OCTOBER TERM, 1993
Syllabus
OREGON WASTE SYSTEMS, INC. v. DEPARTMENT OF ENVIRONMENTAL
QUALITY OF THE STATE OF OREGON ET AL.
CERTIORARI TO THE SUPREME COURT OF OREGON No. 93-70. Argued
January 18, 1994-Decided April 4, 1994*
Oregon imposes a $2.25 per ton surcharge on the in-state
disposal of solid waste generated in other States and an $0.85 per
ton fee on the disposal of waste generated within Oregon.
Petitioners sought review of the out-of-state surcharge in the
State Court of Appeals, challenging the administrative rule
establishing the surcharge and its enabling statutes under, inter
alia, the Commerce Clause. The court upheld the statutes and rule,
and the State Supreme Court affirmed. Despite the Oregon statutes'
explicit reference to out-of-state waste's geographical location,
the court reasoned, the surcharge's express nexus to actual costs
incurred by state and local government rendered it a facially
constitutional "compensatory fee."
Held: Oregon's surcharge is facially invalid under the negative
Commerce Clause. Pp. 98-108.
(a) The first step in analyzing a law under the negative
Commerce Clause is to determine whether it discriminates against,
or regulates evenhandedly with only incidental effects on,
interstate commerce. If the restriction is discriminatory-i. e.,
favors in-state economic interests over their out-of-state
counterparts-it is virtually per se invalid. By contrast,
nondiscriminatory regulations are valid 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.
Oregon's surcharge is obviously discriminatory on its face. It
subjects waste from other States to a fee almost three times
greater than the charge imposed on in-state waste, and the
statutory determinant for whether the fee applies is whether or not
the waste was generated out of state. The alleged compensatory aim
of the surcharge has no bearing on whether it is facially
discriminatory. See Chemical Waste Management, Inc. v. Hunt,
504 U. S. 334,
340-341. Pp.98-100.
(b) Because the surcharge is discriminatory, the virtually per
se rule of invalidity-not the Pike balancing test-provides the
proper legal
*Together with No. 93-108, Columbia Resource Co. v.
Environmental Quality Commission of the State of Oregon, also on
certiorari to the same court.
94
Syllabus
standard for these cases. Thus, the surcharge must be
invalidated unless respondents can show that it advances a
legitimate local purpose that cannot be adequately served by
reasonable nondiscriminatory alternatives. Neither of respondents'
justifications passes strict scrutiny. For the surcharge to be
justified as a "compensatory tax" necessary to make shippers of
out-of-state waste pay their "fair share" of disposal costs, it
must be the rough equivalent of an identifiable and substantially
similar surcharge on intrastate commerce. However, respondents have
failed to identify a specific charge on intrastate commerce equal
to or exceeding the surcharge; the $0.85 per ton fee on in-state
waste is only about one-third of the challenged surcharge. Even
assuming that various other means of general taxation, such as
state income taxes, could serve as a roughly equivalent intrastate
burden, respondents' argument fails because the levies are not
imposed on substantially equivalent events: Taxes on earning income
and utilizing Oregon landfills are entirely different kinds of
taxes. Nor can the surcharge be justified by respondents' argument
that Oregon has a valid interest in spreading the costs of the
disposal of Oregon waste, but not out-of-state waste, to all
Oregonians. Because Oregon's scheme necessarily results in shippers
of out-of-state waste bearing the full costs of disposal with
shippers of Oregon waste bearing less than the full cost, it
necessarily incorporates an illegitimate protectionist objective.
Wyoming v. Oklahoma,
502 U. S. 437, 454.
Recharacterizing the surcharge as "resource
protectionism"-discouraging the importation of out-of-state waste
in order to conserve more landfill space for in-state waste-hardly
advances respondents' cause. A State may not accord its own
inhabitants a preferred right of access over consumers in other
States to its natural resources. Philadelphia v. New Jersey,
437 U. S. 617,
627. Sporhase v. Nebraska ex rel. Douglas,
458 U. S. 941,
distinguished. Pp. 100-107.
316 Ore. 99,849 P. 2d 500, reversed and remanded.
THOMAS, J., delivered the opinion of the Court, in which
STEVENS, O'CONNOR, SCALIA, KENNEDY, SOUTER, and GINSBURG, JJ.,
joined. REHNQUIST, C. J., filed a dissenting opinion, in which
BLACKMUN, J., joined, post, p. 108.
Andrew
J. Pincus argued the cause for petitioners in both
cases. With him on the briefs for petitioners in No. 93-70 were
James E. Benedict and J. Laurence Cable. John DiLorenzo, Jr., filed
briefs for petitioner in No. 93-108.
Thomas A. Balmer, Deputy Attorney General of Oregon, argued the
cause for respondents in both cases. With him on the brief were
Theodore R. Kulongoski, Attorney Gen-
95
eral, Virginia L. Linder, Solicitor General, and Michael D.
Reynolds, Assistant Solicitor General.t
JUSTICE THOMAS delivered the opinion of the Court.
Two Terms ago, in Chemical Waste Management, Inc. v.
Hunt, 504
U. S. 334 (1992), we held that the negative Commerce Clause
prohibited Alabama from imposing a higher fee on the disposal in
Alabama landfills of hazardous waste from other States than on the
disposal of identical waste from Alabama. In reaching that
conclusion, however, we left open the possibility that such a
differential surcharge might be valid if based on the costs of
disposing of waste from other States. Id., at 346, n. 9. Today, we
must decide whether Oregon's purportedly cost-based surcharge on
the in-state disposal of solid waste generated in other States
violates the Commerce Clause.
I
Like other States, Oregon comprehensively regulates the disposal
of solid wastes within its borders.1 Respondent
t A brief of amici curiae urging affirmance was filed for the
State of Indiana et al. by Pamela Carter, Attorney General of
Indiana, and Arend
J. Abel, Matthew R. Gutwein, and Myra P.
Spieker, Deputy Attorneys General, and by the Attorneys General for
their respective States as follows: Winston Bryant of Arkansas,
Robert A. Butterworth of Florida, Chris Gorman of Kentucky, Michael
E. Carpenter of Maine, Mike Moore of Mississippi, Joseph P. Mazurek
of Montana, Lee Fisher of Ohio, Susan B. Loving of Oklahoma, Ernest
D. Preate, Jr., of Pennsylvania, T. Travis Medlock of South
Carolina, Mark Barnett of South Dakota, Joseph B. Meyer of Wyoming,
and James E. Doyle of Wisconsin.
