Title: American Trucking Assns., Inc. v. State of Oregon

State: oregon

Issuer: Oregon Supreme Court

Document:

FILED:  December 15, 2005
IN THE SUPREME COURT OF THE STATE OF OREGON
AMERICAN TRUCKING ASSOCIATIONS, INC.,
a District of Columbia Corporation,
CRST, INC.,
an Iowa corporation,
USF REDDAWAY INC.,
an Oregon corporation,
KENNETH E. MANSIGH TRUCKING, INC.,
a Washington corporation,
and VENEER CHIP TRANSPORT, INC.,
a Washington corporation,
ON BEHALF OF THEMSELVES AND ALL OTHER
SIMILARLY-SITUATED WEIGHT-DISTANCE TAXPAYERS,
Respondents on Review,
v.
STATE OF OREGON,
DEPARTMENT OF TRANSPORTATION
and GRACE CRUNICAN, DIRECTOR,
Department of Transportation,
Petitioners on Review,
and
AAA OREGON/IDAHO,
an Oregon corporation,
Intervenor-Petitioner on Review.
(CC No. 00C16242; CA A117694; SC S51622, S51623)
En Banc
On review from the Court of Appeals.*
Argued and submitted May 10, 2005.
David E. Leith, Assistant Attorney General, Salem, argued
the cause for petitioner on review.  With him on the briefs were
Mary H. Williams, Solicitor General, and Hardy Myers, Attorney
General.
Robert Digges, J., pro hac vice, Alexandria, Virginia,
argued the cause for respondents on review.  Justin M. Thorp, and
Jonathan M. Hoffman, of Martin, Bischoff, Templeton, Langslet
Hoffman LLP, Portland, filed the briefs for respondents on
review.
Scott G. Seidman, of Tonkon Thorp LLP, Portland, argued the
cause for intervenor.  With him on the briefs were Paul W.
Conable and Christine L. Uri.
DE MUNIZ, J.
The decision of the Court of Appeals pertaining to non-farm-use carriers is reversed, the remainder is otherwise affirmed,
and the judgment of the circuit court is affirmed.
*Appeal from Marion County Circuit Court, Claudia Burton, Judge. 193 Or App 185, 90 P3d 15 (2004).
DE MUNIZ, J.
The issue in this case is whether the Oregon "flat fee"
highway tax alternatives that are available to heavy trucks
hauling certain commodities in either interstate or intrastate
commerce violate the Commerce Clause of the United States
Constitution. (1)  American Trucking Associations, Inc., and
several other trucking companies (plaintiffs) sought a judgment
declaring, among other things, that the provisions of ORS
825.480(1), (4), and (5) (2) that offer a flat-fee tax option
to certain non-farm-use carriers, as well as similar provisions
for farm-use trucks, violated the Commerce Clause.  Plaintiffs
also sought injunctive relief and a refund of taxes paid pursuant
to those provisions.  Defendants in the case are the Oregon
Department of Transportation and its director, as well as
intervenor-defendant AAA Oregon/Idaho.  The trial court dismissed
plaintiffs' action below.  The Court of Appeals subsequently
affirmed that judgment as to the flat-fee alternatives for farm-use trucks, but reversed regarding the tax alternatives for non-farm-use trucks.  The Court of Appeals concluded that the flat-fee alternatives for non-farm-use carriers violated the Commerce
Clause by creating a fee structure that had a discriminatory
effect on trucks engaged in interstate commerce.  American
Trucking Assns., Inc. v. State of Oregon, 193 Or App 185, 90 P3d
15 (2004).  We allowed defendant's petition for review and now
reverse the Court of Appeals decision as it pertains to non-farm-use carriers, otherwise affirm the remainder of that decision,
and affirm the trial court's judgment.
We take the relevant facts from the opinion of the
Court of Appeals.
"The primary method under which Oregon taxes heavy
trucks that use its highways is a weight-mile tax.  ORS
825.450-825.555.  Under that tax, a trucking carrier
pays a rate for each mile that its trucks operate on
the state's public highways.  The tax is based on the
weight that the carrier declares to be the truck's
maximum legal weight; the higher the declared weight,
the higher the per-mile tax for that truck.  ORS
825.474-825.476.  A truck that pays the weight-mile tax
does not pay the fuel tax that the state charges other
vehicles and may take any fuel tax paid as a credit
against the weight-mile tax.  ORS 825.486.  A carrier
must maintain records of the declared weights of its
trucks and the miles that they travel in order to make
the required reports and calculate the amount of tax
owed.
