a
"virtually
per se rule of invalidity;" where, on the other
hand, a state law is nondiscriminatory, but nonetheless adversely
affects interstate commerce, we employ a deferential "balancing
test," under which the law will be sustained unless "the burden
imposed on [interstate] commerce is clearly excessive in relation
to the putative local benefits,"
Pike v.
Bruce Church,
Inc., 397 U. S.
137, 142 (1970). See
Oregon
597
Waste Systems, Inc. v. Department of Environmental Quality of
Ore.,
511 U. S.
93, 99 (1994).
While the "virtually
per se rule of invalidity" entails
application of the "strictest scrutiny,"
Hughes v.
Oklahoma, 441
U. S. 322, 337 (1979), it does not necessarily result in the
invalidation of facially discriminatory state legislation, see,
e. g., Maine v.
Taylor, 477 U. S. 131 (1986)
(upholding absolute ban on the importation of baitfish into Maine),
for "what may appear to be a 'discriminatory' provision in the
constitutionally prohibited sense-that is, a protectionist
enactment-may on closer analysis not be so,"
New Energy Co. of
Ind. v.
Limbach, 486 U. S. 269, 278
(1988). Thus, even a statute that erects an absolute barrier to the
movement of goods across state lines will be upheld if "the
discrimination is demonstrably justified by a valid factor
unrelated to economic protectionism,"
id., at 274, or to put
a finer point on it, if the state law "advances a legitimate local
purpose that cannot be adequately served by reasonable
nondiscriminatory alternatives,"
id., at 278.
In addition to laws that employ suspect means as a necessary
expedient to the advancement of legitimate state ends, we have also
preserved from judicial invalidation laws that confer advantages
upon the State's residents but do so without
regulating
interstate commerce. We have therefore excepted the State from
scrutiny when it participates in markets rather than regulates
them-by selling cement, for example, see
Reeves, Inc. v.
Stake, 447 U.
S. 429 (1980), or purchasing auto hulks, see
Hughes v.
Alexandria Scrap Corp., 426 U. S. 794 (1976), or
hiring contractors, see
White v.
Massachusetts Council of
Constr. Employers, Inc., 460 U. S. 204 (1983). Likewise, we
have said that direct subsidies to domestic industry do not run
afoul of the Commerce Clause. See
New Energy Co., supra, at
278. In sum, we have declared that "[t]he Commerce Clause does not
prohibit all state action designed to give its residents an
advantage in the marketplace, but only action of that description
in con-
598
SCALIA, J., dissenting
nection with the State's regulation of interstate commerce."
Ibid. (emphasis in original).
II
In applying the foregoing principles to the case before us, it
is of course important to understand the precise scope of the
exemption created by Me. Rev. Stat. Ann., Tit. 36, § 652(1)(A)
(Supp. 1996-1997). The Court's analysis suffers from the
misapprehension that § 652(1)(A) "sweeps to cover broad swathes of
the nonprofit sector,"
ante, at 594, including nonprofit
corporations engaged in quintessentially commercial activities.
That is not so. A review of Maine law demonstrates that the
provision at issue here is a narrow tax exemption, designed merely
to compensate or subsidize those organizations that contribute to
the public fisc by dispensing public benefits the State might
otherwise provide.
Although Maine allows nonprofit corporations to be organized
"for any lawful purpose," Me. Rev. Stat. Ann., Tit. 13-B, §201
(1981 and Supp. 1996-1997), the exemption supplied by § 652(1)(A)
does not extend to all nonprofit organizations, but only to those
"benevolent and charitable institutions," § 652(1)(A), which are
"organized and conducted
exclusively for benevolent and
charitable purposes," § 652(1)(C)(1) (emphasis added), and only to
those parcels of real property and items of personal property that
are used "solely," § 652(1)(A), "to further the organization's
charitable purposes,"
Poland v.
Poland Springs Health
Institute, Inc., 649 A. 2d 1098, 1100 (Me. 1994). The Maine
Supreme Judicial Court has defined the statutory term "benevolent
and charitable institutions" to include only those nonprofits that
dispense "charity," which is in turn defined to include only those
acts which are
"'for the benefit of an indefinite number of persons, either by
bringing their minds or hearts under the influence of education or
religion, by relieving their bodies from disease, suffering, or
constraint, by assisting them
599
to establish themselves in life, or by erecting or maintaining
public buildings or works or otherwise lessening the burdens of
government.'" Lewiston v. Marcotte Congregate Housing,
Inc., 673 A. 2d 209, 211 (1996) (emphasis added).
Moreover, the Maine Supreme Judicial Court has further limited
the § 652(1)(A) exemption by insisting that the party claiming its
benefit "bring its claim unmistakably within the spirit and intent
of the act creating the exemption,"
ibid. (internal
quotation marks omitted), and by proclaiming that the spirit and
intent of § 652(1)(A) is to compensate charitable organizations for
their contribution to the public fisc. As the court has
explained:
"'[A]ny institution which by its charitable activities relieves
the government of part of [its] burden is conferring a pecuniary
benefit upon the body politic, and in receiving exemption from
taxation it is merely being given a "quid pro quo" for its
services in providing something which otherwise the government
would have to provide.'" Episcopal Camp Foundation, Inc. v.
Hope, 666 A. 2d 108, 110 (1995) (quoting Young Men's
Christian Assn. of Germantown v. Philadelphia, 323 Pa.
401, 413, 187 A. 204, 210 (1936)).
Thus, § 652(1)(A) exemptions have been denied to organizations
that do not provide substantial public benefits, as defined by
reference to the state public policy. In one case, for example, an
organization devoted to maintaining a wildlife sanctuary was denied
exemption on the ground that the preserve's prohibition on deer
hunting conflicted with state policy on game management, so that
the preserve could not be deemed to provide a public benefit. See
Holbrook Island Sanctuary v.
Brooksville, 214 A. 2d
660 (Me. 1965). Even churches have been denied exemptions, see
Pentecostal Assembly of Bangor v.
Maidlow, 414 A. 2d
891, 893-894
600
SCALIA, J., dissenting
(Me. 1980) ("religious purposes are not to be equated with
benevolent and charitable purposes").
The Maine Supreme Judicial Court has adhered rigorously to the
requirement that the exempt property be used "solely" for
charitable purposes. Even when there is no question that the
organization owning the property is devoted exclusively to
charitable purposes, the entire exemption will be forfeited if even
a small fraction of the property is not used in furtherance of
those purposes. See
Lewiston, supra, at 212-213 (denying
exemption to a building 18 percent of which was leased at market
rates);
Nature Conservancy of Pine Tree State, Inc. v.
Bristol, 385 A. 2d 39, 43 (1978) (denying exemption to a
nature preserve on which the grantors had reserved
rights-of-way).
That § 652(1)(A) serves to compensate private charities for
helping to relieve the State of its burden of caring for its
residents should not be obscured by the fact that this particular
case involves a summer camp rather than a more traditional form of
social service. The statute that the Court strikes down does not
speak of "camps" at all, but rather lists as examples of
"benevolent and charitable institutions" nonprofit nursing homes,
boarding homes, community mental health service facilities, and
child care centers, see § 652(1)(A).
Some summer camps fall
within the exemption under a 1933 decision of the Supreme Judicial
Court which applied it to a
tuitionjree camp for
indigent children, see
Camp Emoh Associates v.
Inhabitants of Lyman, 166 A. 59, 60, and under a recent
4-to-3 decision which relied heavily on the fact that the camp at
issue provided "moral instruction" and training in "social living
and civic responsibility," and was not only "nonprofit" but
furnished its camping services
below cost, see
Episcopal
Camp Foundation, supra, at 109, 111. What is at issue in this
case is not whether a summer camp can properly be regarded as
relieving the State of social costs, but rather whether,
assuming it can, a distinction between charities serving
mainly residents and
601
charities operated principally for the benefit of nonresidents
is constitutional.1
III
I turn next to the validity of this focused tax
exemptionapplicable only to property used solely for charitable
purposes by organizations devoted exclusively to charity-under the
negative Commerce Clause principles discussed earlier. The Court
readily concludes that, by limiting the class of eligible property
to that which is used "principally for the benefit of persons who
are Maine residents," the statute "facially discriminates" against
interstate commerce. That seems to me not necessarily true.
Disparate treatment constitutes discrimination only if the objects
of the disparate treatment are, for the relevant purposes,
similarly situated. See
General Motors Corp. v.
Tracy, 519 U.
S. 278, 298-299
1 The Court protests that "there is no
'de minimis'
defense to a charge of discriminatory taxation under the Commerce
Clause,"
ante, at 581, n. 15-as though that were the point
of our emphasizing in this Part II the narrowness of the challenged
limitation. It is not. Rather, the point is (1) that Maine's
limitation focuses upon a particular state interest that is
deserving of exemption from negative Commerce Clause invalidation,
and (2) that acknowledging the principle of such an exemption (as
developed in Part III below) will not place the "national market"
in any peril. What the Court should have gleaned from our
discussion, it did not: It persists in misdescribing the exemption
we defend as "a categorical exemption of nonprofit activities from
dormant Commerce Clause scrutiny."
Ante, at 588, n. 21; see
also
ante, at 591-592, n. 27.
The Court also makes an attempt to contest on the merits the
narrowness of the exemption, suggesting a massive effect upon
interstate commerce by reciting the multi-billion-dollar annual
revenues of nonprofit nursing homes, child care centers, hospitals,
and health maintenance organizations. See
ante, at 586-587,
n. 18. But of course most of the services provided by those
institutions are provided locally, to local beneficiaries. (In that
regard the summer camp that is the subject of the present suit is
most atypical.) The record does not show the number of nonprofit
nursing homes, child care centers, hospitals, and HMO's in Maine
that have been denied the charitable exemption because their
property is not used "principally for the benefit of persons who
are Maine residents"; but it would be a good bet that the number is
zero.
602
SCALIA, J., dissenting
(1997). And for purposes of entitlement to a tax subsidy from
the State, it is certainly reasonable to think that property
gratuitously devoted to relieving the State of some of its welfare
burden is not similarly situated to property used "principally for
the benefit of persons who are not residents of [the State]," §
652(1)(A). As we have seen, the theory underlying the exemption is
that it is a
quid pro quo for uncompensated expenditures
that lessen the State's burden of providing assistance to its
residents.
The Court seeks to establish "facial discrimination" by showing
that the effect of treating disparate property disparately is to
produce higher costs for those users of the property who come from
out of State. But that could be regarded as an
indirect
effect upon interstate commerce produced by a tax scheme that is
not facially discriminatory, which means that the proper
mode of analysis would be the more lenient "balancing" standard
discussed above. We follow precisely this mode of analysis in
Tracy, upholding an Ohio law that provides preferential tax
treatment to domestic public utilities. Such entities, we conclude,
are not "similarly situated" to other fuel distributors; their
insulation from out-of-state competition does not violate the
negative Commerce Clause because it "serves important interests in
health and safety." 519 U. S., at 306. The Court in
Tracy
paints a compelling image of people shivering in their homes in the
dead of winter without the assured service that
competition-sheltered public utilities provide. See
id., at
301-302,306. No less important, however, is the availability of
many of the benefits provided by Maine's private charities and
facilitated not by total insulation from competition but by
favorable tax treatment: care for the sick and dying, for example,
or nursing services for the elderly.