10regon defines "solid wastes" as "all putrescible and
nonputrescible wastes, including but not limited to garbage,
rubbish, refuse, ashes, waste paper and cardboard; sewage sludge,
septic tank and cesspool pumpings or other sludge; commercial,
industrial, demolition and construction wastes; discarded or
abandoned vehicles or parts thereof; discarded home and industrial
appliances; manure, vegetable or animal solid and semisolid wastes,
dead animals, infectious waste ... and other wastes." Ore. Rev.
Stat. § 459.005(27) (1991). Hazardous wastes are not considered
solid wastes. § 459.005(27)(a).
96
Oregon Department of Environmental Quality oversees the State's
regulatory scheme by developing and executing plans for the
management, reduction, and recycling of solid wastes. To fund these
and related activities, Oregon levies a wide range of fees on
landfill operators. See, e.
g., Ore. Rev. Stat. §§
459.235(3), 459.310 (1991). In 1989, the Oregon Legislature imposed
an additional fee, called a "surcharge," on "every person who
disposes of solid waste generated out-ofstate in a disposal site or
regional disposal site." § 459.297(1) (effective Jan. 1, 1991). The
amount of that surcharge was left to respondent Environmental
Quality Commission (Commission) to determine through rulemaking,
but the legislature did require that the resulting surcharge "be
based on the costs to the State of Oregon and its political
subdivisions of disposing of solid waste generated out-of-state
which are not otherwise paid for" under specified statutes. §
459.298. At the conclusion of the rulemaking process, the
Commission set the surcharge on out-of-state waste at $2.25 per
ton. Ore. Admin. Rule 340-97-120(7) (Sept. 1993).
In conjunction with the out-of-state surcharge, the legislature
imposed a fee on the in-state disposal of waste generated within
Oregon. See Ore. Rev. Stat. §§ 459A.ll0(1), (5) (1991). The
in-state fee, capped by statute at $0.85 per ton (originally $0.50
per ton), is considerably lower than the fee imposed on waste from
other States. §§ 459A.ll0(5) and 459A.115. Subsequently, the
legislature conditionally extended the $0.85 per ton fee to
out-of-state waste, in addition to the $2.25 per ton surcharge, §
459A.ll0(6), with the proviso that if the surcharge survived
judicial challenge, the $0.85 per ton fee would again be limited to
in-state waste. 1991 Ore. Laws, ch. 385, §§ 91-92.2
2 As a result, shippers of out-of-state solid waste currently
are being charged $3.10 per ton to dispose of such waste in Oregon
landfills, as compared to the $0.85 per ton fee charged to dispose
of Oregon waste in those same landfills. We refer hereinafter only
to the $2.25 surcharge, because the $0.85 per ton fee, which will
be refunded to shippers of out-of-state
97
The anticipated court challenge was not long in coming.
Petitioners, Oregon Waste Systems, Inc. (Oregon Waste), and
Columbia Resource Company (CRC), joined by Gilliam County, Oregon,
sought expedited review of the out-of-state surcharge in the Oregon
Court of Appeals. Oregon Waste owns and operates a solid waste
landfill in Gilliam County, at which it accepts for final disposal
solid waste generated in Oregon and in other States. CRC, pursuant
to a 20-year contract with Clark County, in neighboring Washington
State, transports solid waste via barge from Clark County to a
landfill in Morrow County, Oregon. Petitioners challenged the
administrative rule establishing the out-of-state surcharge and its
enabling statutes under both state law and the Commerce Clause of
the United States Constitution. The Oregon Court of Appeals upheld
the statutes and rule. Gilliam County v. Department of
Environmental Quality, 114 Ore. App. 369, 837 P. 2d 965 (1992).
The State Supreme Court affirmed. Gilliam County v.
Department of Environmental Quality of Oregon, 316 Ore. 99, 849
P. 2d 500 (1993). As to the Commerce Clause, the court recognized
that the Oregon surcharge resembled the Alabama fee invalidated in
Chemical Waste Management, Inc. v. Hunt,
504 U. S. 334 (1992), in
that both prescribed higher fees for the disposal of waste from
other States. Nevertheless, the court viewed the similarity as
superficial only. Despite the explicit reference in § 459.297(1) to
out-of-state waste's geographic origin, the court reasoned, the
Oregon surcharge is not facially discriminatory "[b]ecause of [its]
express nexus to actual costs incurred [by state and local
government]." 316 Ore., at 112, 849 P. 2d, at 508. That nexus
distinguished Chemical Waste, supra, by rendering the surcharge a
"compensatory fee," which the court viewed as "prima facie
reasonable," that is to say, facially constitutional. 316 Ore., at
112, 849 P. 2d, at 508. The court read
waste if the surcharge is upheld, 1991 Ore. Laws, ch. 385, § 92,
is not challenged here.
98
our case law as invalidating compensatory fees only if they are"
'manifestly disproportionate to the services rendered.'" Ibid.
(quoting Clark v. Paul Gray, Inc.,
306 U. S. 583, 599
(1939)). Because Oregon law restricts the scope of judicial review
in expedited proceedings to deciding the facial legality of
administrative rules and the statutes underlying them, Ore. Rev.
Stat. § 183.400 (1991), the Oregon court deemed itself precluded
from deciding the factual question whether the surcharge on
out-of-state waste was disproportionate. 316 Ore., at 112, 849 P.
2d, at 508.
We granted certiorari, 509 U. S. 953 (1993), because the
decision below conflicted with a recent decision of the United
States Court of Appeals for the Seventh Circuit.3 We now
reverse.