"Plaintiffs do not question the constitutionality
of the weight-mile tax itself.  Rather, they attack two
exceptions to it.[ (3)]  The first exception concerns
the flat fee options provided in ORS 825.480 for
certain commodities.  That statute gives carriers of
three categories of commodities--logs, sand and gravel
carried in dump trucks, and wood chips--the option to
choose to pay a flat fee rather than the weight-mile
tax.  ORS 825.480(1), (4), and (5).  For each
commodity, the legislature established the fee at an
amount that it believed to be identical to what a truck
of the same weight carrying that commodity would pay in
weight-mile tax if it operated as many miles per year
as an average truck that carried that commodity.  The
calculations are based on the assumption that the truck
in question operates entirely in Oregon.  The flat fee
option is available to carriers who are located in
Oregon or any other state.  The legislature has
adjusted the amounts a number of times in order to
reflect changes in the average mileage and in the
weight-mileage rates since it originally adopted the
flat fee options.  If a carrier elects a flat fee
option, it must do so for all the trucks in its fleet
that carry that commodity, and it may make that
election only once per year.  ORS 825.480(2).  A
carrier that chooses to pay a flat fee must still
report the mileage that it travels on public highways,
OAR 740-055-0120; however, because those reports do not
affect the taxes that the carrier pays, the state does
not audit them.
"Trucks carrying commodities that have a flat fee
option are more likely than trucks carrying other
commodities to use nonpublic roads for significant
portions of their trips, to use lesser-traveled public
roads, and to make multiple short journeys.  All of
those factors make it more difficult for carriers to
keep the records that the weight-mile tax requires and
for the state to enforce the tax.  Flat fee carriers
also tend to be small operators, for whom
record-keeping is especially burdensome.  Thus, one
purpose of the flat fee option is to ease the burden on
both the carriers and the state of administering and
enforcing the weight-mile tax.
"Although the legislature intended the flat fee
options to be revenue neutral, they are not, at least
for haulers of logs or of sand and gravel.  The best
estimates, based on data that are not fully reliable,
are that, for the most recent period for which figures
were available at the time of trial, wood chip carriers
who chose the flat fee option as a group paid
$27,315.75 more than they would have paid under the
weight-mile tax, while sand and gravel carriers paid
$276,535.86 less and log carriers paid $1,164,585.86
less.  For sand and gravel carriers, the underpayments
are equivalent to 1.34 cents per mile, while for log
carriers they are equivalent to 1.9 cents per mile. 
For purposes of comparison, the average profit margin
in the trucking industry is 3 cents per mile."
193 Or App at 188-90 (footnote omitted; emphasis added).
On appeal, plaintiffs argued, in part, that, under
American Trucking Assns., Inc. v. Scheiner, 483 US 266, 107 S Ct
2829, 97 L Ed 2d 226 (1987), the highway fees at issue were
malapportioned and therefore discriminatory in their practical
effect.  Specifically, plaintiffs argued that Scheiner supported
the notion that the Oregon flat-fee tax options for trucks
carrying logs, sand and gravel, or wood chips impermissibly
exerted a "hydraulic pressure" on out-of-state motor carriers
hauling those commodities to concentrate their activities in-state to fully take advantage of the flat fee system.  That was
so, plaintiffs maintained, because any advantage to be obtained
under the flat-fee system -- presumably by driving more miles
within Oregon than outside of it -- would invariably be more
available to an Oregon-based motor carrier than to an out-of-state carrier.  The result, plaintiffs maintained, was inherently
discriminatory. 
