Oregon Waste Systems, Inc. v. Dept. Of Env. Qual., 511 U.S. 93 (1994)

Oregon Waste Systems, Inc. v.

Department of Environmental Quality
No. 93-70

Argued January 18, 1994
Decided April 4, 1994 *
[U.S. Reports citation not yet available]

CERTIORARI TO THE SUPREME COURT OF OREGON

Syllabus

Oregon imposes a $2.50 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 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, 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.