II
The Commerce Clause provides that "[t]he Congress shall have
Power ... [t]o regulate Commerce ... among the several States."
Art. I, § 8, cl. 3. Though phrased as a grant of regulatory power
to Congress, the Clause has long been understood to have a
"negative" aspect that denies the States the power unjustifiably to
discriminate against or burden the interstate flow of articles of
commerce. See, e.
g., Wyoming v. Oklahoma,
502 U. S. 437, 454
(1992); Welton v. Missouri,
91 U. S. 275 (1876). The
Framers granted Congress plenary authority over interstate commerce
in "the conviction that in order to succeed, the new Union would
have to avoid the tendencies toward economic Balkanization that had
plagued relations among the Colonies and later among the States
under the Articles of Confederation." Hughes v. Oklahoma,
441 U. S. 322, 325-326
(1979). See generally The Federalist No. 42 (J. Madison). "This
principle that our economic unit is the Nation, which alone has the
gamut of powers necessary to control of the economy, ... has
3 Government Suppliers Consolidating Servs., Inc. v.
Bayh,
975 F.2d
1267 (1992), cert. denied, 506 U. S. 1053 (1993).
99
as its corollary that the states are not separable economic
units." H. P. Hood & Sons, Inc. v. Du Mond,
336 U. S. 525, 537-538
(1949).
Consistent with these principles, we have held that the first
step in analyzing any law subject to judicial scrutiny under the
negative Commerce Clause is to determine whether it "regulates
evenhandedly with only 'incidental' effects on interstate commerce,
or discriminates against interstate commerce." Hughes, supra, at
336. See also Chemical Waste, 504 U. S., at 340-341. As we use the
term here, "discrimination" simply means differential treatment of
in-state and out-of-state economic interests that benefits the
former and burdens the latter. If a restriction on commerce is
discriminatory, it is virtually per se invalid. Id., at 344, n. 6.
See also Philadelphia v. New Jersey,
437 U. S. 617, 624
(1978). By contrast, nondiscriminatory regulations that have only
incidental effects on interstate commerce are valid unless "the
burden imposed on such commerce is clearly excessive in relation to
the putative local benefits." Pike v. Bruce Church, Inc.,
397 U. S. 137, 142
(1970).
In Chemical Waste, we easily found Alabama's surcharge on
hazardous waste from other States to be facially discriminatory
because it imposed a higher fee on the disposal of out-of-state
waste than on the disposal of identical in-state waste. 504 U. S.,
at 342. We deem it equally obvious here that Oregon's $2.25 per ton
surcharge is discriminatory on its face. The surcharge subjects
waste from other States to a fee almost three times greater than
the $0.85 per ton charge imposed on solid in-state waste. The
statutory determinant for which fee applies to any particular
shipment of solid waste to an Oregon landfill is whether or not the
waste was "generated out-of-state." Ore. Rev. Stat. § 459.297(1)
(1991). It is well established, however, that a law is
discriminatory if it "'tax[es] a transaction or incident more
heavily when it crosses state lines than when it occurs entirely
within the State.''' Chemical Waste, supra, at 342
100
100 OREGON WASTE SYSTEMS, INC. v. DEPARTMENT OF ENVIRONMENTAL
QUALITY OF ORE.
(quoting Armco Inc. v. Hardesty,
467 U. S. 638, 642
(1984)). See also American Trucking Assns., Inc. v. Scheiner,
483 U. S. 266,
286 (1987).4
Respondents argue, and the Oregon Supreme Court held, that the
statutory nexus between the surcharge and "the [otherwise
uncompensated] costs to the State of Oregon and its political
subdivisions of disposing of solid waste generated out-of-state,"
Ore. Rev. Stat. § 459.298 (1991), necessarily precludes a finding
that the surcharge is discriminatory. We find respondents' narrow
focus on Oregon's compensatory aim to be foreclosed by our
precedents. As we reiterated in Chemical Waste, the purpose of, or
justification for, a law has no bearing on whether it is facially
discriminatory. See 504 U. S., at 340-341. See also Philadelphia,
supra, at 626. Consequently, even if the surcharge merely recoups
the costs of disposing of out-of-state waste in Oregon, the fact
remains that the differential charge favors shippers of Oregon
waste over their counterparts handling waste generated in other
States. In making that geographic distinction, the surcharge
patently discriminates against interstate commerce.
III
Because the Oregon surcharge is discriminatory, the virtually
per se rule of invalidity provides the proper legal standard here,
not the Pike balancing test. As a result, the surcharge must be
invalidated unless respondents can "sho[w]
4 The dissent argues that the $2.25 per ton surcharge is so
minimal in amount that it cannot be considered discriminatory, even
though the surcharge expressly applies only to waste generated in
other States. Post, at 115. The dissent does not attempt to
reconcile that novel understanding of discrimination with our
precedents, which clearly establish that the degree of a
differential burden or charge on interstate commerce "measures only
the extent of the discrimination" and "is of no relevance to the
determination whether a State has discriminated against interstate
commerce." Wyoming v. Oklahoma,
502 U. S. 437,455 (1992).
See also, e. g., Maryland v. Louisiana,
451 U. S. 725, 760 (1981)
("We need not know how unequal [a] [t]ax is before concluding that
it ... discriminates").
101
that it advances a legitimate local purpose that cannot be
adequately served by reasonable nondiscriminatory alternatives."
New Energy Co. of Ind. v. Limbach,
486 U. S. 269, 278
(1988). See also Chemical Waste, supra, at 342-343. Our cases
require that justifications for discriminatory restrictions on
commerce pass the "strictest scrutiny." Hughes, 441 U. S., at 337.
The State's burden of justification is so heavy that "facial
discrimination by itself may be a fatal defect." Ibid. See also
Westinghouse Elec. Corp. v. Tully,
466 U. S. 388, 406-407
(1984); Maryland v. Louisiana,
451 U. S. 725, 759-760
(1981).