The Court of Appeals agreed.  Drawing on Scheiner's
iteration of the Supreme Court's "internal consistency"
test, (4) the Court of Appeals set out the following hypothetical scenario:
"Here, the focus is on carriers whose trucks travel
more miles in Oregon than the amount that the
legislature presumed.  As one example, assume that the
weight-mile tax for a particular truck is 10 cents per
mile, that the legislature presumes that the average
truck carrying the commodity involved will travel
40,000 miles per year in Oregon, and that the
legislature has therefore set an alternative flat fee
at $4,000 per year.  Carrier A has trucks that actually
travel 50,000 miles entirely in Oregon; it elects to
pay the flat fee and therefore pays $4,000 per truck,
or an effective rate of 8 cents rather than 10 cents
per mile.  Carrier B has trucks that also operate
50,000 miles, but they operate half the time in Oregon
and half the time in other states with identical tax
systems.  Carrier B would lose money by electing to pay
the flat fee in any state that has such a taxing scheme
because the flat fee is calculated on an amount of
mileage greater than its trucks will travel in any one
state.  Thus, economic necessity requires carrier B to
elect to be taxed on the basis of its mileage, and its
total taxes will be $5,000 per truck, or an effective
rate of 10 cents per mile.  Such a taxing scheme favors
intrastate carriers over interstate carriers.  Any
other hypothetical situation, using any other figures
for an unapportioned flat fee option, will show a
similar malapportionment and discriminatory effect as
to interstate carriers that exceed the presumed average
mileage.
"In this hypothetical situation, the flat fee
option will both exert pressure on the interstate
carrier to change its operations to focus on intrastate
business and will discriminate against the interstate
carrier if it does not do so.  Only by focusing on
intrastate business can the carrier pay the lower tax
rate that similarly situated intrastate carriers are
able to pay.  The flat fee options, thus, discriminate
between interstate and intrastate carriers whose
businesses differ only because of their relationship to
state boundaries, and the discrimination operates to the detriment of the interstate carrier.  The flat fee options do not apportion the tax burden among the
states where the interstate carrier operates, and they
therefore fail the 'internal consistency' test."
American Trucking, 193 Or App at 195-96 (footnotes omitted).  As
a result, the Court of Appeals concluded that the flat fee
options before it violated the Commerce Clause and were therefore
unconstitutional.  This court subsequently accepted review to
consider that constitutional issue.
Although the Commerce Clause is framed as an
affirmative grant of commerce-regulating power to Congress, the
United States Supreme Court has interpreted the clause to also
embody an implicit negative command forbidding states from
enacting laws that interfere with the flow of free trade across
the nation.  See, e.g., Oregon Waste Systems, Inc. v.
Environmental Quality Commission of the State of Oregon, 511 US
93, 98, 114 S Ct 1345, 128 L Ed 2d 13 (1994) (Commerce Clause
contains "'negative' aspect that denies the States the power
unjustifiably to discriminate against or burden" interstate
commerce).  At the same time, the Court also has made clear that
the Commerce Clause will not excuse interstate commerce from
shouldering its fair share of state tax burdens as it makes its
way:
"[D]ecisions of this Court, particularly during recent
decades, have sustained nondiscriminatory properly
apportioned state corporate taxes upon foreign
corporations doing an exclusively interstate business
when the tax is related to a corporation's local
activities and the State has provided benefits and
protections for those activities for which it is
justified in asking a fair and reasonable return."
Complete Auto Transit, Inc. v. Brady, 430 US 274, 287, 97 S Ct
1076, 51 L Ed 2d 326 (1977), quoting Colonial Pipeline Co. v.
Traigle, 421 US 100, 108, 95 S Ct 1538, 44 L Ed 2d 1 (1975).  The
respective values underlying each of those ideas -- the value of
facilitating a free flow of commerce between the states and the
value of making such commerce pay its way in the process -- can,
in practical application, often clash if not carefully regulated.
In seeking to maintain the boundaries that allow those
frequently competing priorities to operate in harmony, we are
faced, at the outset, with a problem common to most courts
considering a Commerce Clause issue today:  What is the proper
analytical framework for examining the case at hand?  That
question stems, in part, from the plethora of different tests
that the Supreme Court has created over the years to analyze
state taxation and fee-setting measures that implicate interstate
commerce. (5)  The result, as the Court itself has described
it, often resembles a "quagmire" of differently phrased tests
that rarely offer explicit guidance, outside of fact-matching, as
to when and under what circumstances a particular  test should be
applied.  See, e.g., Quill Corp. v. North Dakota, 504 US 298,
315, 112 S Ct 1904, 119 L Ed 2d 91 (1992) (noting that "our law
in this area is something of a 'quagmire'"); Scheiner, 483 US at
280 (recognizing that past Commerce Clause decisions have been
described as a "'quagmire' of judicial responses").  Here, the
question of how to analyze this Commerce Clause issue is
particularly important because the parties begin by presenting
this court with competing viewpoints on which test is the proper
one to use.
