Annotation 33 - Article I

  State Taxation and Regulation: The Old Law

Although in previous editions of this volume considerable attention was paid to the development and circuitous paths of the law of the negative commerce clause, the value of this exegesis was doubtlessly quite limited. The Court itself has admitted that its ''some three hundred full-dress opinions'' as of 1959 have not resulted in ''consistent or reconcilable'' doctrine but rather in something more resembling a ''quagmire.'' 889 Although many of the principles still applicable in constitutional law may be found in the older cases, in fact the Court has worked a revolution in constitutional law in this area, though at different times for taxation and for regulation. Thus, in this section we summarize the ''old'' law and then deal more fully with the ''modern'' law of the negative commerce clause.

  General Considerations .--The task of drawing the line between state power and the commercial interest has proved a comparatively simple one in the field of foreign commerce, the two things being in great part territorially distinct. 890 With ''commerce among the States'' affairs are very different. Interstate commerce is conducted in the interior of the country, by persons and corporations that are ordinarily engaged also in local business; its usual incidents are acts that, if unconnected with commerce among the States, would fall within the State's powers of police and taxation, while the things it deals in and the instruments by which it is carried on comprise the most ordinary subject matter of state power. In this field, the Court consequently has been unable to rely upon sweeping solutions. To the contrary, its judgments have often been fluctuating and tentative, even contradictory, and this is particu larly the case with respect to the infringement on interstate commerce by the state taxing power. 891  

  Taxation .--The leading case dealing with the relation of the States' taxing power to interstate commerce, the case in which the Court first struck down a state tax as violative of the commerce clause, was the State Freight Tax Case. 892 Before the Court was the validity of a Pennsylvania statute that required every company transporting freight within the State, with certain exceptions, to pay a tax at specified rates on each ton of freight carried by it. The Court's reasoning was forthright. Transportation of freight constitutes commerce. 893 A tax upon freight transported from one State to another effects a regulation of interstate commerce. 894 Under the Cooley doctrine, whenever the subject of a regulation of commerce is in its nature of national interest or admits of one uniform system or plan of regulation, that subject is within the exclusive regulating control of Congress. 895 Transportation of passengers or merchandise through a State, or from one State to another, is of this nature. 896 Hence, a state law imposing a tax upon freight, taken up within the State and transported out of it or taken up outside the State and transported into it, violates the commerce clause. 897  

The principle thus asserted, that a State may not tax interstate commerce, confronted the principle that a State may tax all purely domestic business within its borders and all property ''within its jurisdiction.'' Inasmuch as most large concerns prosecute both an interstate and a domestic business, while the instrumentalities of interstate commerce and the pecuniary returns from such commerce are ordinarily property within the jurisdiction of some State or other, the task before the Court was to determine where to draw the line between the immunity claimed by interstate business, on the one hand, and the prerogatives claimed by local power on the other. In the State Tax on Railway Gross Receipts Case, 898 decided the same day as the State Freight Tax Case, the issue was a tax upon gross receipts of all railroads chartered by the State, part of the receipts having been derived from interstate transportation of the same freight that had been held immune from tax in the first case. If the latter tax were regarded as a tax on interstate commerce, it too would fall. But to the Court, the tax on gross receipts of an interstate transportation company was not a tax on commerce. ''[I]t is not everything that affects commerce that amounts to a regulation of it, within the meaning of the Constitution.'' 899 A gross receipts tax upon a railroad company, which concededly affected commerce, was not a regulation ''directly. Very manifestly it is a tax upon the railroad company. . . . That its ultimate effect may be to increase the cost of transportation must be admitted. . . . Still it is not a tax upon transportation, or upon commerce. . . .'' 900  

Insofar as there is a distinction between these two cases, the Court drew it in part on the basis of Cooley, that some subjects embraced within the meaning of commerce demand uniform, national regulation, while other similar subjects permit of diversity of treatment, until Congress acts, and in part on the basis of a concept of a ''direct'' tax on interstate commerce, which was impermissible, and an ''indirect'' tax, which was permissible until Congress acted. 901 Confusingly, the two concepts were sometimes conflated, sometimes treated separately. In any event, the Court itself was clear that interstate commerce could not be taxed at all, even if the tax was a nondiscriminatory levy applied alike to local commerce. 902 ''Thus, the States cannot tax interstate commerce, either by laying the tax upon the business which constitutes such commerce or the privilege of engaging in it, or upon the receipts, as such, derived from it . . . ; or upon persons or property in transit in interstate commerce.'' 903 However, some taxes imposed only an ''indirect'' burden and were sustained; property taxes and taxes in lieu of property taxes applied to all businesses, including instrumentalities of interstate commerce, were sustained. 904 A good rule of thumb in these cases is that taxation was sustained if the tax was imposed on some local, rather than an interstate, activity or if the tax was exacted before interstate movement had begun or after it had ended.

An independent basis for invalidation was that the tax was discriminatory, that its impact was intentionally or unintentionally felt by interstate commerce and not by local, perhaps in pursuit of parochial interests. Many of the early cases actually involving discriminatory taxation were decided on the basis of the impermissibility of taxing interstate commerce at all, but the category was soon clearly delineated as a separate ground (and one of the most important today). 905  

Following the Great Depression and under the leadership of Justice, and later Chief Justice, Stone, the Court attempted to move away from the principle that interstate commerce may not be taxed and reliance on the direct-indirect distinction. Instead, a state or local levy would be voided only if in the opinion of the Court it created a risk of multiple taxation for interstate commerce not felt by local commerce. 906 It became much more important to the validity of a tax that it be apportioned to an interstate company's activities within the taxing State, so as to reduce the risk of multiple taxation. 907 But, just as the Court had achieved constancy in the area of regulation, it reverted to the older doctrines in the taxation area and reiterated that interstate commerce may not be taxed at all, even by a properly apportioned levy, and reasserted the direct-indirect distinction. 908 The stage was set, following a series of cases in which through formalistic reasoning the States were permitted to evade the Court's precedents, 909 for the formulation of a more realistic doctrine.

  Regulation .--Much more diverse were the cases dealing with regulation by the state and local governments. Taxation was one thing, the myriad approaches and purposes of regulations another. Generally speaking, if the state action was perceived by the Court to be a regulation of interstate commerce itself, it was deemed to impose a ''direct'' burden on interstate commerce and impermissible. If the Court saw it as something other than a regulation of interstate commerce, it was considered only to ''affect'' interstate commerce or to impose only an ''indirect'' burden on it in the proper exercise of the police powers of the States. 910 But the distinction between ''direct'' and ''indirect'' burdens was often perceptible only to the Court. 911  

A corporation's status as a foreign entity did not immunize it from state requirements, conditioning its admission to do a local business, to obtain a local license, and to furnish relevant information as well as to pay a reasonable fee. 912 But no registration was permitted of an out-of-state corporation, the business of which in the host State was purely interstate in character. 913 Neither did the Court permit a State to exclude from the its courts a corporation engaging solely in interstate commerce because of a failure to register and to qualify to do business in that State. 914  

Interstate transportation brought forth hundreds of cases. State regulation of trains operating across state lines resulted in divergent rulings. It was early held improper for States to prescribe charges for transportation of persons and freight on the basis that the regulation must be uniform and thus could not be left to the States. 915 The Court deemed ''reasonable'' and therefore constitutional many state regulations requiring a fair and adequate service for its inhabitants by railway companies conducting interstate service within its borders, as long as there was no unnecessary burden on commerce. 916 A marked tolerance for a class of regulations that arguably furthered public safety was long exhibited by the Court, 917 even in instances in which the safety connection was tenuous. 918 Of particular controversy were ''full-crew'' laws, represented as safety measures, that were attacked by the companies as ''feather-bedding'' rules. 919  