At the outset, we note two justifications that respondents have
not presented. No claim has been made that the disposal of waste
from other States imposes higher costs on Oregon and its political
subdivisions than the disposal of instate waste.5 Also, respondents
have not offered any safety or health reason unique to nonhazardous
waste from other States for discouraging the flow of such waste
into Oregon. Cf. Maine v. Taylor,
477 U. S. 131 (1986)
(upholding ban on importation of out-of-state baitfish into Maine
because such baitfish were subject to parasites completely foreign
to Maine baitfish). Consequently, respondents must come forward
with other legitimate reasons to subject waste from other States to
a higher charge than is levied against waste from Oregon.
5 In fact, the Commission fixed the $2.25 per ton cost of
disposing of solid waste in Oregon landfills without reference to
the origin of the waste, 3 Record 665-690, and Oregon's economic
consultant recognized that the per ton costs are the same for both
in-state and out-of-state waste. Id., at 731-732, 744. Of course,
if out-of-state waste did impose higher costs on Oregon than
in-state waste, Oregon could recover the increased cost through a
differential charge on out-of-state waste, for then there would be
a "reason, apart from its origin, why solid waste coming from
outside the [State] should be treated differently." Fort Gratiot
Sanitary Landfill, Inc. v. Michigan Dept. of Natural Resources,
504 U. S. 353,
361 (1992). Cf. Mullaney v. Anderson,
342 U. S. 415, 417
(1952); Toomer v. Witsell,
334 U. S. 385, 399
(1948).
102
102 OREGON WASTE SYSTEMS, INC. v. DEPARTMENT OF ENVIRONMENTAL
QUALITY OF ORE.
Respondents offer two such reasons, each of which we address
below.
A
Respondents' principal defense of the higher surcharge on
out-of-state waste is that it is a "compensatory tax" necessary to
make shippers of such waste pay their "fair share" of the costs
imposed on Oregon by the disposal of their waste in the State. In
Chemical Waste we noted the possibility that such an argument might
justify a discriminatory surcharge or tax on out-of-state waste.
See 504 U. S., at 346, n. 9. In making that observation, we
implicitly recognized the settled principle that interstate
commerce may be made to "'pay its way.'" Complete Auto Transit,
Inc. v. Brady,
430 U.
S. 274, 281 (1977). See also Maryland, supra, at 754. "It was
not the purpose of the commerce clause to relieve those engaged in
interstate commerce from their just share of state tax burden[s]."
Western Live Stock v. Bureau of Revenue,
303 U. S. 250, 254
(1938). See also Henneford v. Silas Mason Co.,
300 U. S. 577 (1937).
Nevertheless, one of the central purposes of the Clause was to
prevent States from "exacting more than a just share" from
interstate commerce. Department of Revenue of Wash. v. Association
of Wash. Stevedoring Cos.,
435 U. S. 734, 748 (1978)
(emphasis added). See also Northwestern States Portland Cement
Co.
At least since our decision in Hinson v. Lott, 8 Wall. 148
(1869), these principles have found expression in the
"compensatory" or "complementary" tax doctrine. Though our cases
sometimes discuss the concept of the compensatory tax as if it were
a doctrine unto itself, it is merely a specific way of justifying a
facially discriminatory tax as achieving a legitimate local purpose
that cannot be achieved through nondiscriminatory means. See
Chemical Waste, supra, at 346, n. 9 (referring to the compensatory
tax doctrine as a "justif[ication]" for a facially discriminatory
tax). Under that doctrine, a facially discriminatory tax that
imposes on
103
interstate commerce the rough equivalent of an identifiable and
"substantially similar" tax on intrastate commerce does not offend
the negative Commerce Clause. Maryland, supra, at 758-759. See also
Tyler Pipe Industries, Inc. v. Washington State Dept. of Revenue,
483 U. S. 232,
242-243 (1987); Armco, 467 U. S., at 643.
To justify a charge on interstate commerce as a compensatory
tax, a State must, as a threshold matter, "identif[y] ... the
[intrastate tax] burden for which the State is attempting to
compensate." Maryland, supra, at 758. Once that burden has been
identified, the tax on interstate commerce must be shown roughly to
approximate-but not exceedthe amount of the tax on intrastate
commerce. See, e.
g., Alaska v. Arctic Maid,
366 U. S. 199, 204-205
(1961). Finally, the events on which the interstate and intrastate
taxes are imposed must be "substantially equivalent"; that is, they
must be sufficiently similar in substance to serve as mutually
exclusive "prox[ies]" for each other. Armco, supra, at 643. As
Justice Cardozo explained for the Court in Henneford, under a truly
compensatory tax scheme "the stranger from afar is subject to no
greater burdens as a consequence of ownership than the dweller
within the gates. The one pays upon one activity or incident, and
the other upon another, but the sum is the same when the reckoning
is closed." 300 U. S., at 584.6
6 The Oregon Supreme Court, though terming the out-of-state
surcharge a "compensatory fee," relied for its legal standard on
our "user fee" cases. See 316 Ore. 99, 112, 849 P. 2d 500, 508
(1993) (citing, for example, Evansville- Vanderburgh Airport
Authority Dist. v. Delta Airlines, Inc.,
405 U. S. 707 (1972), and
Clark v. Paul Gray, Inc.,
306 U. S. 583 (1939)).
The compensatory tax cases cited in the text, rather than the user
fee cases, are controlling here, as the latter apply only to
"charge[s] imposed by the State for the use of state-owned or
state-provided transportation or other facilities and services."
Commonwealth Edison Co. v. Montana,
453 U. S. 609, 621
(1981). Because it is undisputed that, as in Chemical Waste, the
landfills in question are owned by private entities, including
Oregon Waste, the out-of-state surcharge is plainly not a user fee.
Nev-
104
104 OREGON WASTE SYSTEMS, INC. v. DEPARTMENT OF ENVIRONMENTAL
QUALITY OF ORE.
Although it is often no mean feat to determine whether a
challenged tax is a compensatory tax, we have little difficulty
concluding that the Oregon surcharge is not such a tax. Oregon does
not impose a specific charge of at least $2.25 per ton on shippers
of waste generated in Oregon, for which the out-of-state surcharge
might be considered compensatory. In fact, the only analogous
charge on the disposal of Oregon waste is $0.85 per ton,
approximately one-third of the amount imposed on waste from other
States. See Ore. Rev. Stat. §§ 459A.ll0(5), 459A.115 (1991).