Defendants urge us to analyze the fee scheme now before
us as a "use" tax under the test set out in Evansville-Vanderburgh Airport Authority District v. Delta Airlines, 405 US
707, 92 S Ct 1349, 31 L Ed 2d 620 (1972).  In Evansville-Vanderburgh, the Supreme Court considered whether the Commerce
Clause allowed state and municipal governments to impose a $1.00
service charge for each passenger boarding commercial aircraft at
local airports.  Analogizing those charges to highway tolls, the
Court ultimately upheld the constitutionality of such fees,
articulating, in the process, the following test:
"At least so long as the toll is based on some fair
approximation of use or privilege for use, as was that
before us in Capitol Greyhound [Lines v. Brice, 339 US
542, 70 S Ct 806, 94 L Ed 1053 (1950)], 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 716-17.  Defendants argue that, because the flat-fee
option is essentially an assessment for highway use with its
proceeds dedicated to Oregon highways, the fee should be
scrutinized as a use tax using the framework described above
rather than the somewhat more stringent tests often applied to
general revenue-raising measures.    
In response, plaintiffs contend that the four-factor
test of Complete Auto Transit represents the appropriate analysis
to be applied here.  At issue in Complete Auto Transit was a
Mississippi tax statute that required all businesses engaged in
transporting persons or property for hire to pay a percentage of
gross income for the privilege of operating within the state. 
The Supreme Court upheld the tax against the out-of-state
plaintiff's Commerce Clause challenge, relying on the consistency
of its decisions sustaining similar taxes
"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." 
430 US at 279.  Plaintiffs point in particular to the fair
apportionment and nondiscrimination elements of the test, arguing
that whether a state tax or fee meets those two requirements is a
matter further subject to a separate test for "internal
consistency."  Explaining the nature of internal consistency in
Armco Inc. v. Hardesty, 467 US 638, 104 S Ct 2620, 81 L Ed 2d 540
(1984), the Supreme Court wrote:
"In Container Corp. of America v. Franchise Tax Board,
463 US 159, 169, 77 L Ed 2d 545, 103 S Ct 2933 (1983),
the Court noted that a tax must have 'what might be
called internal consistency -- that is the [tax] must
be such that, if applied by every jurisdiction,' there
would be no impermissible interference with free trade. 
In that case, the Court was discussing the requirement
that a tax be fairly apportioned to reflect the
business conducted in the State.  A similar rule
applies where the allegation is that a tax on its face
discriminates against interstate commerce.  A tax that
unfairly apportions income from other States is a form
of discrimination against interstate commerce."
Id. at 644 (emphasis added).  Plaintiffs contend that the flat-fee option at issue here lacks internal consistency, rendering
the fee malapportioned and discriminatory for purposes of
interstate commerce and, therefore, unable to withstand
constitutional scrutiny under the Complete Auto Transit test.
Although both tests appear to remain viable as Supreme
Court precedents in that neither has been overruled by a
subsequent decision, several factors weigh heavily in favor of
using Complete Auto Transit's analytical framework here rather
than the Evansville-Vanderburgh test.  First, aside from the
Evansville-Vanderburgh case itself, the test articulated therein
has never actually been used again by a majority of the Court to
decide a Commerce Clause controversy.  Following the Evansville-Vanderburgh decision, Congress 
"concluded that the proliferation of local taxes
burdened interstate air transportation, and, when
coupled with the federal Trust Fund levies, imposed
double taxation on air travelers.  To deal with these
problems, Congress passed § 7(a) of the Airport
Development Acceleration Act of 1973[.]"