Similarly, motor vehicle regulations have met mixed fates. Basically, it has always been recognized that States, in the interest of public safety and conservation of public highways, may enact and enforce comprehensive licensing and regulation of motor vehicles using its facilities. 920 Indeed, States were permitted to regulate many of the local activities of interstate firms and thus the interstate operations, in pursuit of these interests. 921 Here, too, safety concerns became overriding objects of deference, even in doubtful cases. 922 In regard to navigation, which had given rise to Gibbons v. Ogden and Cooley, the Court generally upheld much state regulation on the basis that the activities were local and did not demand uniform rules. 923  

As a general rule, during this time, although the Court did not permit States to regulate a purely interstate activity or prescribe prices for purely interstate transactions, 924 it did sustain a great deal of price and other regulation imposed prior to or subsequent to the travel in interstate commerce of goods produced for such commerce or received from such commerce. For example, decisions late in the period upheld state price-fixing schemes applied to goods intended for interstate commerce. 925  

However, the States always had an obligation to act nondiscriminatorily. Just as in the taxing area, regulation that was parochially oriented, to protect local producers or industries, for instance, was not evaluated under ordinary standards but subjected to practically per se invalidation. The mirror image of Welton v. Missouri, 926 the tax case, was Minnesota v. Barber, 927 in which the Court invalidated a facially neutral law that in its practical effect discriminated against interstate commerce and in favor of local commerce. The law required fresh meat sold in the State to have been inspected by its own inspectors with 24 hours of slaughter. Thus, meat slaughtered in other States was excluded from the Minnesota market. The principle of the case has a long pedigree of application. 928 State protectionist regulation on behalf of local milk producers has occasioned judicial censure. Thus, in Baldwin v. G. A. F. Seelig, Inc., 929 the Court had before it a complex state price-fixing scheme for milk, in which the State, in order to keep the price of milk artificially high within the State, required milk dealers buying out-of- state to pay producers, wherever they were, what the dealers had to pay within the State, and, thus, in-state producers were protected. And in H. P. Hood & Sons v. Du Mond, 930 the Court struck down a state refusal to grant an out-of-state milk distributor a license to operate a milk receiving station within the State on the basis that the additional diversion of local milk to the other State would impair the supply for the in-state market. A State may not bar an interstate market to protect local interests. 931  

  State Taxation and Regulation: The Modern Law

  General Considerations .--Transition from the old law to the modern standard occurred relatively smoothly in the field of regulation, 932 but in the area of taxation the passage was choppy and often witnessed retreats and advances. 933 In any event, both taxation and regulation now are evaluated under a judicial balancing formula comparing the burden on interstate commerce with the importance of the state interest, save for discriminatory state action that cannot be justified at all.

  Taxation .--During the 1940s and 1950s, there was engaged within the Court a contest between the view that interstate commerce could not be taxed at all, at least ''directly,'' and the view that the negative commerce clause protected against the risk of double taxation. 934 In Northwestern States Portland Cement Co. v. Minnesota, 935 the Court reasserted the principle expressed earlier in Western Live Stock, that the Framers did not intend to immunize interstate commerce from its just share of the state tax burden even though it increased the cost of doing business. 936 Northwestern States held that a State could constitutionally impose a nondiscriminatory, fairly apportioned net income tax on an out-of-state corporation engaged exclusively in interstate commerce in the taxing State. ''For the first time outside the context of property taxation, the Court explicitly recognized that an exclusively interstate business could be subjected to the states' taxing powers.'' 937 Thus, in Northwestern States, foreign corporations, which maintained a sales office and employed sales staff in the taxing State for solicitation of orders for their merchandise that, upon acceptance of the orders at their home office in another jurisdiction, were shipped to customers in the taxing State, were held liable to pay the latter's income tax on that portion of the net income of their interstate business as was attributable to such solicitation.

Yet, the following years saw inconsistent rulings that turned almost completely upon the use of or failure to use ''magic words'' by legislative drafters. That is, it was constitutional for the States to tax a corporation's net income, properly apportioned to the taxing State, as in Northwestern States, but no State could levy a tax on a foreign corporation for the privilege of doing business in the State, both taxes alike in all respects. 938 In Complete Auto Transit, Inc. v. Brady, 939 the Court overruled the cases embodying the distinction and articulated a standard that has governed the cases since. The tax in Brady was imposed on the privilege of doing business as applied to a corporation engaged in interstate transportation services in the taxing State; it was measured by the corporation's gross receipts from the service. The appropriate concern, the Court wrote, was to pay attention to ''economic realities'' and to ''address the problems with which the commerce clause is concerned.'' 940 The standard, a set of four factors that was distilled from precedent but newly applied, was firmly set out. A tax on interstate commerce will be sustained ''when the tax is applied to an activity with a substantial nexus with the taxing State, is fairly apportioned, does not discriminate against interstate commerce, and is fairly related to the services provided by the State.'' 941 All subsequent cases have been decided in this framework.

Nexus.--Nexus is a requirement that flows from both the commerce clause and the due process clause of the Fourteenth Amendment. 942 What is required is ''some definite link, some minimum connection, between a state and the person, property or transaction it seeks to tax.'' 943 In its commerce-clause setting, the nexus requirement serves to effectuate the ''structural concerns about the effects of state regulation on the national economy.'' 944 That is, ''the 'substantial-nexus' requirement . . . limit[s] the reach of State taxing authority so as to ensure that State taxation does not unduly burden interstate commerce.'' 945  

Often surfacing in cases having to do with the imposition of an obligation by a State on an out-of-state vendor to collect use taxes on goods sold to purchasers in the taxing State, the test is a ''physical presence'' standard. The Court has sustained the imposition on mail order sellers with retail outlets, solicitors, or property within the taxing State, 946 but it has denied the power to a State when the only connection is that the company communicates with customers in the State by mail or common carrier as part of a general interstate business. 947 The validity of general business taxes on interstate enterprises may also be determined by the nexus standard. However, again, only a minimal contact is necessary. 948 Thus, maintenance of one full-time employee within the State (plus occasional visits by non- resident engineers) to make possible the realization and continuance of contractual relations seemed to the Court to make almost frivolous a claim of lack of sufficient nexus. 949 The application of a state business-and-occupation tax on the gross receipts from a large wholesale volume of pipe and drainage products in the State was sustained, even though the company maintained no office, owned no property, and had no employees in the State, its marketing activities being carried out by an in-state independent contractor. 950 Also, the Court upheld a State's application of a use tax to aviation fuel stored temporarily in the State prior to loading on aircraft for consumption in interstate flights. 951  

Given the complexity of modern corporations and their frequent diversification and control of subsidiaries, state treatment of businesses operating within and without their borders requires an appropriate definition of the scope of business operations. Thus, States may impose a tax in accordance with a ''unitary business'' apportionment formula on concerns carrying on part of their business within the taxing State based upon the company's entire proceeds. But there must be a nexus, or minimal connection, between the interstate activities and the taxing State and a rational relationship between the income attributed to the State and the intrastate values of the enterprise. 952  

Apportionment.--This requirement is of long standing, 953 but its importance has broadened as the scope of the States' taxing powers has enlarged. It is concerned with what formulas the States must use to claim a share of a multistate business' tax base for the taxing State, when the business carries on a single integrated enterprise both within and without the State. A State may not exact from interstate commerce more than the State's fair share. Avoidance of multiple taxation, or the risk of multiple taxation, is the test of an apportionment formula. Generally speaking, this factor is both a commerce clause and a due process requisite, and it necessitates a rational relationship between the income attributed to the State and the intrastate values of the enterprise. 954 The Court has declined to impose any particular formula on the States, reasoning that to do so would be to require the Court in engage in ''extensive judicial lawmaking,'' for which it was ill-suited and for which Congress had ample power and ability to legislate. 955  

Rather, ''we determine whether a tax is fairly apportioned by examining whether it is internally and externally consistent.'' 956 ''To be internally consistent, a tax must be structured so that if every State were to impose an identical tax, no multiple taxation would result. Thus, the internal consistency test focuses on the text of the challenged statute and hypothesizes a situation where other States have passed an identical statute. . . .