Even if, however, the Maine statute displays "facial
discrimination" against interstate commerce, that is not the end of
the analysis. The most remarkable thing about today's judgment is
that it is rendered without inquiry into whether the purposes of
the tax exemption
justify its favoritism.
603
Once having concluded that the statute is facially
discriminatory, the Court rests. "[T]he Town," it asserts, "has
made no effort to defend the statute under the
per se rule."
Ante, at 582. This seems to me a pointless technicality. The
town of Harrison (Town) has asserted that the State's interest in
encouraging private entities to shoulder part of its socialwelfare
burden validates this provision under the negative Commerce Clause.
Whether it does so because the presence of that interest causes the
resident-benefiting charities not to be "similarly situated" to the
non-resident-benefiting charities, and hence
negates "facial
discrimination," or rather because the presence of that interest
justifies "facial discrimination," is a question that is not
only of no consequence but is also probably unanswerable. To strike
down this statute because the Town's lawyers put the argument in
one form rather than the other is truly senseless.2
If the Court were to proceed with that further analysis it would
have to conclude, in my view, that this is one of those cases in
which the "virtually
per se rule of invalidity" does not
apply. Facially discriminatory or not, the exemption is no more an
artifice of economic protectionism than any state law which
dispenses public assistance only to the State's residents.3 Our
cases have always recognized the legitimacy of
2 I do not understand the Court's contention,
ante, at
582, and n. 16, that
Fulton Corp. v.
Faulkner,
516 U. S. 325
(1996), provides precedent for such a course. In
Fulton, the
arguments left unaddressed had not been made in another form, but
had not been made
at all. There (unlike here) the State
conceded facial discrimination, and relied exclusively on
the compensatory tax defense, see
id., at 333, which the
Court found had not been made out, see
id., at 344. That
narrow defense could not possibly have been regarded as an
invocation of broader policy justifications such as those asserted
here.
3 In a footnote responding to this dissent, the Court does
briefly address whether the statute fails the "virtually
per
se rule of invalidity." It concludes that it does fail because
"Maine has ample alternatives short of a facially discriminatory
property tax exemption," such as offering direct cash subsidies to
parents of resident children or to camps that serve residents.
Ante, at 582, n. 16. These are
nonregulatory
alternatives (and hence immune from negative Commerce Clause
attack), but they are not
604
SCALIA, J., dissenting
limiting state-provided welfare benefits to bona fide residents.
As JUSTICE STEVENS once wrote for a unanimous Court: "Neither the
overnight visitor, the unfriendly agent of a hostile power, the
resident diplomat, nor the illegal entrant, can advance even a
colorable claim to a share in the bounty that a conscientious
sovereign makes available to its own citizens."
Mathews v.
Diaz, 426 U. S.
67, 80 (1976). States have restricted public assistance to
their own bona fide residents since colonial times, see, M. Ierley,
With Charity For All, Welfare and Society, Ancient Times to the
Present 41 (1984), and such self-interested behavior (or, put more
benignly, application of the principle that charity begins at home)
is inherent in the very structure of our federal system, cf.
Edgar v.
MITE Corp., 457 U. S. 624, 644 (1982)
("[T]he State has no legitimate interest in protecting
nonresident[s]"). We have therefore upheld against equal protection
challenge continuing residency requirements for municipal
employment, see
McCarthy v.
Philadelphia Civil Servo
Comm'n, 424 U. S.
645 (1976)
(per curiam), and bona fide
nondiscriminatory alternatives, which is what the
exception to the "virtually
per se rule of invalidity"
requires. See
Oregon Waste Systems, Inc. V.
Department of
Environmental Quality of Ore., 511 U. S. 93, 101 (1994)
(quoting
New Energy Co. of Ind. V.
Limbach, 486 U. S. 269, 278
(1988)). Surely, for example, our decision in
Maine V.
Taylor, 477 U.
S. 131 (1986), which upheld Maine's regulatory ban on the
importation of baitfish, would not have come out the other way if
it had been shown that a state
subsidy of sales of in-state
baitfish could have achieved the same goal-by making the
out-of-state fish noncompetitive and thereby excluding them from
the market even more effectively than a difficult-to-police ban on
importation. Where regulatory discrimination against out-of-state
interests is appropriate, the negative Commerce Clause is not
designed to push a State into nonregulatory discrimination instead.
It permits state regulatory action disfavoring out-of-staters where
disfavoring them is indispensable to the achievement of an
important and nonprotectionist state objective. As applied to the
present case: It is obviously impossible for a State to distribute
social welfare benefits only to its residents without
discriminating against nonresidents.
605
residency requirements for free primary and secondary schooling,
see
Martinez v.
Bynum, 461 U. S. 321 (1983).
If the negative Commerce Clause requires the invalidation of a
law such as § 652(1)(A), as a logical matter it also requires
invalidation of the laws involved in those cases. After all, the
Court today relies not on any discrimination against out-of-state
nonprofits, but on the supposed discrimination against nonresident
would-be
recipients of charity (the nonprofits'
"customers"); surely those individuals are similarly discriminated
against in the direct distribution of state benefits. The problem,
of course, is not limited to municipal employment and free public
schooling, but extends also to libraries, orphanages, homeless
shelters, and refuges for battered women. One could hardly explain
the constitutionality of a State's limiting its provision of these
to its own residents on the theory that the State is a "market
participant." These are traditional governmental functions, far
removed from commercial activity and utterly unconnected to any
genuine private market.
If, however, a State that provides social services directly
may limit its largesse to its own residents, I see no reason
why a State that chooses to provide some of its social services
indirectly-by compensating or subsidizing private charitable
providers-cannot be similarly restrictive.4 In fact, we have
already approved it. In
Board of Ed. of Ky. Annual Conference of
Methodist Episcopal Church v.
Illinois, 203 U. S. 553 (1906), we
upheld a state law providing an in-
4 It is true, of course, that the legitimacy of a State's
subsidizing domestic commercial enterprises out of general funds
does not establish the legitimacy of a State's giving domestic
commercial enterprises preferential tax treatment. See
West Lynn
Creamery, Inc. v.
Healy, 512 U. S. 186, 210-212
(1994) (SCALIA, J., concurring in judgment). But there is no valid
comparison between, on the one hand, the State's giving tax relief
to an enterprise devoted to the making of profit and, on the other
hand, the State's giving tax relief to an enterprise which, for the
purpose at hand, has the same objective as the State itself (the
expenditure of funds for social welfare).
606
SCALIA, J., dissenting
heritance tax exemption to in-state charities but denying a
similar exemption to out-of-state charities. We recognized that
such exemptions are nothing but compensation to private
organizations for their assistance in alleviating the State's
burden of caring for its less fortunate residents, see
id.,
at 561. "[I]t cannot be said," we wrote, "that if a State exempts
property bequeathed for charitable or educational purposes from
taxation it is unreasonable or arbitrary to require the charity to
be exercised or the education to be bestowed within her borders and
for her people,"
id., at 563.5
It is true that the opinion in
Board of Ed. of Ky.
addressed only the Equal Protection and Privileges and Immunities
Clauses of the Fourteenth Amendment, and not the Commerce Clause. A
Commerce Clause argument was unquestionably raised by the plaintiff
in error, however, in both brief, see Brief for Plaintiff in Error,
D. T. 1906, No. 103, pp. 30-38, and oral argument, see 203 U. S.,
at 555 (argument of counsel), and the Court could not have reached
the disposition it did without rejecting it. "[T]he Court
implicitly rejected [the] argumen[t] ... by refusing to address
[it]."
Clemons v.
Mississippi, 494 U. S. 738, 747-748,
n. 3 (1990). The Commerce Clause objection went undiscussed, I
think, because it was (as it is here) utterly contrived: The
State's
5 The Court attempts to distinguish
Board of Ed. of Ky.
on the ground that the statute upheld in that case treated
charities differently based on whether they were incorporated
within the State, rather than on whether they dispensed charity
within the State, see
ante, at 591-592, n. 27. That is quite
impossible, inasmuch as we have
held that out-of-state
incorporation is
not a constitutional basis for
discriminating between charities. And in the case that announced
that holding (invalidating the denial of a property tax exemption
to a nonprofit corporation incorporated in another State), we
distinguished
Board of Ed. of Ky. on the ground that the
statute at issue there withheld the exemption "by reason of the
foreign corporation's failure or inability to benefit the State in
the same measure as do domestic nonprofit corporations."
WHYY,
Inc. v.
Glassboro, 393 U. S. 117, 120 (1968)
(per curiam). The Court's analysis contradicts both the
holding of this case and its reading of
Board of Ed. of
Ky.-which is obviously the correct one.
607
legislated distinction between charity "bestowed within her
borders and for her people" and charity bestowed elsewhere or for
others did not implicate commerce at all, except to the indirect
and permissible extent that innumerable state laws do.
Finally, even if Maine's property tax exemption for local
charities constituted facial discrimination against out-ofstate
commerce, and even if its policy justification (unrelated to
economic protectionism) were insufficient to survive our "virtually
per se rule of invalidity," cf.
Maine v.
Taylor, 477 U.
S. 131 (1986), there would remain the question whether we
should not recognize an additional exception to the negative
Commerce Clause, as we have in
Tracy. As that case explains,
just as a public health justification unrelated to economic
protectionism may justify an overt discrimination against goods
moving in interstate commerce, "so may health and safety
considerations be weighed in the process of deciding the threshold
question whether the conditions entailing application of the
dormant Commerce Clause are present." 519 U. S., at 307. Today's
opinion goes to great length to reject the Town's contention that
Maine's property tax exemption does not fall squarely within either
the "market participant" or "subsidy" exceptions to the negative
Commerce Clause, but never stops to ask whether those exceptions
are the only ones that may apply. As we explicitly acknowledge in
Tracy-which effectively creates what might be called a
"public utilities" exception to the negative Commerce Clause-the
"subsidy" and "market participant" exceptions do not exhaust the
realm of state actions that we should abstain from scrutinizing
under the Commerce Clause. In my view, the provision by a State of
free public schooling, public assistance, and other forms of social
welfare to only (or principally) its own residents-whether it be
accomplished directly or by providing tax exemptions, cash, or
other property to private organizations that perform the work for
the State-implicates none of the concerns underlying our
608
SCALIA, J., dissenting
negative Commerce Clause jurisprudence. That is, I think,
self-evidently true, despite the Court's effort to label the
recipients of the State's philanthropy as "customers," or
"clientele," see,
e. g., ante, at 576. Because § 652(1)(A)
clearly serves these purposes and has nothing to do with economic
protectionism, I believe that it is beyond scrutiny under the
negative Commerce Clause.
***
As I have discussed, there are various routes by which the Court
could validate the statute at issue here: on the ground that it
does not constitute "facial discrimination" against interstate
commerce and readily survives the
Pike v.