Aloha Airlines, Inc. v. Director of Taxation of Hawaii, 464 US 7,
9-10, 104 S Ct 291, 78 L Ed 2d 10 (1983) (footnote omitted).  The
new federal statute essentially nullified the effect of
Evansville-Vanderburgh on air travel by prohibiting the states
from levying any fee on individuals traveling by air or on the
activities associated with transporting them.  Id. at 10.  Since
then -- perhaps out of an abundance of caution -- none of the 12
Supreme Court cases citing Evansville-Vanderburgh has employed
its test to resolve a Commerce Clause dispute. (6)
Second -- in contrast to the Evansville-Vanderburgh
framework -- Complete Auto Transit's four-factor test represents
an important shift in the Supreme Court's Commerce Clause
jurisprudence and has seen regular and recent use.  Prior to
Complete Auto Transit, the old rule had been that state taxes
levied on the "privilege" of doing business within a state were
per se unconstitutional when applied to what was exclusively
interstate commerce.  See Spector Motor Service v. O'Connor, 340
US 602, 71 S Ct 508, 95 L Ed 573 (1951) (so stating).  At the
same time, the Court consistently had recognized that interstate
commerce could be made to pay its way as it moved through the
states.  The result was that, by the time of Complete Auto
Transit, the old rule had been stripped of most of its practical
significance, and replaced, instead, with a formalistic exercise
that often focused more on eliminating words such as "privilege"
from commerce-related statutes rather than examining the
statutes' practical effects.  For example, under the old rule,
the Supreme Court struck down a Virginia statute creating a
"license tax" on gross business receipts levied for the
"privilege of doing business" in the state.   See Railway Express
Agency v. Virginia, 347 US 359, 74 S Ct 558, 98 L Ed 757 (1954)
(so holding).  Several years later, the Court upheld an amended
version of the same statute, reworded to impose a "franchise tax"
on a business's "going concern" value as measured by its gross
receipts.  See Railway Express Agency v. Virginia, 358 US 434, 79
S Ct 411, 3 L Ed 2d 450 (1959) (so holding).  In Complete Auto
Transit, the Court recognized that no real economic difference
had resulted from manipulating the wording of those statutes and
that its old rule of per se unconstitutionality had been reduced,
in large part, to an axiom that often distracted courts from the
more critical inquiry "into whether the challenged tax produced
results forbidden by the Commerce Clause."  430 US at 285.  The
Court then expressly rejected its old rule.  The four-factor test
that replaced it was, if nothing else, an effort to better focus
the judiciary on the actual concerns that the Commerce Clause was
intended to address. 
Since that time, to the extent that one test can be
singled out as surfacing with regularity among Supreme Court
Commerce Clause cases, Complete Auto Transit's four-part analysis
is conspicuous for having appeared with greater frequency and in
a broader range of substantive applications than the Evansville-Vanderburgh test. (7)  More importantly, the Court cited the
Complete Auto Transit test with apparent approval in deciding
American Trucking Associations, Inc. v. Michigan Public Service
Commission, ___ US ___, 125 S Ct 2419 (2005), the Court's most
recent Commerce Clause decision.  That case, like this one,
concerned a flat-fee assessment on intrastate hauling.  As a
result of that similarity, along with the other reasons discussed
above, we conclude that Complete Auto Transit's four-factor test
is the more appropriate analytical format for reviewing the
issues presented here.  Under that test, a state tax will survive
Commerce Clause scrutiny if (1) the taxed activity has a
sufficient nexus with the state to justify the tax; (2) the tax
is fairly apportioned; (3) the tax does not discriminate against
interstate commerce; and (4) the amount of the tax is fairly
related to the benefits provided to the taxpayer. (8)  430 US
at 279.  We turn now to that inquiry.   
As the parties have framed the issues on review, this
case arguably implicates only the apportionment and discrimination
prongs of the Complete Auto Transit analysis.  On appeal, the
Court of Appeals agreed with plaintiffs that, under American
Trucking Assns., Inc. v. Scheiner, 483 US 266, and its application
of the internal consistency test, the flat-fee option at issue
here was both malapportioned and discriminatory.  Plaintiffs now
essentially urge this court to do the same.  We turn first to the
apportionment question.
In Goldberg v. Sweet, 488 US 252, 109 S Ct 582, 102 L Ed
2d 607 (1989), the Supreme Court stated that, with regard to
interstate commerce, the requirement of proper apportionment is
aimed at preventing individual states from taxing more than their
fair share of an interstate transaction: 
"In analyzing these contentions, we are mindful
that the central purpose behind the apportionment
requirement is to ensure that each State taxes only its
fair share of an interstate transaction."