Respondents' failure to identify a specific charge on intrastate
commerce equal to or exceeding the surcharge is fatal to their
claim. See Maryland, 451 U. S., at 758.
Respondents argue that, despite the absence of a specific $2.25
per ton charge on in-state waste, intrastate commerce does pay its
share of the costs underlying the surcharge through general
taxation.7 Whether or not that is true is difficult to determine,
as "[general] tax payments are received for the general purposes of
the [government], and are, upon proper receipt, lost in the general
revenues." Flast v. Cohen,
392 U. S. 83, 128 (1968)
(Harlan, J., dissenting). Even assuming, however, that various
other means of general taxation, such as income taxes, could serve
as an identifiable intrastate burden roughly equivalent to the
out-of-state surcharge, respondents' compensatory tax argument
fails because the in-state and out-of-state levies are not imposed
on substantially equivalent events.
ertheless, even if the surcharge could somehow be viewed as a
user fee, it could not be sustained as such, given that it
discriminates against interstate commerce. See Evansville, supra,
at 717; Guy v. Baltimore,
100 U. S. 434 (1880). Cf.
Northwest Airlines, Inc. v. County of Kent,
510 U. S. 355, 369 (1994)
(A user fee is valid only to the extent it "does not discriminate
against interstate commerce").
7We would note that respondents, like the dissent, post, at 112,
ignore the fact that shippers of waste from other States in all
likelihood pay income taxes in other States, a portion of which
might well be used to pay for waste reduction activities in those
States.
105
The prototypical example of substantially equivalent taxable
events is the sale and use of articles of trade. See Henneford,
supra. In fact, use taxes on products purchased out of state are
the only taxes we have upheld in recent memory under the
compensatory tax doctrine. See ibid. Typifying our recent
reluctance to recognize new categories of compensatory taxes is
Armco, where we held that manufacturing and wholesaling are not
substantially equivalent events. 467 U. S., at 643. In our view,
earning income and disposing of waste at Oregon landfills are even
less equivalent than manufacturing and wholesaling. Indeed, the
very fact that in-state shippers of out-of-state waste, such as
Oregon Waste, are charged the out-of-state surcharge even though
they pay Oregon income taxes refutes respondents' argument that the
respective taxable events are substantially equivalent. See ibid.
We conclude that, far from being substantially equivalent, taxes on
earning income and utilizing Oregon landfills are "entirely
different kind[s] of tax[es]." Washington v. United States,
460 U. S. 536,
546, n. 11 (1983). We are no more inclined here than we were in
Scheiner to "plunge ... into the morass of weighing comparative tax
burdens" by comparing taxes on dissimilar events. 483 U. S., at 289
(internal quotation marks omitted).8
B
Respondents' final argument is that Oregon has an interest in
spreading the costs of the in-state disposal of Oregon waste to all
Oregonians. That is, because all citizens of Ore-
8 Furthermore, permitting discriminatory taxes on interstate
commerce to compensate for charges purportedly included in general
forms of intrastate taxation "would allow a state to tax interstate
commerce more heavily than in-state commerce anytime the entities
involved in interstate commerce happened to use facilities
supported by general state tax funds." Government Suppliers
Consolidating Servs., Inc. v. Bayh, 975 F. 2d, at 1284. We decline
respondents' invitation to open such an expansive loophole in our
carefully confined compensatory tax jurisprudence.
106
106 OREGON WASTE SYSTEMS, INC. v. DEPARTMENT OF ENVIRONMENTAL
QUALITY OF ORE.
gon benefit from the proper in-state disposal of waste from
Oregon, respondents claim it is only proper for Oregon to require
them to bear more of the costs of disposing of such waste in the
State through a higher general tax burden. At the same time,
however, Oregon citizens should not be required to bear the costs
of disposing of out-of-state waste, respondents claim. The
necessary result of that limited cost shifting is to require
shippers of out-of-state waste to bear the full costs of in-state
disposal, but to permit shippers of Oregon waste to bear less than
the full cost.
We fail to perceive any distinction between respondents'
contention and a claim that the State has an interest in reducing
the costs of handling in-state waste. Our cases condemn as
illegitimate, however, any governmental interest that is not
"unrelated to economic protectionism," Wyoming, 502 U. S., at 454,
and regulating interstate commerce in such a way as to give those
who handle domestic articles of commerce a cost advantage over
their competitors handling similar items produced elsewhere
constitutes such protectionism. See New Energy, 486 U. S., at 275.9
To give controlling effect to respondents' characterization of
Oregon's tax scheme as seemingly benign cost spreading would
require us to overlook the fact that the scheme necessarily
incorporates a protectionist objective as well. Cf. Bacchus
Imports, Ltd. v. Dias,
468 U. S. 263, 273 (1984)
(rejecting Hawaii's attempt to justify a discriminatory tax
exemption for local liquor pro-
9We recognize 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 connection with
the State's regulation of interstate commerce." New Energy Co. of
Ind. v. Limbach,
486
U. S. 269,278 (1988). Cf. Metropolitan Life Ins. Co. v. Ward,
470 U. S. 869,
877, n. 6 (1985). Here, as in New Energy, we confront a patently
discriminatory law that is plainly connected to the regulation of
interstate commerce. We therefore have no occasion to decide
whether Oregon could validly accomplish its limited cost spreading
through the "market participant" doctrine, Hughes v. Alexandria
Scrap Corp.,
426 U.
S. 794, 806-810 (1976), or other means unrelated to any
regulation of interstate commerce.
107
ducers as conferring a benefit on them, as opposed to burdening
out-of-state liquor producers).
Respondents counter that if Oregon is engaged in any form of
protectionism, it is "resource protectionism," not economic
protectionism. It is true that by discouraging the flow of
out-of-state waste into Oregon landfills, the higher surcharge on
waste from other States conserves more space in those landfills for
waste generated in Oregon. Recharacterizing the surcharge as
resource protectionism hardly advances respondents' cause, however.