Bruce
Church balancing test; on the ground that it does constitute
"facial discrimination" but is supported by such traditional and
important state interests that it survives scrutiny under the
"virtually
per se rule of invalidity"; or on the ground that
there is a "domestic charity" exception (just as there is a "public
utility" exception) to the negative Commerce Clause. Whichever
route is selected, it seems to me that the
quid pro quo
exemption at issue here is such a reasonable exercise of the
State's taxing power that it is not prohibited by the Commerce
Clause in the absence of congressional action. We held as much in
Board of Ed. of Ky. and should not overrule that
decision.
The State of Maine may have special need for a
charitable-exemption limitation of the sort at issue here: Its
lands and lakes are attractive to various charities of more densely
populated Eastern States, which would (if the limitation did not
exist) compel the taxpayers of Maine to subsidize their generosity.
But the principle involved in our disapproval of Maine's exemption
limitation has broad application elsewhere. A State will be unable,
for example, to exempt private schools that serve its citizens from
state and local real estate taxes unless it exempts as well private
schools attended predominantly or entirely by students from
609
out of State. A State that provides a tax exemption for real
property used exclusively for the purpose of feeding the poor must
provide an exemption for the facilities of an organization devoted
exclusively to feeding the poor in another country. These results
may well be in accord with the parable of the Good Samaritan, but
they have nothing to do with the Commerce Clause.
I respectfully dissent.
JUSTICE THOMAS, with whom JUSTICE SCALIA joins, and with whom
THE CHIEF JUSTICE joins as to Part I, dissenting.
The tax at issue here is a tax on real estate, the
quintessential asset that does not move in interstate commerce.
Maine exempts from its otherwise generally applicable property tax,
and thereby subsidizes, certain charitable organizations that
provide the bulk of their charity to Maine's own residents. By
invalidating Maine's tax assessment on the real property of
charitable organizations primarily serving non-Maine residents,
because of the tax's alleged
indirect effect on interstate
commerce, the majority has essentially created a "dormant"
Necessary and Proper Clause to supplement the "dormant" Commerce
Clause. This move works a significant, unwarranted, and, in my
view, improvident expansion in our "dormant," or "negative,"
Commerce Clause jurisprudence.1 For that reason, I join JUSTICE
SCALIA'S dissenting opinion.
1 Although the terms "dormant" and "negative" have often been
used interchangeably to describe our jurisprudence in this area, I
believe "negative" is the more appropriate term. See
Oklahoma
Tax Comm'n v.
Jefferson Lines, Inc., 514 U. S. 175, 200 (1995)
(SCALIA, J., joined by THOMAS, J., concurring in judgment) ("[T]he
'negative Commerce Clause' ... is 'negative' not only because it
negates state regulation of commerce, but also because it does
not appear in the Constitution"). There is, quite frankly,
nothing "dormant" about our jurisprudence in this area. See Eule,
Laying the Dormant Commerce Clause to Rest, 91 Yale L. J. 425, 425,
n. 1 (1982).
610
THOMAS, J., dissenting
I write separately, however, because I believe that the improper
expansion undertaken today is possible only because our negative
Commerce Clause jurisprudence, developed primarily to invalidate
discriminatory state taxation of interstate commerce, was already
both overbroad and unnecessary. It was overbroad because, unmoored
from any constitutional text, it brought within the supervisory
authority of the federal courts state action far afield from the
discriminatory taxes it was primarily designed to check. It was
unnecessary because the Constitution would seem to provide an
express check on the States' power to levy certain
discriminatory taxes on the commerce of other States-not in the
judicially created negative Commerce Clause, but in the Art. I, §
10, Import-Export Clause, our decision in
Woodruff v.
Parham, 8 Wall. 123 (1869), notwithstanding. That the
expansion effected by today's decision finds some support in the
morass of our negative Commerce Clause case law only serves to
highlight the need to abandon that failed jurisprudence and to
consider restoring the original ImportExport Clause check on
discriminatory state taxation to what appears to be its proper
role. As I explain in Part III, the tax (and tax exemption) at
issue in this case seems easily to survive Import-Export Clause
scrutiny; I would therefore, in all likelihood, sustain Maine's tax
under that Clause as well, were we to apply it instead of the
judicially created negative Commerce Clause.
I
The negative Commerce Clause has no basis in the text of the
Constitution, makes little sense, and has proved virtually
unworkable in application. See,
e. g., Tyler Pipe Industries,
Inc. v.
Washington State Dept. of Revenue, 483 U. S. 232, 259-265
(1987) (SCALIA, J., dissenting);
Bendix Autolite Corp. v.
Midwesco Enterprises, Inc., 486 U. S. 888, 895-898
(1988) (SCALIA, J., concurring in judgment). In one fashion
611
or another, every Member of the current Court 2 and a goodly
number of our predecessors 3 have at least recognized these
problems, if not been troubled by them.4 Because the
2 See,
e. g., C &
A Carbone, Inc. v.
Clarkstown, 511 U. S. 383, 401 (1994)
(O'CONNOR, J., concurring in judgment) ("The scope of the dormant
Commerce Clause is a judicial creation");
Quill Corp. v.
North Dakota, 504 U. S. 298, 309 (1992) (STEVENS, J.,
writing for a unanimous Court) (recognizing that the Commerce
Clause "says nothing about the protection of interstate commerce in
the absence of any action by Congress");
Wyoming v.
Oklahoma, 502
U. S. 437, 461-462 (1992) (SCALIA, J., joined by REHNQUIST, C.
J., and THOMAS, J., dissenting) (describing the "negative Commerce
Clause" as "nontextual");
Kassel v.
Consolidated
Freightways Corp. of Del., 450 U. S. 662, 706 (1981)
(REHNQUIST, J., dissenting) ("[T]he jurisprudence of the 'negative
side' of the Commerce Clause remains hopelessly confused"); cf.
U. S.
Term Limits, Inc. v.
Thornton, 514 U. S. 779,797, n. 12
(1995) (STEVENS, J., joined by KENNEDY, SOUTER, GINSBURG, and
BREYER, JJ.) ("[T]he Constitution is clearly silent on the subject
of state legislation that discriminates against interstate
commerce").
3 See,
e. g., Wardair Canada Inc. v.
Florida Dept. of
Revenue, 477 U. S.
1, 17 (1986) (Burger, C. J., concurring in part and concurring
in judgment) (referring to "the cloudy waters of this Court's
'dormant Commerce Clause' doctrine");
Philadelphia v.
New
Jersey, 437 U. S.
617, 623 (1978) (Stewart, J.) ("The bounds of [the restraints
imposed by the Commerce Clause itself, in the absence of federal
legislation], appear nowhere in the words of the Commerce Clause");
Northwestern States Portland Cement Co. v.
Minnesota,
358 U. S. 450,
457, 458 (1959) (Clark, J.) (referring to our negative Commerce
Clause jurisprudence as a "tangled underbrush" and a "quagmire"
(internal quotation marks omitted));
H. P. Hood &
Sons, Inc. v.
Du Mond, 336 U. S. 525, 534-535
(1949) (Jackson, J.) (describing the negative Commerce Clause as
filling in one of the "great silences of the Constitution");
McCarroll v.
Dixie Greyhound Lines, Inc., 309 U. S. 176, 189 (1940)
(Black, J., joined by Frankfurter and Douglas, JJ., dissenting)
(criticizing the negative Commerce Clause as arising out of
"[s]pasmodic and unrelated instances of litigation [that] cannot
afford an adequate basis for the creation of integrated national
rules" that "Congress alone" is positioned to develop).
4 Scholarly commentary, too, has been critical of our negative
Commerce Clause jurisprudence. See D. Currie, The Constitution in
the Supreme Court: The First Hundred Years 1789-1888, p. 234 (1985)
(describing the negative Commerce Clause as "arbitrary, conclusory,
and irreconcilable with the constitutional text"); see also,
e. g., L. Tribe, American Constitu-
612
THOMAS, J., dissenting
expansion effected by today's holding further undermines the
delicate balance in what we have termed "Our Federalism,"
Younger v.
Harris, 401 U. S. 37, 44 (1971), I
think it worth revisiting the underlying justifications for our
involvement in the negative aspects of the Commerce Clause, and the
compelling arguments demonstrating why those justifications are
illusory.
To cover its exercise of judicial power in an area for which
there is no textual basis, the Court has historically offered two
different theories in support of its negative Commerce Clause
jurisprudence. The first theory posited was that the Commerce
Clause itself constituted an
exclusive grant of power to
Congress. See,
e. g., Passenger Cases, 7 How. 283, 393-400
(1849).5 The "exclusivity" rationale was likely wrong from the
outset, however. See,
e. g., The Federalist No. 32,
p. 154 (M. Beloff ed. 1987) (A. Hamilton) ("[N]otwithstanding the
affirmative grants of general authorities, there has been the most
pointed care in those cases where it was deemed improper that the
like authorities should reside in the states, to insert negative
clauses prohibiting the exercise
tional Law 439 (2d ed. 1988) ("The Supreme Court's approach to
commerce clause issues ... often appears to turn more on
ad
hoc reactions to particular cases than on any consistent
application of coherent principles"); Redish & Nugent, "The
Dormant Commerce Clause and the Constitutional Balance of
Federalism," 1987 Duke L. J. 569, 573 ("[N]ot only is there no
textual basis [for it], the dormant Commerce Clause actually
contradicts, and therefore directly undermines, the Constitution's
carefully established textual structure for allocating power
between federal and state sovereigns"); B. Gavit, The Commerce
Clause of the United States Constitution 22 (1932) (noting that the
Court has set "no conscious standard" but has rather, "in an
imperial way," decided whether each particular state action
presented to it "was or was not an invalid regulation of interstate
commerce").
5 See also
Mayor of New York v.
Miln, 11 Pet. 102,
157-159 (1837) (Story, J., dissenting);
Groves v.
Slaughter, 15 Pet. 449, 504, 506-508 (1841) (McLean, J.,
concurring);
Cooley v.
Board of Wardens of Port of
Philadelphia ex rel. Soc. for Relief of Distressed Pilots, 12
How. 299 (1852) (adopting a partial-exclusivity rationale for
dormant Commerce Clause cases).
613
of them by the states").6 It was seriously questioned even in
early cases. See
License Cases, 5 How. 504, 583, 615, 618,
624 (1847) (four, and arguably five, of the seven participating
Justices contending that the Commerce Clause was not exclusive).
And, in any event, the Court has long since "repudiated" the notion
that the Commerce Clause operates as an exclusive grant of power to
Congress, and thereby forecloses state action respecting interstate
commerce.
Freeman v.
Hewit, 329 U. S. 249, 259, 262
(1946) (Rutledge, J., concurring); see also,
e. g.,
Southern Pacific Co. v.
Arizona ex rel. Sullivan,
325 U. S. 761,
766-767 (1945) ("Ever since
Willson v.
Black-Bird Creek
Marsh Co., 2 Pet. 245, and
Cooley v.