''The external consistency test asks whether the State has taxed only that portion of the revenues from the interstate activity which reasonably reflects the in-state component of the activity being taxed. We thus examine the in-state business activity which triggers the taxable event and the practical or economic effect of the tax on that interstate activity.'' 957 In the latter case, the Court upheld as properly apportioned a state tax on the gross charge of any telephone call originated or terminated in the State and charged to an in-state service address, regardless of where the telephone call was billed or paid. 958 A complex state tax imposed on trucks displays the operation of the test. Thus, a state registration tax met the internal consistency test because every State honored every other States', and a motor fuel tax similarly was sustained because it was apportioned to mileage traveled in the State, whereas lump-sum annual taxes, an axle tax and an identification marker fee, being unapportioned flat taxes imposed for the use of the State's roads, were voided, under the internal consistency test, because if every State imposed them the burden on interstate commerce would be great. 959  

A deference to state taxing authority was evident in a case in which the Court sustained a state sales tax on the price of a bus ticket for travel that originated in the State but terminated in another State. The tax was unapportioned to reflect the intrastate travel and the interstate travel. Supp.28 The tax in this case was different, the Court held. The previous tax constituted a levy on gross receipts, payable by the seller, whereas the present tax was a sales tax, also assessed on gross receipts, but payable by the buyer. The Oklahoma tax, the Court continued, was internally consistent, since if every State imposed a tax on ticket sales within the State for travel originating there, no sale would be subject to more than one tax. The tax was also externally consistent, the Court held, because it was a tax on the sale of a service that took place in the State, not a tax on the travel. Supp.29  

However, the Court found discriminatory and thus invalid a state intangibles tax on a fraction of the value of corporate stock owned by state residents inversely proportional to the corporation's exposure to the state income tax. Supp.30  

Discrimination.--The ''fundamental principle'' governing this factor is simple. '''No State may, consistent with the Commerce Clause, impose a tax which discriminates against interstate commerce . . . by providing a direct commercial advantage to local business.''' 960 That is, a tax which by its terms or operation imposes greater burdens on out-of-state goods or activities than on competing in-state goods or activities will be struck down as discriminatory under the commerce clause. 961 In Armco. Inc. v. Hardesty, 962 the Court voided as discriminatory the imposition on an out-of-state wholesaler of a state tax that was levied on manufacturing and wholesaling but that relieved manufacturers subject to the manufacturing tax of liability for paying the wholesaling tax. Even though the former tax was higher than the latter, the Court found the imposition discriminated against the interstate wholesaler. 963 A state excise tax on wholesale liquor sales, which ex empted sales of specified local products, was held to violate the commerce clause. 964 A state statute that granted a tax credit for ethanol fuel if the ethanol was produced in the State, or if produced in another State that granted a similar credit to the State's ethanol fuel, was found discriminatory in violation of the clause. 965  

Benefit Relationship.--Although, in all the modern cases, the Court has stated that a necessary factor to sustain state taxes having an interstate impact is that the levy be fairly related to benefits provided by the taxing State, it has declined to be drawn into any consideration of the amount of the tax or the value of the benefits bestowed. The test rather is whether, as a matter of the first factor, the business has the requisite nexus with the State; if it does, the tax meets the fourth factor simply because the business has enjoyed the opportunities and protections which the State has afforded it. 966  

  Regulation .--Adoption of the modern standard of commerce-clause review of state regulation of or having an impact on interstate commerce was achieved in Southern Pacific Co. v. Arizona, 967 although it was presaged in a series of opinions, mostly dissents, by Chief Justice Stone. 968 The Southern Pacific case tested the validity of a state train-length law, justified as a safety measure. Revising a hundred years of doctrine, the Chief Justice wrote that whether a state or local regulation was valid depended upon a ''reconciliation of the conflicting claims of state and national power is to be attained only by some appraisal and accommodation of the competing demands of the state and national interests involved.'' 969 Save in those few cases in which Congress has acted, ''this Court, and not the state legislature, is under the commerce clause the final arbiter of the competing demands of state and national interests.'' 970  

That the test to be applied was a balancing one, the Chief Justice made clear at length, stating that in order to determine whether the challenged regulation was permissible, ''matters for ultimate determination are the nature and extent of the burden which the state regulation of interstate trains, adopted as a safety measure, imposes on interstate commerce, and whether the relative weights of the state and national interests involved are such as to make inapplicable the rule, generally observed, that the free flow of interstate commerce and its freedom from local restraints in matters requiring uniformity of regulation are interests safeguarded by the commerce clause from state interference.'' 971  

The test today continues to be the Stone articulation, although the more frequently quoted encapsulation of it is from Pike v. Bruce Church, Inc. 972 ''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. . . . 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.''

Obviously, the test requires ''even-handedness.'' Discrimination in regulation is another matter altogether. When on its face or in its effect a regulation betrays ''economic protectionism,'' an intent to benefit in-state economic interests at the expense of out-of-state interests, no balancing is required. ''When a state statute clearly discriminates against interstate commerce, it will be struck down . . . unless the discrimination is demonstrably justified by a valid factor unrelated to economic protectionism, . . . . Indeed, when the state statute amounts to simple economic protectionism, a 'virtually per se rule of invalidity' has applied.'' 973 Thus, an Oklahoma law that required coal-fired electric utilities in the State, producing power for sale in the State, to burn a mixture of coal containing at least 10% Oklahoma-mined coal was invalidated at the behest of a State that had previously provided virtually 100% of the coal used by the Oklahoma utilities. 974 Similarly, the Court invalidated a state law that permitted interdiction of export of hydroelectric power from the State to neighboring States, when in the opinion of regulatory authorities the energy was required for use in the State; a State may not prefer its own citizens over out-of-state residents in access to resources within the State. 975  

States may certainly promote local economic interests and favor local consumers, but they may not do so by adversely regulating out-of- state producers or consumers. In Hunt v. Washington State Apple Advertising Comm., 976 the Court confronted a state requirement that closed containers of apples offered for sale or shipped into North Carolina carry no grade other than the applicable U. S. grade. Washington State mandated that all apples produced in and shipped in interstate commerce pass a much more rigorous inspection than that mandated by the United States. The inability to display the recognized state grade in North Carolina impeded marketing of Washington apples. The Court obviously suspected the impact was intended, but, rather than strike the state requirement down as purposeful, it held that the regulation had the practical effect of discriminating, and, inasmuch as no defense based on possible consumer protection could be presented, the state law was invalidated. 977 State actions to promote local products and producers, of everything from milk 978 to alcohol, 979 may not be achieved through protectionism.

Even garbage transportation and disposition is covered by the negative commerce clause. A state law that banned the importation of most solid or liquid wastes that originated outside the State was struck down, because the State could not justify it as a health or safety measure, in the form of a quarantine, inasmuch as it did not limit in-state disposal at its landfills; the State was simply attempting to conserve landfill space and lower costs to its residents by keeping out trash from other States. 980 Further extending the limitation of the clause on waste disposal, Supp.31 the Court invalidated as a discrimination against interstate commerce a local ''flow control'' law, which required all solid waste within the town to be processed at a designated transfer station before leaving the municipality. Supp.32 The town's reason for the restriction was its decision to have built a solid waste transfer station by a private contractor, rather than with public funds by the town. To make the arrangement appetizing to the contractor, the town guaranteed it a minimum waste flow, for which it could charge a fee significantly higher than market rates. The guarantee was policed by the requirement that all solid waste generated within the town be processed at the contractor's station and that any person disposing of solid waste in any other location would be penalized.