Even assuming that landfill space is a "natural resource," "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." Philadelphia, 437 U. S., at 627. As we held more than a
century ago, "if the State, under the guise of exerting its police
powers, should [impose a burden] ... applicable solely to articles
[of commerce] ... produced or manufactured in other States, the
courts would find no difficulty in holding such legislation to be
in conflict with the Constitution of the United States." Guy v.
Baltimore,
100 U. S.
434, 443 (1880).
Our decision in Sporhase v. Nebraska ex rel. Douglas,
458 U. S. 941 (1982), is
not to the contrary. There we held that a State may grant a
"limited preference" for its citizens in the utilization of ground
water. Id., at 956. That holding was premised on several different
factors tied to the simple fact of life that "water, unlike other
natural resources, is essential for human survival." Id., at 952.
Sporhase therefore provides no support for respondents' position
that States may erect a financial barrier to the flow of waste from
other States into Oregon landfills. See Fort Gratiot, 504 U. S., at
364-365, and n. 6. However serious the shortage in landfill space
may be, post, at 108, "[n]o State may attempt to isolate itself
from a problem common to the several States by raising barriers to
the free flow of interstate trade." Chemical Waste, 504 U. S., at
339-340, and 346, n. 9.
108
108 OREGON WASTE SYSTEMS, INC. v. DEPARTMENT OF ENVIRONMENTAL
QUALITY OF ORE.
IV
We recognize that the States have broad discretion to configure
their systems of taxation as they deem appropriate. See, e. g.,
Commonwealth Edison Co. v. Montana,
453 U. S. 609, 622-623
(1981); Boston Stock Exchange v. State Tax Comm'n,
429 U. S. 318, 336-337
(1977). All we intimate here is that their discretion in this
regard, as in all others, is bounded by any relevant limitations of
the Federal Constitution, in these cases the negative Commerce
Clause. Because respondents have offered no legitimate reason to
subject waste generated in other States to a discriminatory
surcharge approximately three times as high as that imposed on
waste generated in Oregon, the surcharge is facially invalid under
the negative Commerce Clause. Accordingly, the judgment of the
Oregon Supreme Court is reversed, and the cases are remanded for
further proceedings not inconsistent with this opinion.
It is so ordered.
CHIEF JUSTICE REHNQUIST, with whom JUSTICE BLACKMUN joins,
dissenting.
Landfill space evaporates as solid waste accumulates.
State and local governments expend financial and political
capital to develop trash control systems that are efficient,
lawful, and protective of the environment. The State of Oregon
responsibly attempted to address its solid waste disposal problem
through enactment of a comprehensive regulatory scheme for the
management, disposal, reduction, and recycling of solid waste. For
this Oregon should be applauded. The regulatory scheme included a
fee charged on out-of-state solid waste. The Oregon Legislature
directed the Environmental Quality Commission to determine the
appropriate surcharge "based on the costs ... of disposing of solid
waste generated out-of-state." Ore. Rev. Stat. § 459.298 (1991).
The Commission arrived at a surcharge of $2.25 per ton, compared to
the $0.85 per ton charged on
109
in-state solid waste. Ore. Admin. Rule 340-97-110(3) (Sept.
1993).1 The surcharge works out to an increase of about $0.14 per
week for the typical out-of-state solid waste producer.2 Brief for
Respondents 26-27, n. 16. This seems a small price to pay for the
right to deposit your "garbage, rubbish, refuse ... ; sewage
sludge, septic tank and cesspool pumpings or other sludge; ...
manure, ... dead animals, [and] infectious waste" on your
neighbors. Ore. Rev. Stat. § 459.005(27) (1991).
Nearly 20 years ago, we held that a State cannot ban all
out-of-state waste disposal in protecting themselves from hazardous
or noxious materials brought across the State's borders.
Philadelphia v. New Jersey,
437 U. S. 617 (1978). Two
Terms ago in Chemical Waste Management, Inc. v.
Hunt,
504 U. S. 334
(1992), in striking down the State of Alabama's $72 per ton fee on
the disposal of out-of-state hazardous waste, the Court left open
the possibility that such a fee could be valid if based on the
costs of disposing of waste from other States. Id., at 346, n. 9.
Once again, however, as in Philadelphia and Chemical Waste
Management, the Court further cranks the dormant Commerce Clause
ratchet against the States by striking down such cost-based fees,
and by so doing ties the hands of the States in addressing the
vexing national problem of solid waste disposal. I dissent.
1 The surcharge is composed of the following identified costs:
$0.58statewide activities for reducing environmental risks and
improving solid waste management; $0.66-reimbursements to the State
for tax credits and other public subsidies; $0.05-solid waste
reduction activities related to the review and certification of
waste reduction and recycling plans; $0.72-increased environmental
liability; $0.20-lost disposal capacity; $0.03-publicly supported
infrastructure; and $O.Ol-nuisance impacts from transportation.
Pet. for Cert. in No. 93-108, p. 4.
2 The $2.25 per ton fee imposed on out-of-state waste exceeds
the $0.85 per ton fee imposed on in-state waste by $1.40 per ton.
One ton equals 2,000 pounds. Assuming that the hypothetical
nonresident generates 200 pounds of garbage per month (1/10 of a
ton), the nonresident's garbage bill would increase by $0.14 per
month.
110
110 OREGON WASTE SYSTEMS, INC. v. DEPARTMENT OF ENVIRONMENTAL
QUALITY OF ORE.
Americans generated nearly 196 million tons of municipal solid
waste in 1990, an increase from 128 million tons in 1975. See U. S.
Environmental Protection Agency, Characterization of Municipal
Solid Waste in the United States: 1992 Update, p. ES-3. Under
current projections, Americans will produce 222 million tons of
garbage in the year 2000. Ibid. Generating solid waste has never
been a problem. Finding environmentally safe disposal sites has. By
1991, it was estimated that 45 percent of all solid waste landfills
in the Nation had reached capacity. 56 Fed. Reg. 50980 (1991).