Board of
Wardens, 12 How. 299, it has been recognized that, in the
absence of conflicting legislation by Congress, there is a residuum
of power in the state to make laws governing matters of local
concern which nevertheless in some measure affect interstate
commerce or even, to some extent, regulate it");
James v.
Watt, 716 F.2d
71, 73 (CA1 1983) (Breyer, J.) (noting that "the strong
Madison/Marshall 'preemptive' view of the Interstate Commerce
Clause is no longer the law of the land"), cert. denied, 467 U. S.
1209 (1984).7
6 See also F. Frankfurter, The Commerce Clause Under Marshall,
Taney and Waite 13 (1937) ("The conception that the mere grant of
the commerce power to Congress dislodged state power finds no
expression" in the records of the Philadelphia Convention nor the
discussions preceding ratification);
id., at 17-19 (noting
that Chief Justice Marshall's discussion of the "exclusiveness"
doctrine in
Gibbons v.
Ogden, 9 Wheat. 1, 197-209
(1824), "was logically irrelevant to [his] holding," and adding:
"It was an audacious doctrine, which, one may be sure, would hardly
have been publicly avowed in support of the adoption of the
Constitution. Indeed,
The Federalist in effect denied it, by
assuring that only express prohibitions in the Constitution limited
the taxing power of the states" (citing The Federalist No.
32)).
7The majority's assertion that James Madison viewed what we have
termed the "negative" aspect of the Commerce Clause as more
significant than its positive aspects, see
ante, at 571, n.
7, is based on a letter written by Madison more than 40 years after
the Convention, see 3 The Records of the Federal Convention of
1787, p. 478 (M. Farrand ed. 1911) (hereinafter Farrand)
(reprinting letter from James Madison to J. C. Cabell, Feb. 13,
614
THOMAS, J., dissenting
Indeed, the Court's early view that the Commerce Clause, on its
own, prohibited state impediments to interstate commerce such that
"Congress cannot re-grant, or in any manner reconvey to the states
that power,"
Cooley v.
Board of Wardens of Port of
Philadelphia ex rel. Soc. for Relief of Distressed Pilots, 12
How. 299, 318 (1852), quickly proved untenable. Compare
Pennsylvania v.
Wheeling &
Belmont Bridge
Co., 13 How. 518 (1852) (holding that construction of the
Wheeling Bridge impeded commerce in violation of the Commerce
Clause), with
Pennsylvania v.
Wheeling &
Belmont Bridge Co., 18 How. 421, 426 (1856) (upholding
Federal Act that declared the Wheeling Bridge to be "[a] lawful
structur[e]"); see also
Transportation Co. v.
Parkersburg, 107 U. S. 691, 701 (1883)
("It is Congress, and not the Judicial Department, to which the
Constitution has given the power to regulate commerce").8 And, as
this Court's definition of the scope of congressional authority
under the positive Commerce Clause has expanded, the exclusivity
rationale has moved from untenable to absurd.
The second theory offered to justify creation of a negative
Commerce Clause is that Congress, by its silence, pre-empts state
legislation. See
Robbins v.
Shelby County Taxing
Dist., 120 U. S.
489, 493 (1887) (asserting that congressional
1829). The majority's interpretation of the letter is
anachronistic. There is nothing in the letter to suggest that
Madison had in mind the "negative" Commerce Clause we have created
which supposedly operates of its own force to allow
courts
to invalidate state laws that affect commerce. Rather, Madison's
reference to the Clause as granting a "power" strongly suggests
that he was merely asserting that the Convention designed the
Clause more to enable "the General Government," namely,
Congress, to
negate state laws impeding commerce
"rather than as a power to be used for the positive purposes of the
General Government."
Ibid.
8 See also
ante, at 572 ("Congress unquestionably has the
power to repudiate or substantially modify thEe] course of [our
negative Commerce Clause] adjudication");
Southern Pacific
Co. v.
Arizona ex rel. Sullivan, 325 U. S. 761, 769 (1945)
(Congress has "undoubted" power to "permit the states to regulate
the commerce in a manner which would otherwise not be
permissible").
615
silence evidences congressional intent that there be no state
regulation of commerce). In other words, we presumed that
congressional "inaction" was "equivalent to a declaration that
inter-State commerce shall be free and untrammelled."
Welton
v.
Missouri, 91
U. S. 275, 282 (1876). To the extent that the
"pre-emption-by-silence" rationale ever made sense, it, too, has
long since been rejected by this Court in virtually every analogous
area of the law.
For example, ever since the watershed case of
Erie R. Co.
v.
Tompkins, 304 U. S. 64 (1938), this
Court has rejected the notion that it can create a federal common
law to fill in great silences left by Congress, and thereby
pre-empt state law. We have recognized that "a federal court could
not generally apply a federal rule of decision, despite the
existence of jurisdiction, in the absence of an applicable Act of
Congress."
Milwaukee v.
Illinois, 451 U. S. 304, 313
(1981).9
The limited areas in which we have created federal common law
typically involve either uniquely federal issues or the rights and
responsibilities of the United States or its agents. See
Texas
Industries, Inc. v.
Radcliff Materials, Inc., 451 U. S. 630, 641
(1981). But where a federal rule is not essential, or where state
law already operates within a particular field, we have applied
state law rather than opting to create federal common law. See
United States v.
Kimbell Foods, Inc., 440 U. S. 715, 730 (1979)
(rejecting "generalized
9 See also
Atherton v.
FDIC, 519 U. S. 213, 218 (1997)
(rejecting the "judicial 'creation' of a special federal rule of
decision" and noting that "'[w]hether latent federal power should
be exercised to displace state law is primarily a decision for
Congress,' not the federal courts" (citation omitted));
O'Melveny &
Myers v.
FDIC, 512 U. S. 79, 83 (1994)
(rejecting, as "so plainly wrong," the contention that federal
common law governs application of state causes of action brought by
the Federal Deposit Insurance Corporation as receiver for a
federally insured savings and loan);
Milwaukee, 451
U. S., at 313, n. 7,314 ("Federal common law is a 'necessary'
expedient" resorted to only when the Court is "compelled to
consider federal questions 'which cannot be answered from federal
statutes alone'" (citations omitted)).
616
THOMAS, J., dissenting
pleas for uniformity" as a basis for creating federal common
law); see also
Atherton v.
FDIC, 519 U. S. 213, 225-226
(1997) (same).
Similarly, even where Congress
has legislated in an area
subject to its authority, our pre-emption jurisprudence explicitly
rejects the notion that mere congressional silence on a particular
issue may be read as pre-empting state law:
"As is always the case in our pre-emption jurisprudence, where
'federal law is said to bar state action in fields of traditional
state regulation, ... we have worked on the "assumption that the
historic police powers of the States were not to be superseded by
the Federal Act unless that was the clear and manifest purpose of
Congress."'" California Div. of Labor Standards Enforcement
v. Dillingham Constr. N. A., Inc., 519 U. S. 316, 325 (1997)
(citations omitted).
See also Jones v. Rath Packing Co.,
430 U. S. 519 (1977)
(same); Rice v. Santa Fe Elevator Corp.,
331 U. S. 218 (1947)
(same).
To be sure, we have overcome our reluctance to pre-empt state
law in two types of situations: (1) where a state law directly
conflicts with a federal law; and (2) where Congress, through
extensive legislation, can be said to have pre-empted the field.
See
Gade v.
National Solid Wastes Management Assn.,
505 U. S. 88, 98
(1992). But those two forms of preemption provide little aid to
defenders of the negative Commerce Clause. Conflict pre-emption
only applies when there is a direct clash between an Act of
Congress and a state statute, but the very premise of the negative
Commerce Clause is the
absence of congressional action.
Field pre-emption likewise is of little use in areas where
Congress has failed to enter the field, and certainly does not
support the general proposition of "pre-emption-by-silence" that is
used to provide a veneer of legitimacy to our negative Commerce
Clause forays. Furthermore, field pre-emption
617
is itself suspect, at least as applied in the absence of a
congressional command that a particular field be pre-empted.
Perhaps recognizing this problem, our recent cases have frequently
rejected field pre-emption in the absence of statutory language
expressly requiring it. See,
e. g., O'Melveny &
Myers v.
FDIC, 512 U. S. 79, 85 (1994)
("Nor would we adopt a court-made rule to supplement federal
statutory regulation that is comprehensive and detailed; matters
left unaddressed in such a scheme are presumably left subject to
the disposition provided by state law"). Even when an express
pre-emption provision has been enacted by Congress, we have
narrowly defined the area to be pre-empted. See,
e. g.,
Dillingham, supra, at 324-325;
Cipollone v.
Liggett
Group, Inc., 505
U. S. 504, 517 (1992).
In the analogous context of statutory construction, we have
similarly refused to rely on congressional
inaction to alter
the proper construction of a pre-existing statute. See
Central
Bank of Denver, N.
A. v.
First Interstate Bank of
Denver, N.
A., 511 U. S. 164, 180-185
(1994). And, even more troubling, the "pre-emption-by-silence"
rationale virtually amounts to legislation by default, in apparent
violation of the constitutional requirements of bicameralism and
presentment. Cf.
INS v.
Chadha, 462 U. S. 919, 951-959
(1983). Thus, even were we wrongly to assume that congressional
silence evidenced a desire to pre-empt some undefined category of
state laws, and an intent to delegate such policyladen
categorization to the courts, treating unenacted congressional
intent as if it were law would be constitutionally dubious.
In sum, neither of the Court's proffered theoretical
justifications-exclusivity or pre-emption-by-silence-currently
supports our negative Commerce Clause jurisprudence, if either ever
did. Despite the collapse of its theoretical foundation, I suspect
we have nonetheless adhered to the negative Commerce Clause because
we believed it necessary to check state measures contrary to the
perceived
spirit, if not
618
THOMAS, J., dissenting
the actual letter, of the Constitution. Thus, in one of our
early uses of the negative Commerce Clause, we invalidated a state
tax on the privilege of selling goods "which are not the growth,
produce, or manufacture of the State."
Welton v.
Missouri, 91 U. S., at 278. And in
Cook v.
Pennsylvania, 97 U. S. 566 (1878), we
struck down a state tax on out-ofstate goods sold at auction. See
also,
e. g., 1.
M. Darnell & Son
Co. v.
Memphis, 208 U. S. 113 (1908);
Voight v.
Wright, 141 U. S. 62 (1891);
Walling v.
Michigan, 116 U. S. 446 (1886);
Webber v.
Virginia, 103 U. S. 344 (1881). To
this day, we find discriminatory state taxes on out-of-state goods
to be "virtually
per se invalid" under our negative Commerce
Clause. See,
e. g., West Lynn Creamery, Inc. v.
Healy, 512 U.
S. 186 (1994);
Associated Industries of Mo. v.
Lohman, 511 U.
S. 641 (1994);
New Energy Co. of Ind. v.
Limbach,
486 U. S. 269 (1988);
Maryland v.
Louisiana,
451 U. S. 725
(1981). Though each of these cases reached what intuitively seemed
to be a desirable result-and in some cases arguably was the
constitutionally
correct result, as I describe below-the
negative Commerce Clause rationale upon which they rested remains
unsettling because of that rationale's lack of a textual basis.