Id. at 260-61.  A state tax is fairly apportioned for purposes of
interstate commerce if it is both internally and externally
consistent.  The parties do not contest the external consistency
of the flat-fee option in this case. (9)  Plaintiffs, however,
argue that Oregon's flat-fee option lacks internal consistency.  
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."  Id. at 261.  To examine a tax
for malapportionment, the internal consistency test essentially
extrapolates a hypothetical application of the challenged state
tax or fee across all the states and scrutinizes the results for
signs of overreaching:
"This test asks nothing about the degree of economic
reality reflected by the tax, but simply looks to the
structure of the tax at issue to see whether its
identical application by every State in the Union would
place interstate commerce at a disadvantage as compared
with commerce intrastate.  A failure of internal
consistency shows as a matter of law that a State is
attempting to take more than its fair share of taxes
from the interstate transaction, since allowing such a
tax in one State would place interstate commerce at the
mercy of those remaining States that might impose an
identical tax."
Oklahoma Tax Commission v. Jefferson Lines, Inc., 514 US 175, 185,
115 S Ct 1331, 131 L Ed 2d 261 (1995) (emphasis added).
Here, applying the internal consistency test, we discern
no apportionment problem under the Complete Auto Transit analysis. 
The flat-fee option is aimed at operations that take place
primarily in Oregon.  If viewed as a tax, it is one imposed upon
an activity that takes place exclusively within this state's
borders.  The flat fee does not tax an interstate truck's entry
into this state, nor does it tax transactions spanning multiple
states.  As a result, if every state replicated Oregon's flat-fee
tax option under the same terms, we cannot hypothesize a scenario
where the interstate commerce in logs, sand and gravel, or wood
chips would be subject to multiple taxation or could be viewed as
one state's attempt to take more than its fair share of taxes from
transactions involving those commodities.
That said, however, the remaining issue under the test
set out in Complete Auto Transit is perhaps the most important: 
Does the flat-fee option at issue here nevertheless discriminate
against interstate commerce?  In concluding that it did, the Court
of Appeals essentially melded the concepts of apportionment and
discrimination together and assumed that, just as hypothetical
projections could be used to show malapportionment under the
internal consistency test, similar hypothetical projections could
also be used to infer discrimination.  Indeed, on review,
plaintiffs assert that no record evidence is needed to prove that
the flat-fee option is discriminatory here.  Plaintiffs argue that
the flat-fee option creates a forbidden incentive for trucking
companies that do business in Oregon and elsewhere to concentrate
their operations within this state; Scheiner, they contend,
illustrates that such incentives alone are enough to violate the
Commerce Clause.  
In any event, plaintiffs contend that the record in this
case clearly establishes discrimination in practical effect. 
Plaintiffs point in particular to trial court findings that show,
according to a study done in 2000, that sand and gravel haulers
utilizing the flat-fee option paid, in the aggregate, almost
$300,000 less than they would have paid under the weight-milage
alternative, while log haulers using the flat fee realized a
similar savings of over $1 million.  Noting that the flat-fee
option is utilized almost solely by Oregon-based motor carriers
that operate predominately or exclusively within the state, they
argue that, as with all flat highway taxes, the flat-fee option
inevitably will cost state-based, heavy users of Oregon's highways
less per mile than the alternative weight-mile tax will cost
interstate users who have less occasion to use Oregon roads.  That
result, they maintain, is inherently discriminatory.  Those
propositions, however, are incorrect for several reasons.    
First, the Supreme Court has never viewed hypothetical
possibilities, standing alone, as sufficient to constitute
unconstitutional discrimination for Commerce Clause purposes:
"On the contrary, we repeatedly have focused our
Commerce Clause analysis on whether a challenged scheme
is discriminatory in 'effect,' and we have emphasized
that 'equality for the purposes of * * * the flow of
commerce is measured in dollars and cents, not legal
abstractions.'"
Associated Industries of Missouri v. Lohman, 511 US 641, 654, 114
S Ct 1815, 128 L Ed 2d 639 (1994) (internal citations omitted). 
Therefore, aside from laws discriminating against interstate
commerce on their face, see Fulton Corp. v. Faulkner, 516 US 325,
331, 116 S Ct 848, 133 L Ed 2d 796 (1996) ("[s]tate laws
discriminating against interstate commerce on their face are
'virtually per se invalid.'"), issues involving discrimination
against interstate commerce must involve "substantial distinctions
and real injuries."  Lohman, 511 US at 654 (quoting Gregg Dyeing
Co. v. Query, 286 US 472, 481, 52 S Ct 631, 76 L Ed 1232 (1932)). 