The Court analogized the constraint as a form of economic protectionism, which bars out-of-state processors from the business of treating the localities solid waste, by hoarding a local resource for the benefit of local businesses that perform the service. The town's goal of revenue generation was not a local interest that could justify the discrimination. Moreover, the town had other means to accomplish this goal, such as subsidization of the local facility through general taxes or municipal bonds. The Court did not deal with, indeed, did not notice, the fact that the local law conferred a governmentally-granted monopoly, an exclusive franchise, indistinguishable from a host of local monopolies at the state and local level. Supp.33 States may not interdict the movement of persons into the State, whatever the motive to protect themselves from economic or similar difficulties. 981  

Drawing the line between discriminatory regulations that are almost per se invalid and regulations that necessitate balancing is not an easy task. Not every claim of protectionism is sustained. Thus, in Minnesota v. Clover Leaf Creamery Co., 982 there was attacked a state law banning the retail sale of milk products in plastic, nonreturnable containers but permitting sales in other nonreturnable, nonrefillable containers, such as paperboard cartons. The Court found no discrimination against interstate commerce, because both in-state and out-of-state interests could not use plastic containers, and it refused to credit a lower, state-court finding that the measure was intended to benefit the local pulpwood industry. In Exxon Corp. v. Governor of Maryland, 983 the Court upheld a statute that prohibited producers or refiners of petroleum products from operating retail service stations in Maryland. No discrimination was found, first, because there were no local producers or refiners within Maryland and therefore since the State's entire gasoline supply flowed in interstate commerce there was no favoritism, and, second, although the bar on operating fell entirely on out-of-state concerns, there were out-of-state concerns that did not produce or refine gasoline and they were able to continue operating in the State, so that there was some distinction between all in-state operators and some out-of-state operators as against some other out-of- state operators.

Still a model example of balancing is Chief Justice Stone's opinion in Southern Pacific Co. v. Arizona. 984 At issue was the validity of Arizona's law barring the operation within the State of trains of more than 14 passenger cars, no other State had a figure this low, or 70 freight cars, only one other State had a cap this low. First, the Court observed that the law substantially burdened interstate commerce. Enforcement of the law in Arizona, while train lengths went unregulated or were regulated by varying standards in other States, meant that interstate trains of a length lawful in other States had to be broken up before entering the State; inasmuch as it was not practicable to break up trains at the border, that act had to be accomplished at yards quite removed, with the result that the Arizona limitation controlled train lengths as far east as El Paso, Texas, and as far west as Los Angeles. Nearly 95% of the rail traffic in Arizona was interstate. The other alternative was to operate in other States with the lowest cap, Arizona's, with the result that that State's law controlled the railroads' operations over a wide area. 985 If other States began regulating at different lengths, as they would be permitted to do, the burden on the railroads would burgeon. Moreover, the additional number of trains needed to comply with the cap just within Arizona was costly, and delays were occasioned by the need to break up and remake lengthy trains. 986  

Conversely, the Court found that as a safety measure the state cap had ''at most slight and dubious advantage, if any, over unregulated train lengths.'' That is, while there were safety problems with longer trains, the shorter trains mandated by state law required increases in the numbers of trains and train operations and a consequent increase in accidents generally more severe than those attributable to longer trains. In short, the evidence did not show that the cap lessened rather than increased the danger of accidents. 987  

Conflicting state regulations appeared in Bibb v. Navajo Freight Lines, Inc. 988 There, Illinois required the use of contour mudguards on trucks and trailers operating on the State's highways, while adjacent Arkansas required the use of straight mudguards and banned contoured ones. At least 45 States authorized straight mudguards. The Court sifted the evidence and found it conflicting on the comparative safety advantages of contoured and straight mudguards. But, admitting that if that were all that was involved the Court would have to sustain the costs and burdens of outfitting with the required mudguards, the Court invalidated the Illinois law, because of the massive burden on interstate commerce occasioned by the necessity of truckers to shift cargoes to differently designed vehicles at the State's borders.

Arguably, the Court in more recent years has continued to stiffen the scrutiny with which it reviews state regulation of interstate carriers purportedly for safety reasons. 989 Difficulty attends any evaluation of the possible developing approach, inasmuch as the Court has spoken with several voices. A close reading, however, indicates that while the Court is most reluctant to invalidate regulations that touch upon safety and that if safety justifications are not illusory it will not second-guess legislative judgment, nonetheless, the Court will not accept, without more, state assertions of safety motivations. ''Regulations designed for that salutary purpose nevertheless may further the purpose so marginally, and interfere with commerce so substantially, as to be invalid under the Commerce Clause.'' Rather, the asserted safety purpose must be weighed against the degree of interference with interstate commerce. ''This 'weighing' . . . requires . . . 'a sensitive consideration of the weight and nature of the state regulatory concern in light of the extent of the burden imposed on the course of interstate commerce.'' 990  

Balancing has been used in other than transportation-industry cases. Indeed, the modern restatement of the standard was in such a case. 991 There, the State required cantaloupes grown in the State to be packed there, rather than in an adjacent State, so that in-state packers' names would be associated with a superior product. Promotion of a local industry was legitimate, the Court, said, but it did not justify the substantial expense the company would have to incur to comply. State efforts to protect local markets, concerns, or consumers against outside companies have largely been unsuccessful. Thus, a state law that prohibited ownership of local investment-advisory businesses by out-of- state banks, bank-holding companies, and trust companies was invalidated. 992 The Court plainly thought the statute was protectionist, but instead of voiding it for that reason it held that the legitimate interests the State might have did not justify the burdens placed on out-of-state companies and that the State could pursue the accomplishment of legitimate ends through some intermediate form of regulation. In Edgar v. Mite Corp., 993 an Illinois regulation of take- over attempts of companies that had specified business contacts with the State, as applied to an attempted take-over of a Delaware corporation with its principal place of business in Connecticut, was found to constitute an undue burden, with special emphasis upon the extraterritorial effect of the law and the dangers of disuniformity. These problems were found lacking in the next case, in which the state statute regulated the manner in which purchasers of corporations chartered within the State and with a specified percentage of in-state shareholders could proceed with their take-over efforts. The Court emphasized that the State was regulating only its own corporations, which it was empowered to do, and no matter how many other States adopted such laws there would be no conflict. The burdens on interstate commerce, and the Court was not that clear that the effects of the law were burdensome in the appropriate context, were justified by the State's interests in regulating its corporations and resident shareholders. 994  

In other areas, while the Court repeats balancing language, it has not applied it with any appreciable bite, 995 but in most re spects the state regulations involved are at most problematic in the context of the concerns of the commerce clause.

Footnotes

[Footnote 889] Northwestern States Portland Cement Co. v. Minnesota, 358 U.S. 450, 457 -458 (1959) (in part quoting Miller Bros Co. v. Maryland, 347 U.S. 340, 344 (1954)). Justice Frankfurter was similarly skeptical of definitive statements. ''To attempt to harmonize all that has been said in the past would neither clarify what has gone before nor guide the future. Suffice it to say that especially in this field opinions must be read in the setting of the particular cases and as the product pf preoccupation with their special facts.'' Freeman v. Hewit, 329 U.S. 249, 251 -252 (1946). The comments in all three cases dealt with taxation, but they could just as well have included regulation.

[Footnote 890] Infra, pp.240-242.

[Footnote 891] In addition to the sources previously cited, see J. Hellerstein & W. Hellerstein, State and Local Taxation--Cases and Materials (5th ed. 1988), ch. 6, 241 passim. For a succinct description of the history, see Hellerstein, State Taxation of Interstate Business: Perspectives on Two Centuries of Constitutional Adjudication, 41 Tax Law. 37 (1987).

[Footnote 892] Reading Railroad v. Pennsylvania, 82 U.S. (15 Wall.) 232 (1873).

[Footnote 893] Id., 275.

[Footnote 894] Id., 275-276, 279.