Moreover, our negative Commerce Clause jurisprudence has taken
us well beyond the invalidation of obviously discriminatory taxes
on interstate commerce. We have used the Clause to make
policy-laden judgments that we are ill equipped and arguably
unauthorized to make. See
Moorman Mfg. Co. v.
Bair,
437 U. S. 267,
278-280 (1978) (recognizing that establishing a formula for
apportioning taxes on multistate corporations would require
"extensive judicial lawmaking" for which the courts are ill
suited). In so doing, we have developed multifactor tests in order
to assess the perceived "effect" any particular state tax or
regulation has on interstate commerce. See
Complete Auto
Transit, Inc. v.
Brady, 430 U. S. 274 (1977); see
also
Quill Corp. v.
North
619
Dakota, 504
U. S. 298 (1992). And in an unabashedly legislative manner, we
have balanced that "effect" against the perceived interests of the
taxing or regulating State, as the very description of our "general
rule" indicates:
"Where the statute regulates even-handedly to effectuate a
legitimate local public interest, and its effects on interstate
commerce are only incidental, it will be upheld unless the burden
imposed on such commerce is clearly excessive in relation to the
putative local benefits. Huron [Portland] Cement Co. v.
Detroit, 362
U. S. 440, 443 [(1960)]. If a legitimate local purpose is
found, then the question becomes one of degree. And the extent of
the burden that will be tolerated will of course depend on the
nature of the local interest involved, and on whether it could be
promoted as well with a lesser impact on interstate activities."
Pike v. Bruce Church, Inc., 397 U. S. 137, 142
(1970).
Any test that requires us to assess (1) whether a particular
statute serves a "legitimate" local public interest; (2) whether
the effects of the statute on interstate commerce are merely
"incidental" or "clearly excessive in relation to the putative
benefits"; (3) the "nature" of the local interest; and (4) whether
there are alternative means of furthering the local interest that
have a "lesser impact" on interstate commerce, and even then makes
the question "one of degree," surely invites us, if not compels us,
to function more as legislators than as judges. See
Bendix
Autolite Corp. v.
Midwesco Enterprises, Inc., 486 U. S.,
at 897-898 (SCALIA, J., concurring in judgment) (urging abandonment
of the
Pike balancing test so as to "leave essentially
legislative judgments to the Congress").
Moreover, our open-ended balancing tests in this area have
allowed us to reach different results based merely "on differing
assessments of the force of competing analogies."
Okla-
620
THOMAS, J., dissenting
homa Tax Comm'n v.
Jefferson Lines, Inc., 514 U. S. 175, 196, n. 7
(1995). The examples are almost too numerous to count, but there is
perhaps none that more clearly makes the point than a comparison of
our decisions in
Philadelphia v.
New Jersey, 437 U. S. 617 (1978), and
its progeny, on the one hand, and
Bowman v.
Chicago
&
Northwestern R. Co., 125 U. S. 465 (1888), and
its progeny, on the other. In
Bowman, we recognized that
States can prohibit the importation of "cattle or meat or other
provisions that are diseased or decayed, or otherwise, from their
condition and quality, unfit for human use or consumption,"
id., at 489, a view to which we have adhered for more than a
century, see,
e. g., Maine v.
Taylor, 477 U. S. 131 (1986);
Asbell v.
Kansas, 209 U. S. 251 (1908). In
Philadelphia, however, we held that New Jersey could not
prohibit the importation of "solid or liquid waste which originated
or was collected outside the territoriallimits of the State." 437
U. S., at 618 (internal quotation marks omitted). The cases were
arguably distinguishable, but only on policy grounds and not on any
distinction derived from the text of the Constitution itself.
Similarly, we have in some cases rejected attempts by a State to
limit use of the State's own natural resources to that State's
residents. See,
e. g., Hughes v.
Oklahoma, 441 U. S. 322, 338
(1979). But in other cases, we have upheld just such preferential
access. See,
e. g., Sporhase v.
Nebraska ex rel.
Douglas, 458 U.
S. 941, 955-957 (1982); cf.
Baldwin v.
Fish and Game
Comm'n of Mont., 436 U. S. 371 (1978).
Again, the distinctions turned on often subtle policy judgments,
not the text of the Constitution.
In my view, none of this policy-laden decisionmaking is proper.
Rather, the Court should confine itself to interpreting the text of
the Constitution, which itself seems to prohibit in plain terms
certain of the more egregious state taxes on interstate commerce
described above, see
supra, at 618, and leaves to Congress
the policy choices necessary for any further regulation of
interstate commerce.
621
II
Article I, § 10, cl. 2, of the Constitution provides that "[n]o
State shall, without the Consent of the Congress, lay any Imposts
or Duties on Imports or Exports .... " To the 20th-century reader,
the Clause appears only to prohibit States from levying certain
kinds of taxes on goods imported from or exported to
foreign
nations. But a strong argument can be made that for the
Constitution's Framers and ratifiers-representatives of States
which still viewed themselves as semi-independent sovereigns-the
terms "imports" and "exports" encompassed not just trade with
foreign nations, but trade with
other States as well.
The late Professor William Crosskey, in a persuasive treatment
of this subject nearly a half century ago, unearthed numerous
founding-era examples in which the word "import" referred to goods
produced in other States. See The True Meaning of the Imports and
Exports Clause: Herein of "Interstate Trade Barriers," in 1787, 1
Politics and the Constitution in the History of the United States
295-323 (1953). Crosskey recounts, for example, that merchants
frequently published advertisements in the local newspapers
announcing recent shipments of such "imported" goods as
"Philadelphia Flour," "Carolina Rice," and "Connecticut Beef."
Id., at 298.10 Similarly, the word "export" was used to
refer to
10 See also Gazette of the State of Georgia, Oct. 11, 1787, p.
3, col. 3 ("Just imported ... Superfine Philadelphia flour");
Newport [R. L] Mercury, June 12, 1784, p. 4, col. 2 ("Just imported
... Burlington [New Jersey] and Carolina, Pork, in Barrels");
ibid. ("Just imported ... best Philadelphia Flour"); South
Carolina Weekly Gazette, Sept. 13, 1783, p. 3, col. 2 ("Just
imported, In the Sloop Rosana, ... from Rhode-Island, ... Potatoes,
Apples, Onions by the bunch and bushel, Beats, Carrots, and good
warranted Cheese"); Columbian Herald [Charleston, S.
C.],
Nov. 26,1787, p. 4, col. 4 ("Just imported, From Philadelphia, ...
Dr. Martin's Celebrated Medicine for Cancers, Ulcers, Wens,
Scurvies, Tetters, Ringworms, &c."); Newport Mercury, July 31,
1786, p. 2, col. 2 (complaining that "last year upwards of 700,000
bushels of corn were imported into [South Carolina] from North
Carolina and Virginia"); Columbian Herald, Feb. 14, 1785, p. 2,
622
THOMAS, J., dissenting
goods shipped both to other States and abroad. One writer, for
example, urged his fellow Connecticut citizens to manufacture
stockings in sufficient quantity not only for the supply of
Connecticut "but for
exportation to other States" as well.
Letter from "A. C.," Massachusetts Centinel, Sept. 5, 1787, p. 1,
col. 1, reprinted from New Haven Gazette (emphasis added). Another
argued that Connecticut could enrich itself "[b]y making and
refining
Cyder for
exportation with which we might
supply the
Southern States, as well as the large provinces
of Quebec and Nova-Scotia." Connecticut Farmer, New-Haven Gazette,
Oct. 6, 1785, p. 2, col. 3 (second and third emphases added).
More significantly, the early statute books are replete with
examples of these commonplace 18th-century understandings of the
terms "import" and "export." The Virginia cheeseduty Act of October
1786, for example, provided for a duty of "three pence a pound on
all cheese ...
imported into this commonwealth." 12 Hening,
Virginia Statutes at Large, ch. 29, § 2, p. 289 (emphasis added).
As complaints published in New England newspapers indicate, that
duty was imposed on cheese produced by the New England States. See
Salem [Mass.] Mercury, Mar. 3, 1787, p. 2, col. 2. Moreover, the
duty was but one of many imposed by Virginia, which had for some
time, it seems, "imposed like duties upon the importation of
New-England rum, Lynn [Mass.] Shoes, Cheese, Cordage, and a variety
of other articles manufactured in the Eastern States." Independent
Chronicle [Boston], Apr. 19, 1787, p. 3, col. 2; see 11 Hening,
Virginia Statutes at Large, ch. 8, §8, pp. 121-122 (Oct. 1782)
(imposing a tonnage duty "on all vessels ... from or to foreign
parts, or from or to any of the United States," and an impost duty
on goods "imported or brought into this commonwealth ... from any
port or place whatsoever").
col. 4 (complaint about legislation pending in Georgia-later
adoptedtaxing "all goods imported into the back part of that state
from South Carolina").
623
Maryland, for its part, taxed certain "articles exported out of"
the State, including flour shipped to New England. 1784 Md. Laws,
ch. 84, § 1; see also Letter from "A Citizen," Norwich [Conn.]
Packet, Jan. 17, 1788, p. 1, col. 1 ("The NewEngland States have
imported, for four years past, from the State of Maryland, upwards
of twenty five thousand barrels of flour annually-on which they
have been obliged to pay a duty for the liberty of exportation").
And, when it provided for the inspection of salted foods "exported
and imported from and to the town of Baltimore," Maryland expressly
included salted foods "brought or imported into the said town, from
any part of this state, or anyone of the United States, or from any
foreign port whatever." 1786 Md. Laws, ch. 17, §5.
In similar fashion, Connecticut adopted an excise tax that
distinguished between "imported Chocolate," taxed at three pence
per pound, and "Chocolate made within this State," taxed at one
penny per pound. 1783 Conn. Acts and Laws 619. And in May 1784,
Connecticut adopted an import duty that expressly applied to
certain enumerated articles "imported or brought into this State,
by Land or Water, from any of the United States of America." 1784
Conn. Acts and Laws 271.11
11 Some commentators have argued that the phrase "imported or
brought" suggests that Connecticut lawmakers intended to
distinguish between foreign goods "imported" and other States'
goods "brought" into the State. This supposed distinction between
"imported" and "brought" is not consistent with the remainder of
the statute, however. For example, the second paragraph of the Act
uses the phrase "brought or imported into this State" when
referring exclusively to items "that are not the Growth, Produce,
or Manufacture of the United States." 1784 Conn. Acts and Laws 271.