Nevertheless, the Court stubbornly refuses to acknowledge that a
clean and healthy environment, unthreatened by the improper
disposal of solid waste, is the commodity really at issue in cases
such as these, see, e. g., Chemical Waste Management, supra, at 350
(REHNQUIST, C. J., dissenting), and Fort Gratiot Sanitary Landfill,
Inc. v. Michigan Dept. of Natural Resources,
504 U. S. 353, 368 (1992)
(REHNQUIST,
Notwithstanding the identified shortage of landfill space in the
Nation, the Court notes that it has "little difficulty," ante, at
104, concluding that the Oregon surcharge does not operate as a
compensatory tax, designed to offset the loss of available landfill
space in the State caused by the influx of out-of-state waste. The
Court reaches this nonchalant conclusion because the State has
failed "to identify a specific charge on intrastate commerce equal
to or exceeding the surcharge." Ibid. (emphasis added). The Court's
myopic focus on "differential fees" ignores the fact that in-state
producers of solid waste support the Oregon regulatory program
through state income taxes and by paying, indirectly, the numerous
fees imposed on landfill operators and the dumping fee on in-state
waste. Ore. Rev. Stat. § 459.005 et seq. (1991).
We confirmed in Sporhase v. Nebraska ex rel. Douglas,
458 U. S. 941 (1982),
that a State may enact a comprehensive regulatory system to address
an environmental problem or
111
a threat to natural resources within the confines of the
Commerce Clause. In the context of threatened ground water
depletion, we stated that "[o]bviously, a State that imposes severe
withdrawal and use restrictions on its own citizens is not
discriminating against interstate commerce when it seeks to prevent
the uncontrolled transfer of water out of the State." Id., at
955-956. The same point could be made about a "clean and safe
environment" in these cases: Where a State imposes restrictions on
the ability of its own citizens to dispose of solid waste in an
effort to promote a "clean and safe environment," it is not
discriminating against interstate commerce by preventing the
uncontrolled transfer of out-ofstate solid waste into the
State.
The availability of safe landfill disposal sites in Oregon did
not occur by chance. Through its regulatory scheme, the State of
Oregon inspects landfill sites, monitors waste streams, promotes
recycling, and imposes an $0.85 per ton disposal fee on in-state
waste, Ore. Rev. Stat. § 459.005 et seq. (1991), all in an effort
to curb the threat that its residents will harm the environment and
create health and safety problems through excessive and unmonitored
solid waste disposal. Depletion of a clean and safe environment
will follow if Oregon must accept out-of-state waste at its
landfills without a sharing of the disposal costs. The Commerce
Clause does not require a State to abide this outcome where the
"natural resource has some indicia of a good publicly produced and
owned in which a State may favor its own citizens in times of
shortage." Sporhase, supra, at 957. A shortage of available
landfill space is upon us, 56 Fed. Reg. 50980 (1991), and with it
comes the accompanying health and safety hazards flowing from the
improper disposal of solid wastes. We have long acknowledged a
distinction between economic protectionism and health and safety
regulation promulgated by Oregon. See H. P. Hood & Sons, Inc.
v. Du Mond,
336 U. S.
525, 533 (1949).
112
112 OREGON WASTE SYSTEMS, INC. v. DEPARTMENT OF ENVIRONMENTAL
QUALITY OF ORE.
Far from neutralizing the economic situation for Oregon
producers and out-of-state producers, the Court's analysis turns
the Commerce Clause on its head. Oregon's neighbors will operate
under a competitive advantage against their Oregon counterparts as
they can now produce solid waste with reckless abandon and avoid
paying concomitant state taxes to develop new landfills and clean
up retired landfill sites. While I understand that solid waste is
an article of commerce,
Philadelphia, 437 U. S., at 622-623,
it is not a commodity sold in the marketplace; rather it is
disposed of at a cost to the State. Petitioners do not buy garbage
to put in their landfills; solid waste producers pay petitioners to
take their waste. Oregon solid waste producers do not compete with
out-of-state businesses in the sale of solid waste. Thus, the fees
do not alter the price of a product that is competing with other
products for common purchasers. If anything, striking down the fees
works to the disadvantage of Oregon businesses. They alone will
have to pay the "nondisposal" fees associated with solid waste:
landfill siting, landfill cleanup, insurance to cover environmental
accidents, and transportation improvement costs associated with
out-of-state waste being shipped into the State. While we once
recognized that" 'the collection and disposal of solid wastes
should continue to be primarily the function of State, regional,
and local agencies,'"
id., at 621, n. 4, quoting 42 U. S. C.
§ 6901(a)(4) (1976 ed.), the Court today leaves States with only
two options: become a dumper and ship as much waste as possible to
a less populated State, or become a dumpee, and stoically accept
waste from more densely populated States.
The Court asserts that the State has not offered "any safety or
health reason[sJ" for discouraging the flow of solid waste into
Oregon. Ante, at 101. I disagree. The availability of
environmentally sound landfill space and the proper disposal of
solid waste strike me as justifiable "safety or health" rationales
for the fee. As far back as the turn of the
113
century, the Court recognized that control over the collection
and disposal of solid waste was a legitimate, nonarbitrary exercise
of police powers to protect health and safety. See, e. g.,
California Reduction Co. v. Sanitary Reduction Works,
199 U. S. 306 (1905)
(holding that exclusive privilege to one company to dispose of the
garbage in the city and county of San Francisco was not void as
taking the property of householders for public use without
compensation); and Gardner v. Michigan,
199 U. S. 325 (1905)
(holding that property rights of individuals must be subordinated
to the general good and if the owner of garbage suffers any loss by
its destruction he is compensated therefor in the common benefit
secured by the regulation requiring that all garbage be
destroyed).
In exercising its legitimate police powers in regulating solid
waste disposal, Oregon is not "needlessly obstruct[ing] interstate
trade or attempt[ing] to place itself in a position of economic
isolation." Maine v. Taylor,
477 U. S. 131, 151 (1986)
(internal quotation marks omitted) (upholding Maine's ban on the
importation of live baitfish on the ground that it serves the
legitimate governmental interest in protecting Maine's indigenous
fish population from parasites prevalent in out-of-state baitfish).