[Footnote 895] Id., 279-280.

[Footnote 896] Id., 280.

[Footnote 897] Id., 281-282.

[Footnote 898] Reading Railway Co. v. Pennsylvania, 82 U.S. (15 Wall.) 284 (1872).

[Footnote 899] Id., 293.

[Footnote 900] Id., 294. This case was overruled 14 years later, when the Court voided substantially the same tax in Philadelphia Steamship Co. v. Pennsylvania, 122 U.S. 326 (1887).

[Footnote 901] See The Minnesota Rate Cases (Simpson v. Shepard), 230 U.S. 352, 398 -412 (1913) (reviewing and summarizing at length both taxation and regulation cases). See also Missouri ex rel. Barrett v. Kansas Natural Gas Co., 265 U.S. 298, 307 (1924).

[Footnote 902] Robbins v. Shelby County Taxing District, 120 U.S. 489, 497 (1887); Leloup v. Port of Mobile, 127 U.S. 640, 648 (1888).

[Footnote 903] The Minnesota Rate Cases (Simpson v. Shepard), 230 U.S. 352, 400 -401 (1913).

[Footnote 904] The Delaware Railroad Tax, 85 U.S. (18 Wall.) 206, 232 (1873). See Cleveland, Cincinnati, Chicago & St. Louis Ry. Co. v. Backus, 154 U.S. 439 (1894); Postal Telegraph Cable Co. v. Adams, 155 U.S. 688 (1895). See cases cited in J. Hellerstein & W. Hellerstein, supra, n. 891, 215-219.

[Footnote 905] E.g., Welton v. Missouri, 91 U.S. 275 (1875); Robbins v. Shelby County Taxing District, 120 U.S. 489 (1887); Darnell & Son Co. v. City of Memphis, 208 U.S. 113 (1908); Bethlehem Motors Corp. v. Flynt, 256 U.S. 421 (1921).

[Footnote 906] Western Live Stock v. Bureau of Revenue, 303 U.S. 250 (1938); McGoldrick v. Berwind-White Coal Mining Co., 309 U.S. 33 (1940); International Harvester Co. v. Dept. of Treasury, 322 U.S. 340 (1944); International Harvester Co. v. Evatt, 329 U.S. 416 (1947).

[Footnote 907] E.g., Gwin, White & Prince, Inc. v. Henneford, 305 U.S. 434 (1939); Joseph v. Carter & Weekes Stevedoring Co., 330 U.S. 422 (1947); Central Greyhound Lines, Inc. v. Mealey, 334 U.S. 653 (1948); Notice the Court's distinguishing of Central Greyhound in Oklahoma Tax Comm'n v. Jefferson Lines, Inc., 514 U.S. 175, 188-91 (1995).

[Footnote 908] Freeman v. Hewit, 329 U.S. 249 (1946); Spector Motor Service, Inc. v. O'Connor, 340 U.S. 602 (1951).

[Footnote 909] Thus, the States carefully phrased tax laws so as to impose on interstate companies not a license tax for doing business in the State, which was not permitted, Railway Express Agency v. Virginia, 347 U.S. 359 (1954), but a franchise tax on intangible property on the privilege of doing business in a corporate form, which was permissible. Railway Express Agency v. Virginia, 358 U.S. 434 (1959); Colonial Pipeline Co. v. Traigle, 421 U.S. 100 (1975). Also, the Court increasingly found the tax to be imposed on a local activity in instances it would previously have seen to be an interstate activity. E.g., Memphis Natural Gas Co. v. Stone, 335 U.S. 80 (1948); General Motors Corp. v. Washington, 377 U.S. 436 (1964); Standard Pressed Steel Co. v. Dept. of Revenue, 419 U.S. 560 (1975).

[Footnote 910] Sedler, The Negative Commerce Clause as a Restriction on State Regulation and Taxation: An Analysis in Terms of Constitutional Structure, 31 Wayne L. Rev. 885, 924-925 (1985). In addition to the sources already cited, see the Court's summaries in The Minnesota Rate Cases (Simpson v. Shepard), 230 U.S. 352, 398 -412 (1913), and Southern Pacific Co. v. Arizona, 325 U.S. 761, 766 -770 (1945). In the latter case, Chief Justice Stone was reconceptualizing the standards under the clause, but the summary represents a faithful recitation of the law.

[Footnote 911] See DiSanto v. Pennsylvania, 273 U.S. 34, 44 (1927) (Justice Stone dissenting). The dissent was the precursor to Chief Justice Stone's reformulation of the standard in 1945. DiSanto was overruled in California v. Thompson, 313 U.S. 109 (1941).

[Footnote 912] Bank of Augusta v. Earle, 38 U.S. (13 Pet.) 519 (1839); Hanover Fire Ins. Co. v. Harding, 272 U.S. 494 (1926); Union Brokerage Co. v. Jensen, 322 U.S. 202 (1944).

[Footnote 913] Crutcher v. Kentucky, 141 U.S. 47 (1891); International Textbook Co. v. Pigg, 217 U.S. 91 (1910).

[Footnote 914] Dahnke-Walker Co. v. Bondurant, 257 U.S. 282 (1921); Allenberg Cotton Co. v. Pittman, 419 U.S. 20 (1974). But see Eli Lilly & Co. v. Sav-on Drugs, 366 U.S. 276 (1961).

[Footnote 915] Wabash, S. L. & P. Ry. Co. v. Illinois, 118 U.S. 557 (1886). The power of the States generally to set rates had been approved in Chicago, B. & Q. R. Co. v. Iowa, 94 U.S. 155 (1877), and Peik v. Chicago & N. W. R. Co., 94 U.S. 164 (1877). After the Wabash decision, States retained power to set rates for passengers and freight taken up and put down within their borders. Wisconsin R. R. Comm. v. Chicago, B. & Q. R. Co., 257 U.S. 563 (1922).

[Footnote 916] Generally, the Court drew the line at regulations that provided for adequate service, not any and all service. Thus, one class of cases dealt with requirements that trains stop at designated cities and towns. The regulations were upheld in such cases as Gladson v. Minnesota, 166 U.S. 142 (1897), and Lake Shore & Mich. South. Ry. v. Ohio, 173 U.S. 285 (1899), and invalidated in Illinois Central R. R. v. Illinois, 142 (1896). See Chicago, B. & Q. Ry. v. Wisconsin R. R. Comm., 237 U.S. 220, 226 (1915); St. Louis & S. F. Ry. v. Public Service Comm., 254 U.S. 535, 536 -537 (1921). The cases were extremely fact particularistic.

[Footnote 917] E.g., Smith v. Alabama, 124 U.S. 465 (1888) (required locomotive engineers to be examined and licensed by the State, until Congress should deem otherwise); New York, N. H. & H. Co. v. New York, 165 U.S. 628 (1897) (fobidding heating of passenger cars by stoves); Chicago, R. I. & Pac. Ry. Co. v. Arkansas, 219 U.S. 453 (1911) (requiring three brakemen on freight trains of more than 25 cars).

[Footnote 918] E.g., Terminal Assn v. Trainmen, 318 U.S. 1 (1943) (requiring railroad to provide caboose cars for its employees); Hennington v. Georgia, 163 U.S. 299 (1896) (forbidding freight trains to run on Sundays). But see Seaboard Air Line Ry. v. Blackwell, 244 U.S. 310 (1917) (voiding as too onerous on interstate transportation law requiring trains to come to almost a complete stop at all grade crossings, when there were 124 highway crossings at grade in 123 miles, doubling the running time).

[Footnote 919] Four cases over a lengthy period sustained the laws. Chicago, R. I. & P. R. Co. v. Arkansas, 219 U.S. 453 (1911); St. Louis, Iron Mt. & S. R. Co. v. Arkansas, 240 U.S. 518 (1916); Missouri Pacific Co. v. Norwood, 283 U.S. 249 (1931); Brotherhood of Locomotive Firemen & Enginemen v. Chicago, R. I. & P. R. Co., 382 U.S. 423 (1966). In the latter case, the Court noted the extensive and conflicting record with regard to safety, but it then ruled that with the issue in so much doubt it was peculiarly a legislative choice.