And conversely, "imported" is used alone in contexts where it
plainly covers goods produced in other States. See,
e.
g., id., at 309 (setting duty for sugar, "whether the
Produce or Manufacture of the United States, or not, imported into
this State"); cf. 1786 Md. Laws, ch. 17, § 6 (setting standards for
"all beef and pork barrels brought to, or imported into,
Baltimore-town, from any part of this state"). The more plausible
view, therefore, is that the words "brought" and "imported" are
624
THOMAS, J., dissenting
In fact, when state legislators of the founding generation
intended to limit the term "imports" only to goods of foreign
origin, they were quite adept at so indicating. See
id., at
269 (provision regarding merchants "who shall import annually into
[New London or New Haven] from Europe, Asia or Africa, Goods, Wares
and Merchandise, the Growth, Produce or Manufacture of said
Countries");
id., at 270 (setting duties for "Goods imported
into this State from any Foreign Port, Island or Plantation not
within any of The United States"); 2 New York Laws, ch. 7, p. 12
(1886) (Act of Nov. 18, 1784, setting duties for certain "articles
imported from Europe"). Thus, based on this common 18th-century
usage of the words "import" and "export," and the lack of any
textual indication that the Clause was intended to apply
exclusively to foreign goods, it seems likely that those who
drafted the Constitution sought, through the Import-Export Clause,
to prohibit States from levying duties and imposts on goods
imported from, or exported to, other States as well as foreign
nations, and that those who ratified the Constitution would have so
understood the Clause.
Our Civil War era decision in
Woodruffv. Parham, 8 Wall.
123 (1869), of course, held that the Import-Export Clause applied
only to foreign trade. None of the parties to these proceedings
have challenged that holding, but given that the common
18th-century understanding of the words used in the Clause extended
to interstate as well as foreign trade, it is
largely redundant and, to the extent they refer to different
activities, the distinction in the phrase is not between foreign
goods "imported" into Connecticut, on the one hand, and other
States' goods "brought" into Connecticut, on the other, but between
goods of both kinds-domestic and foreign-commercially "imported" in
quantity and those "brought" in limited quantities by individuals
in their own baggage. Compare 1784 Conn. Acts and Laws, at 272
(using the phrase "imported or brought" when referring both to a
ship's cargo and to the "Baggage of Passengers"), with
id.,
at 273 (using only the word "imported" when referring solely to the
ship's cargo).
625
worth assessing the
Woodruff Court's reasoning with an
eye toward reconsidering that decision in an appropriate case.
The
Woodruff Court began with a textual argument,
contending that the power to levy "imposts" given to Congress in
Art. I, § 8, cl. 1, applied only to foreign imports. Such a limited
reading of the word "imposts" in that Clause was necessary, the
Court claimed, because any other reading would be nonsensical:
Goods "imported" by one State from another State, explained the
Court, would be an "export" of the State where the goods were
produced or grown, and the supposed power given to Congress in Art.
I, § 8, to levy an "impost" on such "imports" would be prohibited
by the Art. I, § 9, provision that "[n]o Tax or Duty shall be laid
on Articles exported from any State." This apparent tension between
§ 8 and § 9 led the Court to believe that the word "imposts" in § 8
must be read as applying only to foreign imports in order to avoid
a partial negation of the Art. I, § 8, power. The Court then
extrapolated from this reading that the word "impost" in Art. I, §
10, similarly had the same limited application to foreign imports.
As we have already seen, however, see
supra, at 621-623, the
word "import" derived its meaning from the jurisdiction into which
goods were imported; consequently, it does not necessarily follow
that the imports on which Congress was given the power to lay
"imposts" in Art. I, § 8, were identical to the imports and exports
on which the several States were prohibited from levying "Imposts
or Duties" by Art. I, § 10.12
The
Woodruff Court bolstered its textual argument with
two further arguments, neither of which appear still to be
12 Even assuming that the word "impost" in the two Clauses
applied to the same class of "imports," there is nothing
nonsensical in reading "impost" in Art. I, § 8, as applicable to
interstate as well as foreign trade. It is frequently the case that
a broad grant of power in one Clause is restricted by another
Clause. Moreover, a State could also import goods from a federal
territory, and the congressional power to lay an impost on such
(nonforeign) trade would not run afoul of the Art. I, § 9,
prohibition.
626
THOMAS, J., dissenting
valid, if ever they were: First, that in the history of the
Constitution's formation and adoption, "the words imports and
imposts were used with
exclusive reference to articles
imported from foreign countries,"
id., at 133 (emphasis
added), and second, the policy concern that goods imported from
other States would be forever exempt from tax if the Clause were
read to apply to interstate imports.
As to the first nontextual argument, the
Woodruff Court
was selective in its use of history, to say the least. It first
asserted that, in Articles VI and IX of the Articles of
Confederation, the words "imports, exports, and imposts are used
with exclusive reference to foreign trade, because [those articles]
have regard only to the treaty-making power of the federation."
Id., at 134. Even if the
Woodruff Court's assertion
was accurate as to Articles VI and IX, which is doubtful,13 Article
IV cannot be so read. That Article expressly permitted "duties" and
"impositions" to be levied on property removed from one State to
another, as long
13 Article VI, § 3, merely provided that "[n]o State shall lay
any imposts or duties, which may interfere with any stipulations in
treaties, entered into by the United States in Congress assembled."
1 Stat. 5. And Article IX provided: "The United States, in Congress
assembled, shall have the sole and exclusive right and power of ...
entering into treaties and alliances, provided that no treaty of
commerce shall be made, whereby the legislative power of the
respective States shall be restrained from imposing such imposts
and duties on foreigners, as their own people are subjected to, or
from prohibiting the exportation or importation of any species of
goods or commodities whatsoever .... " 1 Stat. 6. As should be
evident, neither Article requires a reading of "impost" as
applicable exclusively to foreign imports. The better reading is
that when the States levied imposts in their individual capacities,
they could not interfere with treaties enacted by the States in
their collective capacity. In fact, the two provisions, read
together, suggest the existence of much broader classes of
"imposts," "imports," and "exports," and that only the
subclass of imposts interfering with foreign trade might be
prohibited. The absence of this very qualifier in the later enacted
Import-Export Clause creates a negative inference that the
unqualified constitutional language covered more than did the
limited prohibition in the Articles of Confederation.
627
as the property was not owned by "the United States, or either
of them." 14
The
Woodruff Court next turned to the use of the words
"duty" and "import" in the Continental Congress. The Court noted
that the Continental Congress recommended that the States give it
permission to levy a duty of five percent on all "foreign
merchandise imported into the country," and that, though
"imperfectly ... preserved," the debates in the Congress "are full
of the subject of the injustice done by the States who had good
seaports, by duties levied in those ports on foreign goods designed
for States who had no such ports."
Id., at 134.
There is, of course, no question that the ability of seaport
States to tax the foreign imports of their neighbors was a source
of discord between the States, and continued to be so through the
Constitutional Convention itself. In order to support its
contention, however, the
Woodruff Court was obligated to
show not merely that the words "duty," "impost," and "imports" were
used in reference to foreign goods, but
14 Indeed, some New Englanders apparently believed that the
Virginia duty on New England cheese, see
supra, at 622, was
contrary to Article IV's provision that "no imposition, duties or
restriction, shall be laid by any State, on the property of the
United States, or either of them." 1 Stat. 4. See Salem [Mass.]
Mercury, Mar. 3, 1787. The general view of the Clause, however, and
certainly the view of the several States that imposed duties on
interstate trade, see
supra, at 622-623, was that it applied
only to goods actually owned by the States, not to goods grown or
manufactured within them. See Salem [Mass.] Mercury, Mar. 3, 1787
("[T]he proper construction of that part of the Articles of
Confederation is, that no state in the union shall lay a tax on pub
lick property imported therein-for, be it remembered, Congress
were, at the time the Confederation was formed, exporters of almost
every necessary for carrying on the war, & the clause alluded
to was intended to prevent any individual state from laying a duty
on those necessary supplies"); see also 12 Hening, Virginia
Statutes at Large, ch. 40, § 3, pp. 304-305 (Oct. 1786)
(distinguishing between articles "which are the property of the
United States, or either of them," and articles "which shall be
proved to be of the growth, produce or manufacture of the State
from which they shall be imported").
628
THOMAS, J., dissenting
that foreign goods were the
exclusive reference. Contrary
to the
Woodruff Court's claim, the historical record does
not appear to support such an exclusive use of the words.
The records of the Continental Congress contain numerous
examples of the words "duty," "impost," and "import" being used
with reference to interstate trade. In 1785, for example, in
response to the increasing animosities between the States
engendered by conflicting interstate trade regulations, an
amendment to the Articles of Confederation was proposed that would
have vested in the Continental Congress the power to lay "such
imposts and duties upon imports and exports, as may be necessary
for the purpose" of "regulating the trade of the States, as well
with foreign Nations,
as with each other." 28 Journals of
the Continental Congress, Mar. 28, 1785, p. 201 (1933) (emphasis
added). Two provisos within the proposed amendment further suggest
that interstate imports and exports were very much within the
purview of the amendment: First, "that the Citizens of the States
shall in no instance be subjected to pay higher imposts and duties,
than those imposed on the subjects of foreign powers"; and second,
"that the Legislative power of the several States shall not be
restrained from prohibiting the importation or exportation of any
species of goods or commodities whatsoever."
Ibid.
As early as 1779, the problems posed by
interstate trade
barriers had become acute enough to warrant a request by the
Continental Congress urging the States "to repeal all laws or other
restrictions laid on the inland trade between the said states."
Resolution of Aug. 25, 1779, 14 Journals of the Continental
Congress 986;
id., at 996 (adopting resolution). While this
particular resolution does not use the words "duties" or "imports,"
it seems evident from a survey of the statutory "duties" being
levied by some States on goods "imported" from other States, see
supra, at 622-623, that the resolution was directed at just
such duties on imports from other States.
629
Many of the States ignored the request, of course, and their
"rival, conflicting and angry regulations" continued to be a source
of conflict until the new Constitution went into effect. See
Madison, Preface to Debates in the Convention of 1787 (Draft),
circa 1836, in 3 Farrand 547; see also,
e. g.,
William Ellery to Samuel Dick, Aug. 2, 1784, in 7 Letters of
Members of the Continental Congress 579 (E. Burnett ed. 1934)
(hereinafter Burnett's Letters) (predicting that Rhode Island would
not agree to the national impost requested by the Congress in 1781
"until the States shall have agreed not to lay any
duties
upon goods
imported into them from any one of their Sister
States; perhaps not then" (emphasis added)); William Samuel Johnson
to Jonathan Sturges (draft), Jan. 26,1785, in 8 Burnett's Letters
13 (noting that the Continental Congress was considering asking the
States "to invest Congress with the Power of regulating their Trade
as well with foreign Nations
as with each other," a move
which "might probably overturn the System [of "duties" on
"imported" goods, see
supra, at 623,] Conn[ecticu]t has
adopt'd as relat[iv]e to N. Y. which it is said she will counteract
by regulat[ion]s of her Assembly now convening" (emphasis in
original)).
