Oregon Waste Sys.,Inc. v. Dep't of Envir. Quality of Oregon

• Decision Date: 04 April 1994
• Docket Number: 9370
• Citation: 128 L.Ed.2d 13,511 U.S. 93,114 S.Ct. 1345
• Parties: OREGON WASTE SYSTEMS, INC., et al., Petitioners v. DEPARTMENT OF ENVIRONMENTAL QUALITY OF The STATE OF OREGON et al. COLUMBIA RESOURCE COMPANY, Petitioner v. ENVIRONMENTAL QUALITY COMMISSION OF The STATE OF OREGON
• Court: U.S. Supreme Court

511 U.S. 93

114 S.Ct. 1345

128 L.Ed.2d 13

OREGON WASTE SYSTEMS, INC., et al., Petitioners

v DEPARTMENT OF ENVIRONMENTAL QUALITY OF The STATE

OF OREGON et al.

COLUMBIA RESOURCE COMPANY, Petitioner

v. ENVIRONMENTAL QUALITY COMMISSION OF The STATE OF OREGON.

Nos. 93-70, 93-108.

Supreme Court of the United States

Argued Jan. 18, 1994.

Decided April 4, 1994.

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. ____.

(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, 90 S.Ct. 844, 847, 25 L.Ed.2d 174. 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. ----, ----, 112 S.Ct. 2009, ----, 119 L.Ed.2d 121. Pp. 1349-1350.

(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. ----, ----, 112 S.Ct. 789, ----, 117 L.Ed.2d 1. 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, 98 S.Ct. 2531, 2537, 57 L.Ed.2d 475. Sporhase v. Nebraska, 458 U.S. 941, 102 S.Ct. 3456, 73 L.Ed.2d 1254, distinguished. Pp. ____.

316 Ore. 99, 849 P.2d 500 (1993), 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.

Andrew J. Pincus, Washington, DC, argued for the petitioners.

Thomas A. Balmer, Salem, OR, argued for the respondent.

Justice THOMAS delivered the opinion of the Court.

Two Terms ago, in Chemical Waste Management, Inc. v. Hunt, 504 U.S. ----, 112 S.Ct. 2009, 119 L.Ed.2d 121 (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 ----, n. 9, 112 S.Ct., at 2016, 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 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-of-state 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.110(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.110(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.110(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

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. ----, 112 S.Ct. 2009, 119 L.Ed.2d 121 (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. Ibid. The court read 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, 59 S.Ct. 744, 753, 83 L.Ed. 1001 (1939)). Because Oregon law restricts the scope of judicial review in expedited proceedings to deciding the facial legality of administrative rules and the statutes...