[Footnote 920] Hendrick v. Maryland, 235 U.S. 610 (1915); Kane v. New Jersey, 242 U.S. 160 (1916).

[Footnote 921] E.g., Bradley v. Public Utility Comm., 289 U.S. 92 (1933) (State could deny an interstate firm a necessary certificate of convenience to operate as a common carrier on the basis that the route was overcrowded); Welch Co. v. New Hampshire, 306 U.S. 79 (1939) (maximum hours for drivers of motor vehicles); Eichholz v. Public Service Comm., 306 U.S. 268 (1939) (reasonable regulations of traffic). But compare Michigan Comm. v. Duke, 266 U.S. 570 (1925) (State may not impose common-carrier responsibilities on business operating between States that did not assume them); Buck v. Kuykendall, 267 U.S. 307 (1925) (denial of certificate of convenience under circumstances was a ban on competition).

[Footnote 922] E.g., Mauer v. Hamilton, 309 U.S. 598 (1940) (ban on operation of any motor vehicle carrying any other vehicle above the head of the operator). By far, the example of the greatest deference is South Carolina Highway Dept. v. Barnwell Bros., 303 U.S. 177 (1938), in which the Court upheld, in a surprising Stone opinion, truck weight and width restrictions prescribed by practically no other State (in terms of the width, no other).

[Footnote 923] E.g., Transportation Co. v. City of Chicago, 99 U.S. 635 (1879); Williamette Iron Bridge Co. v. Hatch, 125 U.S. 1 (1888). See Kelly v. Washington, 302 U.S. 1 (1937) (upholding state inspection and regulation of tugs operating in navigable waters, in absence of federal law).

[Footnote 924] E.g., Western Union Tel Co. v. Foster, 247 U.S. 105 (1918); Lemke v. Framers Grain Co., 258 U.S. 50 (1922); State Corp. Comm. v. Wichita Gas Co., 290 U.S. 561 (1934).

[Footnote 925] Milk Control Board v. Eisenberg Co., 306 U.S. 346 (1939) (milk); Parker v. Brown, 317 U.S. 341 (1943) (raisins).

[Footnote 926]   91 U.S. 275 (1875).

[Footnote 927]   136 U.S. 313 (1890).

[Footnote 928] E.g., Brimmer v. Rebman, 138 U.S. 78 (1891) (law requiring postslaughter inspection in each county of meat transported over 100 miles from the place of slaughter); Dean Milk Co. v. City of Madison, 340 U.S. 349 (1951) (city ordinance preventing selling of milk as pasteurized unless it had been processed and bottled at an approved plant within a radius of five miles from the central square of Madison). As the latter case demonstrates, it is constitutionally irrelevant that other Wisconsin producers were also disadvantaged by the law. For a modern application of the principle of these cases, see Fort Gratiot Sanitary Landfill v. Michigan Natural Resources Dept., 112 S.Ct. 2019 (1992) (forbidding landfills from accepting out-of-county wastes). And see C & A Carbone, Inc. v. Town of Clarkstown, 511 U.S. 383, 391 (1994) (discrimination against interstate commerce not preserved because local businesses also suffer).

[Footnote 929]   294 U.S. 511 (1935). See also Polar Ice Cream & Creamery Co. v. Andrews, 375 U.S. 361 (1964). With regard to products originating within the State, the Court had no difficulty with price fixing. Nebbia v. New York, 291 U.S. 502 (1934).

[Footnote 930]   336 U.S. 525 (1949). For the most recent case in this saga, see West Lynn Creamery, Inc. v. Healy, 512 U.S. 186 (1994).

[Footnote 931] And the Court does not permit a State to combat discrimination against its own products by admitting only products (here, again, milk) from States that have reciprocity agreements with it to protect its own dealers. Great Atlantic & Pacific Tea Co. v. Cottrell, 424 U.S. 366 (1976).

[Footnote 932] Formulation of a balancing test was achieved in Southern Pacific Co. v. Arizona, 325 U.S. 761 (1945),and was thereafter maintained more or less consistently. The Court's current phrasing of the test was in Pike v. Bruce Church, Inc., 397 U.S. 137 (1970).

[Footnote 933] Indeed, scholars dispute just when the modern standard was firmly adopted. The conventional view is that it was articulated in Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977), but there also seems little doubt that the foundation of the present law was laid in Northwestern States Portland Cement Co. v. Minnesota, 358 U.S. 450 (1959).

[Footnote 934] Compare Freeman v. Hewit, 329 U.S. 249, 252 -256 (1946), with Western Live Stock v. Bureau of Revenue, 303 U.S. 250, 258 , 260 (1938).

[Footnote 935]   358 U.S. 450 (1959).

[Footnote 936] Id., 461-462. See Western Live Stock v. Bureau of Revenue, 303 U.S. 250, 254 (1938). For recent reiterations of the principle, see Quill Corp. v. North Dakota ex rel. Heitkamp, 112 S.Ct. 1904, 1912 n. 5 (1992) (citing cases).

[Footnote 937] Hellerstein, State Taxation of Interstate Business: Perspectives on Two Centuries of Constitutional Adjudication, 41 Tax Law. 37, 54 (1987).

[Footnote 938] Spector Motor Service, Inc. v. O'Connor, 340 U.S. 602 (1951). The attenuated nature of the purported distinction was evidenced in Colonial Pipeline Co. v. Traigle, 421 U.S. 100 (1975), in which the Court sustained a nondiscriminatory, fairly apportioned franchise tax that was measured by the taxpayer's capital stock, imposed on a pipeline company doing an exclusively interstate business in the taxing State, on the basis that it was a tax imposed on the privilege of conducting business in the corporate form.

[Footnote 939]   430 U.S. 274 (1977).

[Footnote 940] Id., 279, 288. ''In reviewing Commerce Clause challenges to state taxes, our goal has instead been to 'establish a consistent and rational method of inquiry' focusing on 'the practical effect of a challenged tax.''' Commonwealth Edison Co. v. Montana, 453 U.S. 609, 615 (1981) (quoting Mobil Oil Corp. v. Comr. of Taxes, 445 U.S. 425, 443 (1980)).

[Footnote 941] Id., 279. The rationale of these four parts of the test is set out in Quill Corp. v. North Dakota ex rel. Heitkamp, 112 S.Ct. 1904, 1913 (1992). A recent application of the four-part Complete Auto Transit test is Oklahoma Tax Comm'n v. Jefferson Lines, Inc., 514 U.S. 175 (1995).

[Footnote 942] It had been thought that the tests of nexus under the commerce clause and the due process clause were identical, but, controversially, in Quill Corp. v. North Dakota ex rel. Heitkamp, 112 S.Ct. 1904, 1909-1911 (1992), but compare id., 1916 (Justice White concurring in part and dissenting in part), the Court, stating that the two ''are closely related,''(citing National Bellas Hess, Inc. v. Dept. of Revenue of Illinois, 386 U.S. 753, 756 (1967)), held that the two constitutionally requirements ''differ fundamentally'' and it found a state tax met the due process test while violating the commerce clause.

[Footnote 943] National Bellas Hess, Inc. v. Dept. of Revenue of Illinois, 386 U.S. 753, 756 (1967). The phraseology is quoted from a due process case, Miller Bros. Co. v. Maryland, 347 U.S. 340, 344 -345 (1954), but as a statement it probably survives the bifurcation of the tests in Quill.

[Footnote 944] Quill Corp. v. North Dakota ex rel. Heitkamp, 112 S.Ct. 1904, 1913 (1992).

[Footnote 945] Ibid.