In fact, the animosity engendered by the various duties levied
on imports from other States was one of the motivating factors
leading to the Annapolis Convention of 1786. See T. Powell,
Vagaries and Varieties in Constitutional Interpretation 182 (1956)
("When the Framers spoke in 1787, the states were substantially
sovereign, and their exercises of sovereign powers in adversely
affecting trade from sister states was one of the factors leading
to the Annapolis conference"). As noted by Tench Coxe, one of the
Pennsylvania Commissioners appointed to attend the Convention:
"Goods of the growth product and manufacture of the Other States in
Union were [in several of the States] charged with high Duties upon
importation into the enacting State-as great in many instances as
those imposed on foreign Articles of
630
THOMAS, J., dissenting
the same Kinds." Coxe, Letter to the Virginia Commissioners at
Annapolis, Sept. 13, 1786, reprinted in 9 The Papers of James
Madison 125 (Rutland ed. 1975). Coxe thought the very purpose of
the Annapolis Convention had been "[t]o procure an alteration" of
this and other practices, which were, he added, "evidently opposed
to the great principles and Spirit of the Union."
Ibid.
Similarly, one of the first criticisms leveled against the
Articles of Confederation during the ensuing Federal Convention was
the general Government's inability to prevent "quarrels between
states," including those arising from the various "duties" the
States imposed upon each other, both on foreign goods moving
through the seaport States and on each other's goods. See 1 Farrand
19,25 (Edmund Randolph, May 29); see also Madison, Preface to
Debates in the Convention of 1787 (draft),
circa 1836, in 3
Farrand 547-548 ("Some of the States, as Connecticut, taxed imports
as from Massts higher than imports even from G. B. of w[hi]ch
Massts. complained to Virga. and doubtless to other States").
While the focus of the Convention quickly moved beyond the mere
abolition of trade barriers, of course, there are passages in the
available Convention debates which indicate that interstate trade
barriers remained a concern, and that the words of the
Import-Export Clause applied to interstate, as well as to foreign,
trade. George Mason, for example, proposed to exempt from the
Import-Export Clause prohibition duties necessary for the States'
execution of their inspection laws. Otherwise, he argued, the
"restriction on the States would prevent the incidental duties
necessary for the inspection & safe-keeping of their produce,
and be ruinous to the [Southern] Staple States." 2 Farrand 588
(Sept. 12). James Madison seconded the motion, and his comment that
any feared abuse of the power to levy duties on exports for
inspection purposes was perhaps best guarded against by "the right
in the Genl. Government to regulate trade
between State
&
State," id., at 588-589 (emphasis added),
631
strongly suggests that exports to other States were within the
Clause's reach.15
These references to duties on
interstate imports and
exports are bolstered by several more in the ratification debates.
See,
e. g., 2 J. Elliot, Debates on the Federal
Constitution 57-58 (2d ed. 1891) (hereinafter Elliot) (Dawes,
Massachusetts ratifying convention) ("As to commerce, it is well
known that the different states now pursue different systems of
duties in regard to each other. By this, and for want of general
laws of prohibition through the Union, we have not secured even our
own domestic traffic that passes from state to state" (original
emphasis deleted)). Indeed, one of the principal Anti-Federalist
complaints against the new Constitution was that States were
prohibited from laying
any duties or imposts on imports or
exports, a prohibition that, in their view, left only direct
taxation as a means for the States to support their own
governments. See,
e. g., Brutus 1, Oct. 18, 1787, in
13 Documentary History of the Ratification of the Constitution 415
(J. Kaminsky & G. Saladino eds. 1981) (hereinafter Doc. Hist.)
("No state can ... lay any duties, or imposts, on imports, or
exports .... [T]he only mean therefore left, for any state to
support its government and discharge its debts, is by direct
taxation").16 This
15 Furthermore, in response to concerns that the inspection
exemption might be used merely as a pretext for taxing neighboring
States, see 2 Farrand 589, Mason's proposal was further amended to
make any such State inspection laws "subject to the revision and
controul of Congress,"
id., at 607, 624. The need for, and
existence of, this further limitation on the States' authority to
tax imports and exports suggests that the Commerce Clause power
itself, referred to by Madison, would not operate to limit the
States of its own accord. See
supra, at 613-614, n. 7.
16 See also John Quincy Adams to William Cranch, Oct. 14,1787,
in 14 Doc. Rist. 222 ("Row will it be possible for each particular
State to pay its debts, when the power of laying imposts or duties,
on imports or exports, shall be taken from them-By direct taxes, it
may be said"); George Lee Turberville to James Madison, Dec. 11,
1787, in
id., at 407 (''Why shou'd the states be prevented
from raising a Revenue by Duties or
632
THOMAS, J., dissenting
complaint overstates the case somewhat-States could still levy
excises, and duties other than those on imports and exports. See,
e. g., The Federalist No. 32, p. 151 (M. Beloff ed.
1987) (A. Hamilton) ("([W]ith the sole exception of duties on
imports and exports)[, States] would, under the plan of the
convention, retain [the] authority [to raise their own revenues] in
the most absolute and unqualified sense"). But it does suggest that
the Anti-Federalists, at least, viewed the Import- Export Clause as
prohibiting all other state taxes, including the duties then in
place on goods imported from neighboring States. And moves in
various States shortly after the Constitution's ratification to
repeal the offending duties on interstate trade support the
Anti-Federalist view. Compare An Act repealing the Laws made for
levying and collecting a Duty on Articles imported into this State,
1789 Conn. Acts and Laws 377 (Jan. 1789), with,
e.
g., An Act for levying and collecting Duties on the
Importation of certain Articles, and for appropriating the same,
1784 Conn. Acts and Laws 309 (Oct. 1784) (providing for, inter
alia, a duty of three pence "on each Pound of Sugar ... whether the
Produce or Manufacture of the United States, or not, imported into
this State").
Justice Nelson, of course, pointed out in his
Woodruff
dissent that a lack of "security or protection" against
"obstructions and interruptions of commerce among the States" was
"one of the principal grievances that led to the Convention of
1787, and to the adoption of the Federal Constitution." 8 Wall., at
140-141. But he seems not to have had in his arse-
Taxes-on their own Exports? Are the states not bound down to
direct Taxation for the support of their police &
government?"); A Federal Republican, A Review of the Constitution
Proposed by the Late Convention, Oct. 28, 1787, in 3 The Complete
Anti-Federalist 79 (H. Storing ed. 1981) (hereinafter Storing)
("The [Import-Export Clause] is reducing [the States] to the
necessity oflaying direct taxes"); Vox Populi, Massachusetts
Gazette, Oct.-Nov. 1787, in 4 Storing 47 ("Must we be confined to a
dry tax on polls and estates ... ?").
633
nal many of the historical materials cited above, which indicate
that the
words used in the Import-Export Clause encompassed,
at the time the Constitution was written, both interstate and
foreign tradeP Indeed, the
Woodruffmajority itself felt
compelled to note that its "research [had] extended" only so far as
permitted by "the discussions on this subject, as they have come
down to us from that time."
Id., at 136; see also
id., at 134 (referring to the "imperfectly ... preserved"
discussions of the Continental Congress). Whatever the cause, the
Woodruff Court's analysis of the historical usage of the
words overlooked many contrary examples and is thus not especially
compelling.
The second contention that the
Woodruff Court used to
bolster its textual argument was a policy concern based on an
unnecessarily broad view of the Import-Export Clause's prohibition.
The
Woodruff Court believed that the prohibition on "Duties
or Imposts on Exports or Imports" exempted imported articles, and
the merchants who traded in them, from state taxation of
any
kind, at least so long as they remained in their original packages.
Id., at 137. This view of the Clause's prohibition would
result in "the grossest injustice," said the Court, were the Clause
to be read as applying to "articles brought from one State into
another," for "[n]either the State nor the city which protects [the
import merchant's] life and property [could] make him contribute a
dollar to support its government."
Ibid.
17 Farrand did not publish his volumes until 1911 (although the
Woodruff Court did have available to it Madison's notes, as
well as the more perfunctory convention journal); Burnett's Letters
were published between 1921 and 1936; the Journals of the
Continental Congress were published between 1904 and 1937; volume 9
of The Papers of James Madison, in which Tench Coxe's letter was
first reprinted, was not published until 1975; and a useful,
readily accessible collection of the various Anti-Federalist
writings was not available until 1981. This is not to say that the
original documents reprinted in these volumes would not have been
available to the
Woodruff Court. But our ready access to, as
well as our appreciation of, such documents has increased over
time.
634
THOMAS, J., dissenting
Woodruffs broad reading of the Clause's prohibition was
explicitly adopted three years later in
Low v.
Austin,
13 Wall. 29 (1872), a case involving foreign imports. But we
expressly overruled
Low 20 years ago, in
Michelin Tire
Corp. v.
Wages, 423 U. S. 276, 279
(1976), holding that the Import- Export Clause "cannot be read to
accord imported goods preferential treatment that permits escape
from uniform taxes imposed without regard to foreign origin for
services which the State supplies,"
id., at 287; cf.
United States v.
International Business Machines
Corp., 517 U. S.
843, 857-859 (1996) (distinguishing the Art. I, § 9, cl. 5,
Export Clause, which bars the United States from imposing any
tax on exports, from the Import-Export Clause, which
prohibits States from levying only
duties and
imposts). While
Michelin and
Low dealt with
foreign imports, the expansive interpretation of the Import-Export
Clause's prohibition rejected by
Michelin was the same
interpretation that gave the
Woodruff Court pause and that
seems to have been an impetus to its refusal to read the Clause as
applying to imports from other States. Thus, after
Michelin,
the second argument the
Woodruff Court used to bolster its
weak textual analysis-that it would be a gross injustice to
prohibit States from levying
any taxes on goods which were
produced in other States-no longer has any force.
There is nothing else of consequence to support the
Woodruff Court's holding. The only remaining argument made
by the
Woodruff majority was that it was "improbable" that
the Convention would have permitted States to tax "imports" from
other States merely with the assent of Congress, because the
revenues that would accrue to Congress by granting such assent
would prove too great a temptation for Congress to serve as a
neutral arbiter regarding such taxes.
Woodruff, supra, at
133. The
Woodruff Court's speculation was without historical
support, however, and pales in comparison to the substantial
evidence described above regard-
635
ing the meaning of the words in the Clause, see
supra, at
621-624.18
In short, there is little in the
Woodruff opinion to
sustain its holding, and its weakness is even more evident given
the contrary precedent rejected by the
Woodruff Court. In
Brown v.
Maryland, 12 Wheat. 419, 449 (1827), Chief
Justice Marshall, writing for the Court, suggested: "[W]e suppose
the principles laid down in this case [namely, that a state license
tax on importers of foreign articles was invalid both under the
Import-Export Clause and the Act of Congress which authorizes
importation] to apply equally to importations from a sister State."
And just eight years before
Woodruff, Chief Justice Taney,
writing for a unanimous Court, struck down a stamp tax on bills of
lading for gold being shipped from California to New York, holding
that "the State tax in question is a duty upon the
export of
gold and silver, and consequently repugnant to the [ImportExport]
clause in the Constitution."
Almy v.
California, 24
How. 169, 175 (1861) (emphasis added).