Quite to the contrary, Oregon accepts out-of-state waste as part of
its comprehensive solid waste regulatory program and it "retains
broad regulatory authority to protect the health and safety of its
citizens and the integrity of its natural resources." Ibid.
Moreover, Congress also has recognized taxes as an effective method
of discouraging consumption of natural resources in other contexts.
Cf. 26 U. S. C. §§ 4681, 4682 (1988 ed., Supp. IV) (tax on
ozone-depleting chemicals); 26 U. S. C. §4064 (1988 ed. and Supp.
IV) (gas guzzler excise tax). Nothing should change the analysis
when the natural resource-landfill space-was created or regulated
by the State in the first place.
114
114 OREGON WASTE SYSTEMS, INC. v. DEPARTMENT OF ENVIRONMENTAL
QUALITY OF ORE.
In its sweeping ruling, the Court makes no distinction between
publicly and privately owned landfills. It rejects the argument
that our "user fee" cases apply in this context since the landfills
owned by the petitioners are private and our user fee analysis
applies only to "'charge[s] imposed by the State for the use of a
state-owned or state-provided transportation or other facilities
and services.'" Ante, at 103, n. 6, quoting Commonwealth Edison Co.
v. Montana,
453 U. S.
609, 621 (1981). Rather than stopping there, however, the
majority goes on to note that even if the Oregon surcharge could be
viewed as a user fee, "it could not be sustained as such, given
that it discriminates against interstate commerce." Ante, at 104,
n. 6, citing EvansvilleVanderburgh Airport Authority Dist. v. Delta
Airlines, Inc.,
405
U. S. 707, 717 (1972). There is no need to make this dubious
assertion. We specifically left unanswered the question whether a
state or local government could regulate disposal of out-of-state
solid waste at landfills owned by the government in Philadelphia,
supra, at 627, n. 6.
We will undoubtedly be faced with this question directly in the
future as roughly 80 percent of landfills receiving municipal solid
waste in the United States are state or locally owned. U. S.
Environmental Protection Agency, Resource Conservation and Recovery
Act, Subtitle D Study: Phase 1 Report, p. 4-7 (Oct. 1986) (Table
4-2). We noted in SouthCentral Timber Development, Inc. v.
Wunnicke,
467 U. S.
82, 93 (1984): "[I]f a State is acting as a market participant,
rather than as a market regulator, the dormant Commerce Clause
places no limitation on its activities." See also Wyoming v.
Oklahoma,
502 U. S.
437, 459 (1992). Similarly, if the State owned and operated a
park or recreational facility, it would be allowed to charge
differential fees for in-state and out-of-state users of the
resource. See, e. g., Baldwin v. Fish and Game Comm'n of Mont.,
436 U. S. 371
(1978) (upholding Montana's higher nonresident elk hunting license
fees to compensate the State for conservation expenditures
115
from taxes which only residents pay). More recently we upheld
such differential fees under a reasonableness standard in Northwest
Airlines, Inc. v. County of Kent,
510 U. S. 355 (1994),
despite the fact that the fees were not precisely tied to the costs
of the services provided at the publicly owned airport. We relied
on our Commerce Clause analysis from Evansville, supra. We stated
in Evansville:
"At least so long as the toll is based on some fair
approximation of use or privilege for use, ... and is neither
discriminatory against interstate commerce nor excessive in
comparison with the governmental benefit conferred, it will pass
constitutional muster, even though some other formula might reflect
more exactly the relative use of the state facilities by individual
users." Id., at 716-717.
I think that the $2.25 per ton fee that Oregon imposes on
out-of-state waste works out to a similar "fair approximation" of
the privilege to use its landfills. Even the Court concedes that
our precedents do not demand anything beyond "substantia[l]
equivalen[cyJ" between the fees charged on in-state and
out-of-state waste. Ante, at 103 (internal quotation marks
omitted). The $0.14 per week fee imposed on out-of-state waste
producers qualifies as "substantially equivalent" under the
reasonableness standard of Northwest Airlines and Evansville.
The Court begrudgingly concedes that interstate commerce may be
made to "pay its way," ante, at 102 (internal quotation marks
omitted), yet finds Oregon's nominal surcharge to exact more than a
"'just share'" from interstate commerce,
ibid. It escapes me
how an additional $0.14 per week cost for the average solid waste
producer constitutes anything but the type of "incidental effects
on interstate commerce" endorsed by the majority. Ante, at 99.
Evenhanded regulations imposing such incidental effects on
interstate commerce must be upheld unless "the burden imposed
116
116 OREGON WASTE SYSTEMS, INC. v. DEPARTMENT OF ENVIRONMENTAL
QUALITY OF ORE.
on such commerce is clearly excessive in relation to the
putative local benefits." Pike v. Bruce Church, Inc.,
397 U. S. 137, 142
(1970). If the majority finds $0.14 per week beyond the pale, one
is left to wonder what the Court possibly could have contemplated
when it stated:
"'[I]n 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.''' Hunt
v. Washington State Apple Advertising Comm'n, 432 U. S. 333, 350
(1977), quoting Southern Pacific Co. v. Arizona ex rel. Sullivan,
325 U. S. 761,
767 (1945).
Surely $0.14 per week falls within even the most crabbed
definition of "affect" or "regulate." Today the majority has
rendered this "residuum of power" a nullity.
The State of Oregon is not prohibiting the export of solid waste
from neighboring States; it is only asking that those neighbors pay
their fair share for the use of Oregon landfill sites. I see
nothing in the Commerce Clause that compels less densely populated
States to serve as the low-cost dumping grounds for their
neighbors, suffering the attendant risks that solid waste landfills
present. The Court, deciding otherwise, further limits the
dwindling options available to States as they contend with the
environmental, health, safety, and political challenges posed by
the problem of solid waste disposal in modern society.
For the foregoing reasons, I respectfully dissent.
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