[Footnote 946] Scripto v. Carson, 362 U.S. 207 (1960); National Geographic Society v. California Bd. of Equalization, 430 U.S. 551 (1977). The agents in the State in Scripto were independent contractors, rather than employees, but this distinction was irrelevant. See also Tyler Pipe Industries v. Dept. of Revenue, 483 U.S. 232, 249 -250 (1987) (reaffirming Scripto on this point). See also D. H. Holmes Co. v. McNamara, 486 U.S. 24 (1988) (imposition of use tax on catalogs, printed outside State at direction of an in-state corporation and shipped to prospective customers within the State, upheld).

[Footnote 947] National Bellas Hess, Inc. v. Department of Revenue of Illinois, 386 U.S. 753 (1967), reaffirmed with respect to the commerce clause in Quill Corp. v. North Dakota ex rel. Heitkamp, 112 S.Ct. 1904 (1992).

[Footnote 948] Some in-state contact is necessary in many instances by statutory compulsion. Reacting to Northwestern States, Congress enacted P.L. 86-272, 15 U.S.C. Sec. 381, providing that mere solicitation by a company acting outside the State did not support imposition of a state income tax on a company's proceeds. See Heublein, Inc. v. South Carolina Tax Comm., 409 U.S. 275 (1972); Wisconsin Dept. of Revenue v. William Wrigley, Jr., Co., 112 S.Ct. 2447 (1992).

[Footnote 949] Standard Pressed Steel Co. v. Dept. of Revenue, 419 U.S. 560 (1975). See also General Motors Corp. v. Washington, 377 U.S. 436 (1964).

[Footnote 950] Tyler Pipe Industries, Inc. v. Dept. of Revenue, 483 U.S. 232, 249 -251 (1987). The Court noted its agreement with the state court holding that '''the crucial factor governing nexus is whether the activities performed in this state on behalf of the taxpayer are significantly associated with the taxpayer's ability to establish and maintain a market in this state for the sales.''' Id., 250.

[Footnote 951] United Air lines v. Mahin, 410 U.S. 623 (1973).

[Footnote 952] Container Corp. of America v. Franchise Tax Board, 463 U.S. 159, 165 -169 (1983); ASARCO Inc. v. Idaho State Tax Comm., 458 U.S. 307, 316 -17 (1982).

[Footnote 953] E.g., Pullman's Palace Car Co. v. Pennsylvania, 141 U.S. 18, 26 (1891); Maine v. Grand Trunk Ry., 142 U.S. 217, 278 (1891).

[Footnote 954] The recent cases are, Moorman Mfg. Co. v. Bair, 437 U.S. 267 (1978); Mobil Oil Corp. v. Comr. of Taxes, 445 U.S. 425 (1980); Exxon Corp. v. Wisconsin Dept. of Revenue, 447 U.S. 207 (1980); ASARCO v. Idaho State Tax Comm., 458 U.S. 307 (1982); F. W. Woolworth Co. v. New Mexico TaxationRevenue Dept., 458 U.S. 354 (1982); Container Corp. of America v. Franchise Tax Board, 463 U.S. 159 (1983); Tyler Pipe Industries v. Dept. of Revenue, 483 U.S. 232, 251 (1987); Allied-Signal, Inc. v. Director, Div. of Taxation, 112 S.Ct. 2251 (1992). Cf. American Trucking Assns., Inc. v. Scheiner, 483 U.S. 266 (1987).

[Footnote 955] Moorman Mfg. Co. v. Bair, 437 U.S. 267, 278 -280 (1978).

[Footnote 956] Goldberg v. Sweet, 488 U.S. 252, 261 (1989).

[Footnote 957] Id., 261, 262 (internal citations omitted).

[Footnote 958] Id. The tax law provided a credit for any taxpayer who was taxed by another State on the same call. Actual multiple taxation could thus be avoided, the risks of other multiple taxation was small, and it was impracticable to keep track of the taxable transactions.

[Footnote 959] American Trucking Assns., Inc. v. Scheiner, 483 U.S. 266 (1987).

[Footnote 28 (1996 Supplement)] Indeed, there seemed to be a precedent squarely on point. Central Greyhound Lines, Inc. v. Mealey, 334 U.S. 653 (1948). Struck down in that case was a state statute that failed to apportion its taxation of interstate bus ticket sales to reflect the distance traveled within the State.

[Footnote 29 (1996 Supplement)] Oklahoma Tax Comm'n v. Jefferson Lines, Inc., 514 U.S. 175 (1995). Indeed, the Court analogized the tax to that in Goldberg v. Sweet, 488 U.S. 252 (1989), a tax on interstate telephone services that originated in or terminated in the State and that were billed to an in-state address.

[Footnote 30 (1996 Supplement)] Fulton Corp. v. Faulkner, 116 S. Ct. 848 (1996). The State had defended on the basis that the tax was a ''compensatory'' one designed to make interstate commerce bear a burden already borne by intrastate commerce. The Court recognized the legitimacy of the defense, but it found the tax to meet none of the three criteria for classification as a valid compensatory tax. Id. at 855-60.

[Footnote 960] Boston Stock Exchange v. State Tax Comm., 429 U.S. 318, 329 (1977) (quoting Northwestern States Portland Cement Co. v. Minnesota, 358 U.S. 450, 457 (1959)). The principle, as we have observed above, is a long-standing one under the commerce clause. E.g., Welton v. Missouri, 91 U.S. 275 (1876).

[Footnote 961] Maryland v. Louisiana, 451 U.S. 725, 753 -760 (1981). But see Commonwealth Edison Co. v. Montana, 453 U.S. 609, 617 -619 (1981). And see Oregon Waste Systems v. Department of Envtl. Quality, 511 U.S. 93 (1994) (surcharge on in-state disposal of solid wastes that discriminates against companies disposing of waste generated in other States invalid).

[Footnote 962]   467 U.S. 638 (1984).

[Footnote 963] The Court applied the ''internal consistency'' test here, too, in order to determine the existence of discrimination. Id., 644- 645. Thus, the wholesaler did not have to demonstrate it had paid a like tax to another State, only that if other States imposed like taxes it would be subject to discriminatory taxation. See also Tyler Pipe Industries v. Washington State Dept. of Revenue, 483 U.S. 232 (1987); American Trucking Assns., Inc. v. Scheiner, 483 U.S. 266 (1987); Amerada Hess Corp. v. Director, New Jersey Taxation Div., 490 U.S. 66 (1989); Kraft General Foods v. Iowa Dept. of Revenue, 112 S.Ct. 2365 (1992)

[Footnote 964] Bacchus Imports, Ltd. v. Dias, 468 U.S. 263 (1984).

[Footnote 965] New Energy Co. of Indiana v. Limbach, 486 U.S. 269 (1988).

[Footnote 966] Commonwealth Edison Co. v. Montana, 453 U.S. 609, 620 -629 (1981). Two state taxes imposing flat rates on truckers, because they did not vary directly with miles traveled or with some other proxy for value obtained from the State, were found to violate this standard in American Trucking Assns., Inc. v. Scheiner, 483 U.S. 266, 291 (1987), but this oblique holding was tagged onto an elaborate opinion holding the taxes invalid under two other Brady tests, and, thus, the precedential value is questionable.

[Footnote 967]   325 U.S. 761 (1945).

[Footnote 968] E.g., DiSanto v. Pennsylvania, 273 U.S. 34, 43 (1927) (dissenting); California v. Thompson, 313 U.S. 109 (1941); Duckworth v. Arkansas, 314 U.S. 390 (1941); Parker v. Brown, 317 U.S. 341, 362 -368 (1943) (alternative holding).

[Footnote 969] Southern Pacific Co. v. Arizona, 325 U.S. 761, 768 -769 (1941).

[Footnote 970] Id., 769.

[Footnote 971] Id., 770-771.