Chief Justice Marshall's statement in
Brown was merely
dicta, of course, but the
Woodruffmajority's rejection of
the precedential force of
Almy, based solely on its
assertion that "[i]t seems to have escaped the attention of counsel
on both sides, and of the Chief Justice who delivered the
opinion,
18 Indeed, were I similarly to speculate, I would not find it
"improbable" that the Convention would have trusted Congress to
serve as a referee between individual States. Since many States
would necessarily be harmed by a single State's impost, the
institutional checks would in all likelihood be sufficient to
counter any revenue "temptation" Congress might have faced,
especially given the extensive revenue authority granted directly
to Congress in Art. I, § 8, cl. 1. My "speculation" is at least
consistent with the recorded Convention debates. Roger Sherman
proposed the requirement that any revenues raised by
congressionally approved state imposts go into the federal treasury
not as a separate means of raising national revenues, but to ensure
that the States not use a protectionist impost as a pretext for
raising revenues from other States. See 2 Farrand 441-442 (Aug.
28).
636
THOMAS, J., dissenting
that the case was one of inter-state commerce," 8 Wall., at 137,
is harder to sustain. The
Almy Court expressly noted that
Mr. Almy was charged with failing to pay the stamp tax on a bill of
lading for "a quantity of gold-dust for transportation to New York"
from San Francisco, 24 How., at 172, and the explicit "question
presented by the case" was whether a State had a right "to tax such
instruments when used in
commerce among the States," Brief
for Plaintiff in Error in
Almy v.
California, D. T.
1860, No. 23, pp. 1-2 (emphasis added); see also
id., at 3
(referring to fact that the tax was on bills of lading "for exports
to other States").
Woodruffs rejection of
Brown and
Almy-precedent which better reflected the historical record
and common usage of the Clause's words-was thus highly
questionable.
In sum, it would seem that
Woodruffwas, in all
likelihood, wrongly decided. Of course, much of what the
ImportExport Clause appears to have been designed to protect
against has since been addressed under the negative Commerce
Clause. As the majority recognizes, discriminatory state taxation
of interstate commerce is one of the core pieces of our negative
Commerce Clause jurisprudence.
Ante, at 581. Were it simply
a matter of invalidating state laws under one Clause of the
Constitution rather than another, I might be inclined to leave well
enough alone. Indeed, our rule that state taxes that discriminate
against interstate commerce are virtually
per se invalid
under the negative Commerce Clause may well approximate the
apparent prohibition of the Import-Export Clause itself. But, as
already described, without the proper textual roots, our negative
Commerce Clause has gone far afield of its core-and we have yet to
articulate either a coherent rationale for permitting the courts
effectively to legislate in this field, or a workable test for
assessing which state laws pass negative Commerce Clause muster.
Precedent as unworkable as our negative Commerce Clause
jurisprudence has become is simply not entitled to the weight of
stare decisis. See
Holder
637
v.
Hall, 512 U. S. 874, 936-937
(1994) (THOMAS, J., concurring in judgment). And it is quite
possible that, were we to revisit
Woodruff, we might find
that the Constitution already affords us a textual mechanism with
which to address the more egregious of state actions discriminating
against interstate commerce.
III
Were we thus to shed ourselves of our nontextual negative
Commerce Clause and all the accompanying multifactor balancing
tests we have employed, and instead merely apply what appears to me
to be the relevant provision of the Constitution, this would seem
to be a fairly straightforward case (although I reserve final
judgment of the matter for a case when the Import-Export Clause is
specifically addressed by the parties). Unlike the Export Clause of
Art. I, § 9, which prohibits the Congress from levying
any
tax on exports, the Import- Export Clause only prohibits States
from levying "duties" and "imposts." See
International Business
Machines, 517 U. S., at 857-858.
The Maine property tax at issue here is almost certainly not an
impost, for, as 18th-century usage of the word indicates, an impost
was a tax levied on
goods at the time of
importation.
See,
e. g., The Observer-No. XII, Connecticut Courant and
Weekly Intelligencer, Jan. 7, 1790, p. 1, col. 2 ("[I]mpost is a
tax on merchandize, payable at the port of entry"); 19 N. Bailey,
An Universal Etymological English Dictionary (26 ed. 1789)
(defining "impost" as "a tax or tribute, but more especially such
as is received by a prince or state, for goods brought into any
haven from other nations"); 20
19 See also Providence Gazette and Country Journal, Feb. 13,
1790, p. 1, col. 1 (reprinting same); Gazette of the United States,
Jan. 9, 1790, p. 2, col. 1 (same).
20 See also T. Sheridan, A Complete Dictionary of the English
Language (6th ed. 1796) ("Impost ... A tax; a toll; custom paid");
S. Johnson, A Dictionary of the English Language (7th ed. 1785)
("Impost. A tax; a toll; a custom paid. Taxes and
imposts
upon merchants do seldom good to the
638
THOMAS, J., dissenting
Michelin, 423 U. S., at 287 ("[I]mposts and duties ...
are essentially taxes on the commercial privilege of bringing goods
into a country"). Because the tax at issue here is levied on real
property-property that cannot possibly have been "imported"-the tax
would not seem to fit within any of the commonly accepted
definitions of "impost."
"Duty," however, though frequently used like "impost" to denote
"money paid for custom of goods," An Universal Etymological English
Dictionary,
supra, does not appear to have been limited to
taxes assessed at portside. See,
e. g., S. Johnson, A
Dictionary of the English Language (7th ed. 1785) ("Duty ... Tax;
impost; custom; toll. All the wines make their way through several
duties and taxes,
before they reach the port" (second
emphasis added)); 2 Elliot 331 (John Williams, New York ratifying
convention) (noting that Congress' Art. I, § 8, power "extend[s] to
duties on all kinds of goods, to tonnage and poundage of vessels,
to duties on written instruments, newspapers, almanacs, &c").
In fact, "imposts" seems to have been viewed as a particular
subclass of duties; the fact that the two words are used
disjunctively in the Import-Export Clause suggests, therefore, that
something broader than portside customs was within the
constitutional prohibition.
Because of the somewhat ambiguous usage of the words "duty" and
"impost," Luther Martin inquired of their meaning during the
Convention. James Wilson, a member of the
king's revenue; for that that he wins in the hundred, he loseth
in the shire. Bacon's Essays"); Barclay's Universal English
Dictionary 471 (B. Woodward rev. 1782) ("Impost. A toll; custom
paid for goods or merchandise"); T. Blount, A Law-Dictionary (1670)
("Impost Tribute, Tallage, or Custom; but more particularly it is
that Tax which the King receives for such merchandises as are
imported into any Haven, from other Nations .... And it may be
distinguished from
Custom, which is rather that profit which
the King raises from Wares exported; but they are sometimes
confounded"); cf. 7 Oxford English Dictionary 733 (2d ed. 1989)
("[I]mpost ... A tax, duty, imposition, tribute;
spec. a
customs-duty levied on merchandise. Now chiefly
Hist").
639
Committee on Detail, replied as follows:
"[D]uties are
applicable to many objects to which the word
imposts does
not relate. The latter are appropriated to commerce; the former
extend to a variety of objects, as stamp duties &c." 2 Farrand
305 (emphasis in original); see also 2 Storing 54 (Luther Martin,
in Maryland Convention, describing same colloquy); The Fallacies of
the Freeman Detected by a Farmer, Freeman's Journal, April 1788, in
3 Storing 186-187 ("Under the term duties [in Art. I, § 8], every
species of indirect taxes is included, but it especially means the
power of levying money upon printed books, and written
instruments"). What seems likely from these descriptions is that a
duty, though broader than an impost, was still a tax
on
particular
goods or written instruments.
It is important to note, moreover, that the Martin-Wilson
colloquy is in reference to the Art. I, § 8, power given to
Congress to levy duties. That power is broader than the prohibition
on States found in Art. I, § 10, which reaches not all duties, but
only those on "imports or exports." 21 But even without this
additional limitation, one kind of tax that duties almost certainly
did
not encompass were "direct" taxes, such as property
taxes and poll taxes. See,
e. g., The Federalist No.
12 (A. Hamilton) (distinguishing direct taxes,
21 See,
e. g., De Witt, Letter To the Free
Citizens of the Commonwealth of Massachusetts, American Herald,
Boston, Oct.-Dec. 1787, in 4 Storing 23 (noting that Congress
"shall have the
exclusive power of imposts and the duties on
imports and exports, [and, implicitly, a concurrent] power of
laying excises and other duties" (emphasis added)); Letters from
The Federal Farmer, Oct. 10, 1787, in 2 Storing 239 (distinguishing
between "impost duties, which are laid on imported goods [and] may
usually be collected in a few seaport towns," and "internal taxes,
[such] as poll and land taxes, excises, duties on all written
instruments, etc. [which] may fix themselves on every person and
species of property in the community"); Essays of Brutus, Dec. 13,
1787 in 2 Storing 392-393 (same); see also 2 Farrand 589 (noting
that Morris "did not consider the dollar per Hhd laid on Tobo. in
Virga. as a duty on exportation, as no drawback would be allowed on
Tobo. taken out of the Warehouse for internal consumption").
640
THOMAS, J., dissenting
such as property taxes, from indirect taxes, such as imposts,
duties, and excises); Freeman's Journal, in 3 Storing 186-187
("Under the term duties [in Art. I, § 8], every species of indirect
taxes is included"); see also
Michelin, supra, at 286,
290-291.
The tax at issue here is nothing more than a tax on real
property. Such taxes were classified as "direct" taxes at the time
of the framing, and were not within the class of "indirect" taxes
encompassed by the common understanding of the word "duties." The
amount of the Maine tax is tied to the value of the real property
on which it is imposed, not to any particular goods, and not even
to the number of campers served. It does not appear, therefore, to
be a "duty" on "imports" in any sense of the words.22 Even when
coupled with the tax exemption for certain Maine charities (which
is, in truth, no different than a subsidy paid out of the State's
general revenues), Maine's property tax would not seem to be a
"Duty or Impost on Imports or Exports" within the meaning of the
Import-Export Clause. Thus, were we to overrule
Woodruff and
apply the Import-Export Clause to this case, I would in all
likelihood sustain this tax under that Clause as well.
22 Even were I to agree with the majority that a particular
property tax may be a property tax in name only, see
ante,
at 574-575, and even were I to assume that travel across state
lines to consume services in another State renders those traveling
consumers "imports," it is difficult to characterize the tax at
issue here as a duty on imports. It is, rather, as the majority
recognizes, a "generally applicable state property tax."
Ante, at 567. Maine's grant of an exemption from the tax to
some charitable organizations that dispense their charity primarily
to Maine residents makes the tax something less than universal, but
it does not make the tax, even in practical effect, one that is
levied exclusively, or even primarily, on imports. See,
e. g.,
New Energy Co. of Ind. v.
Limbach, 486 U. S. 269 (1988);
Maryland v.
Louisiana, 451 U. S. 725, 756
(1981);
License Cases, 5 How. 504,576 (1847); cf.
Davis v.
Michigan Dept. of Treasury, 489 U. S. 803,821 (1989)
(STEVENS, J., dissenting) (arguing, in an analogous context, that
"the fact that a State may elect to grant a preference, or an
exemption, to a small percentage of its residents does not make the
tax discriminatory").
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