Oregon Waste Systems, Inc. v. Department of Environmental Quality of Ore.
511 U.S. 93 (1994)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A state law that facially discriminates against interstate commerce by imposing a surcharge on the disposal of out-of-state waste, which is higher than the fee for in-state waste, violates the negative Commerce Clause and is subject to the strictest scrutiny. Such a law cannot be justified as a 'compensatory tax' unless it satisfies a three-part test requiring the state to identify a substantially equivalent intrastate tax.
Facts:
- The Oregon Legislature enacted a comprehensive regulatory scheme for the disposal of solid wastes within its borders.
- As part of this scheme, Oregon imposed a surcharge on the in-state disposal of solid waste that was generated in other states.
- The state's Environmental Quality Commission set this out-of-state surcharge at $2.25 per ton.
- In contrast, the fee imposed on the disposal of solid waste generated within Oregon was only $0.85 per ton.
- Oregon Waste Systems, Inc. owns and operates a landfill in Oregon that accepts both in-state and out-of-state solid waste for disposal.
- Columbia Resource Company (CRC) transports solid waste by barge from Clark County, Washington, to a landfill in Oregon.
- Oregon justified the higher surcharge on out-of-state waste by stating it was based on the costs to the state for disposing of such waste that were not otherwise paid for by out-of-state entities.
Procedural Posture:
- Oregon Waste Systems, Inc. and Columbia Resource Company (Petitioners) challenged the surcharge in the Oregon Court of Appeals.
- The Oregon Court of Appeals upheld the statute and the surcharge.
- Petitioners appealed to the Oregon Supreme Court.
- The Oregon Supreme Court affirmed the lower court's decision, finding the surcharge to be a facially constitutional 'compensatory fee.'
- The U.S. Supreme Court granted certiorari to resolve a conflict with a decision from the U.S. Court of Appeals for the Seventh Circuit.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a state surcharge imposed solely on the disposal of solid waste generated out-of-state, which is higher than the fee for disposing of in-state waste, violate the negative Commerce Clause, even if the state claims the surcharge is a 'compensatory fee' for costs incurred by the state?
Opinions:
Majority - Justice Thomas
Yes, the state surcharge violates the negative Commerce Clause. A state law that imposes a higher fee on out-of-state goods than on identical in-state goods is facially discriminatory and therefore virtually per se invalid. The Court reasoned that Oregon's $2.25 per ton surcharge on out-of-state waste, compared to the $0.85 per ton fee for in-state waste, is discriminatory on its face because the fee is determined solely by the geographic origin of the waste. The state's justification or purpose, such as cost recovery, is irrelevant to the initial determination of whether the law is facially discriminatory. Because the law is discriminatory, it is subject to the 'strictest scrutiny,' and the state must show it advances a legitimate local purpose that cannot be served by reasonable nondiscriminatory alternatives. Oregon's argument that the surcharge is a valid 'compensatory tax' fails. To be a valid compensatory tax, a state must: (1) identify the specific intrastate tax burden it is compensating for; (2) show the tax on interstate commerce roughly approximates, but does not exceed, the intrastate tax; and (3) demonstrate that the interstate and intrastate taxes are imposed on 'substantially equivalent' events. Oregon failed this test because it could not identify an equivalent in-state tax burden of at least $2.25 per ton, and its attempt to justify the fee by pointing to general income taxes paid by Oregon residents fails because earning income and disposing of waste are not substantially equivalent events. The Court also rejected Oregon's 'resource protectionism' argument, reiterating that a state may not grant its own residents preferential access to natural resources within its borders.
Dissenting - Chief Justice Rehnquist
No, the state surcharge does not violate the Commerce Clause. The surcharge is a responsible, cost-based measure enacted by Oregon to address the serious national problem of solid waste disposal. The majority's myopic focus on 'differential fees' ignores the reality that in-state producers already support Oregon's comprehensive waste management program through state income taxes and other fees. The Court's decision ties the hands of states attempting to protect their environment and public health, which is the real commodity at issue, not garbage. The dissent argues that the minor surcharge, which amounts to about $0.14 per week for the average out-of-state producer, is a 'fair approximation' of the privilege to use Oregon's landfills and constitutes at most an 'incidental effect' on interstate commerce that should be upheld under the Pike balancing test. This is a legitimate exercise of the state's police powers to regulate for health and safety, not economic protectionism. The Court is wrongly preventing less populated states from requiring their neighbors to pay a fair share for using them as dumping grounds.
Analysis:
This decision significantly reinforces the 'virtually per se' rule of invalidity for state laws that are facially discriminatory against interstate commerce. It narrowly construes the compensatory tax doctrine, making it exceedingly difficult for states to justify differential fees on out-of-state goods or services by pointing to general tax burdens shouldered by in-state residents. By requiring that the intrastate tax be 'substantially equivalent' to the interstate tax, the Court closed a potential loophole that states might have used to favor local economic interests under the guise of cost recovery. This ruling solidifies the principle that states cannot isolate themselves from national problems or hoard local resources, like landfill space, by erecting financial barriers to interstate trade.