[Footnote 972]   397 U.S. 137, 142 (1970).

[Footnote 973] Wyoming v. Oklahoma, 112 S.Ct. 789, 800 (1992) (quoting City of Philadelphia v. New Jersey, 437 U.S. 617, 624 (1978)). See also Brown-Forman Distillers Corp. v. New York State Liquor Auth., 476 U.S. 573, 579 (1986). In Maine v. Taylor, 477 U.S. 131 (1986), the Court did uphold a protectionist law, finding a valid justification aside from economic protectionism. The State barred the importation of out-of-state baitfish, and the Court credited lower-court findings that legitimate ecological concerns existed about the possible presence of parasites and nonnative species in baitfish shipments.

[Footnote 974] Wyoming v. Oklahoma, 112 S.Ct. 789 (1992). See also Maryland v. Louisiana, 451 U.S. 725 (1981) (a tax case, invalidating a state first-use tax, which, because of exceptions and credits, imposed a tax only on natural gas moving out-of-state, because of impermissible discrimination).

[Footnote 975] New England Power Co. v. New Hampshire, 455 U.S. 331 (1982). See also Hughes v. Oklahoma, 441 U.S. 322 (1979) (voiding a ban on transporting minnows caught in the State for sale outside the State); Sporhase v. Nebraska, 458 U.S. 941 (1982) (invalidating a ban on the withdrawal of ground water from any well in the State intended for use in another State). These cases largely eviscerated a line of older cases recognizing a strong state interest in protection of animals and resources. See Geer v. Connecticut, 161 U.S. 519 (1896). New England Power had rather old antecedents. E.g., West v. Kansas Gas Co., 221 U.S. 229 (1911); Pennsylvania v. West Virginia, 262 U.S. 553 (1923).

[Footnote 976]   432 U.S. 333 (1977). Other cases in which the State was attempting to promote and enhance local products and businesses include Pike v. Bruce Church, Inc., 397 U.S. 137 (1970) (State required producer of high-quality cantaloupes to pack them in the State, rather than in an adjacent State at considerably less expense, in order that the produce be identified with the producing State); Foster-Fountain Packing Co. v. Haydel, 278 U.S. 1 (1928) (State banned export of shrimp from State until hulls and heads were removed and processed, in order to favor canning and manufacture within the State).

[Footnote 977] That discriminatory effects will result in invalidation, as well as purposeful discrimination, is also drawn from Dean Milk Co. v. City of Madison, 340 U.S. 349 (1951)

[Footnote 978] E.g., H. P. Hood & Sons v. Du Mond, 336 U.S. 525 (1949). See also Great Atlantic & Pacific Tea Co. v. Cottrell, 424 U.S. 366 (1976) (state effort to combat discrimination by other States against its milk through reciprocity provisions). In West Lynn Creamery, Inc. v. Healy, 512 U.S. 186 (1994), the Court held invalidly discriminatory against interstate commerce a state milk pricing order, which imposed an assessment on all milk sold by dealers to in- state retailers, the entire assessment being distributed to in-state dairy farmers despite the fact that about two- thirds of the assessed milk was produced out of State. The avowed purpose and undisputed effect of the provision was to enable higher-cost in-state dairy farmers to compete with lower-cost dairy farmers in other States.

[Footnote 979] Healy v. Beer Institute, Inc., 491 U.S. 324 (1989); Brown- Forman Distillers Corp. v. New York State Liquor Auth., 476 U.S. 573 (1986). And see Bacchus Imports, Ltd. v. Dias, 468 U.S. 263 (1984) (a tax case).

[Footnote 980] City of Philadelphia v. New Jersey, 437 U.S. 617 (1978), reaffirmed and applied in Chemical Waste Management, Inc. v. Hunt, 112 S.Ct. 2009 (1992), and Fort Gratiot Sanitary Landfill v. Michigan Natural Resources Dept., 112 S.Ct. 2019 (1992).

[Footnote 31 (1996 Supplement)] See also Oregon Waste Systems, Inc. v. Department of Envtl. Quality, 511 U.S. 93 (1994) (discriminatory tax).

[Footnote 32 (1996 Supplement)] C & A Carbone, Inc. v. Town of Clarkstown, 511 U.S. 383 (1994).

[Footnote 33 (1996 Supplement)] 33 See The Supreme Court, Leading Cases, 1993 Term, 108 Harv. L. Rev. 139, 149-59 (1994). Weight was given to this consideration by Justice O'Connor, 511 U.S. at 401 (concurring) (local law an excessive burden on interstate commerce), and by Justice Souter, id. at 410 (dissenting).

[Footnote 981] Edwards v. California, 314 U.S. 160 (1941) (California effort to bar ''Okies,'' persons fleeing the Great Plains dust bowl in the Depression). Cf. the notable case of Crandall v. Nevada, 73 U.S. (6 Wall.) 35 (1867) (without tying it to any particular provision of Constitution, Court finds a protected right of interstate movement). The right of travel is now an aspect of equal protection jurisprudence.

[Footnote 982]   449 U.S. 456, 470 -474 (1981).

[Footnote 983]   437 U.S. 117 (1978).

[Footnote 984]   325 U.S. 761 (1945). Interestingly, Justice Stone had written the opinion for the Court in South Carolina State Highway Dept. v. Barnwell Bros., 303 U.S. 177 (1938), in which, in a similar case involving regulation of interstate transportation and proffered safety reasons, he had eschewed balancing and deferred overwhelmingly to the state legislature. Barnwell Bros. involved a state law that prohibited use on state highways of trucks that were over 90 inches wide or that had a gross weight over 20,000 pounds, with from 85% to 90% of the Nation's trucks exceeding these limits. This deference and refusal to evaluate evidence resurfaced in a case involving an attack on railroad ''full-crew'' laws. Brotherhood of Locomotive Firemen & Enginemen v. Chicago, R.I. & P. Railroad Co., 393 U.S. 129 (1968).

[Footnote 985] The concern about the impact of one State's regulation upon the laws of other States is in part a reflection of the Cooley national uniformity interest and partly a hesitation about the autonomy of other States, E.g., CTS Corp. v. Dynamics Corp. of America, 481 U.S. 69, 88 -89 (1987); Brown-Forman Distillers Corp. v. New York State Liquor Auth., 476 U.S. 573, 583 -584 (1986).

[Footnote 986] Southern Pacific Co. v. Arizona, 325 U.S. 761, 771 -775 (1945).

[Footnote 987] Id., 775-779, 781-784.

[Footnote 988]   359 U.S. 520 (1959).

[Footnote 989] Raymond Motor Transp. v. Rice, 434 U.S. 429 (1978); Kassel v. Consolidated Freightways Corp., 450 U.S. 662 (1981).

[Footnote 990] Kassel v. Consolidated Freightways Corp., 450 U.S. 662, 67 - 671 (1981) (quoting Raymond Motor Transp. v. Rice, 434 U.S. 429, 441 , 443 (1978)). Both cases invalidated state prohibitions of the use of 65- foot single-trailer trucks on state highways.

[Footnote 991] Pike v. Bruce Church, Inc., 397 U.S. 137 (1970).

[Footnote 992] Lewis v. BT Investment Managers, Inc., 447 U.S. 27 (1980).

[Footnote 993]   457 U.S. 624 (1982) (plurality opinion).

[Footnote 994] CTS Corp. v. Dynamics Corp. of America, 481 U.S. 69 (1987).

[Footnote 995] E.g., Northwest Central Pipeline Corp. v. State Corp. Comm. of Kansas, 489 U.S. 493, 525 -526 (1989); Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456, 472 -474 (1981); Exxon Corp. v. Governor of Maryland, 437 U.S. 117, 127 -128 (1978). But see Bendix Autolite Corp. v. Midwesco Enterprises, Inc., 486 U.S. 888 (1988).


 

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Annotations p. 33