The flat-fee option here, of course, does not facially
discriminate against interstate commerce.  Interstate and
intrastate operations alike are free to either pay the weight/mile
tax or the flat fee if they haul commodities covered by ORS
825.480.  In short, eligibility for the flat fee is determined
solely by the commodities hauled, not by the location of the
carrier.  
Second, plaintiffs' assertion that the Supreme Court's
finding of discrimination in Scheiner was not a fact-based
determination misapprehends the record that was before the Court
in that case.  At issue in Scheiner were two different
Pennsylvania flat-tax schemes.  483 US at 273-75.  Both were
levied on all commercial trucks operating in the state in return
for the privilege of using the state's highways.  The Court noted
that, facially, the taxes did not discriminate between in-state
and out-of-state trucks in allocating tax burdens.  Id. at 281. 
Based on the evidence before it, however, the Court found that the
Pennsylvania-based trucks subject to the flat taxes traveled
approximately five times as many miles within Pennsylvania as did
their out-of-state counterparts.  Id. at 276.  Correspondingly,
the Court found that, based on the record before it, the cost per
mile of those taxes was approximately five times as high for out-of-state trucks as for local vehicles.  Id.  It was that
evidentiary record that rendered the Pennsylvania taxes "plainly
discriminatory," id. at 286, not, as plaintiffs suggest, a
hypothetical construct. 
Here, in contrast, plaintiffs present no evidence of an
actual burden placed on interstate commerce by Oregon's flat-fee
option, or any instance where use of the flat fee has, in fact,
discriminated against interstate commerce.  Plaintiffs point only
to the aggregate savings realized under the flat fee as evidence
of discriminatory effect.  Unlike the plaintiffs in Scheiner,
however, plaintiffs do not break those figures down between in-state and out-of-state trucking operations, or otherwise show how
the aggregate savings serve to set the two groups apart.  As a
result, to find discrimination against interstate commerce in this
case, we would be forced to assume that out-of-state trucking
operations somehow had been denied access to benefits otherwise
available to intrastate trucking firms and, therefore, had not
contributed to the aggregate savings figures found by the trial
court.  Nothing in the record, however, supports that
finding. (10)  Consequently, there is nothing to show that the
flat-fee option before us effectively has created an
unconstitutionally protected trade area that prefers local
commerce over interstate commerce. 
Finally, the Supreme Court's recent decision in American
Trucking Associations, Inc. v. Michigan Public Service Commission,
___ US ___, 125 S Ct 2419, effectively refutes plaintiffs'
argument regarding the general discriminatory effect of locally
focused flat fees.  At issue in Michigan Public Service Commission
was a $100 dollar annual state fee levied on all trucks in
Michigan making intrastate deliveries.  The primary plaintiff in
that case, American Trucking Associations, Inc. -- the same
primary plaintiff in the case now before this court -- argued,
much as it does here, that the fee in question was discriminatory
because trucking companies that worked solely within Michigan
would drive far more miles within the state than their
counterparts that also made interstate deliveries, thereby
obtaining a greater cost-per-mile benefit from the fee than the
interstate haulers.  Those financial incentives, the plaintiffs
argued, would exert an impermissible "hydraulic pressure" on out-of-state truckers to concentrate their hauling in Michigan.  The
Supreme Court rejected that argument, however, concluding, as the
Michigan Court of Appeals had pointed out, that, without more, the
record contained little, if any, evidence of a significant
practical burden on interstate commerce.  Id. at 2423-24.  
The same is true here.  If nothing else, Michigan Public
Service Commission makes clear that plaintiffs cannot rely on 
hypothetical assertions to establish the existence of
discriminatory economic effects; plaintiffs must demonstrate
actual discrimination.  If plaintiffs' arguments to the contrary
were well-taken, not only would the Supreme Court have reached a
different outcome in Michigan Public Service Commission, but
virtually every uniformly assessed local fee would be in jeopardy
if it touched some aspect of interstate commerce.  That, of
course, is not the aim of the Commerce Clause.  See, e.g.,
Commonwealth Edison Co. v. Montana, 453 US 609, 623-24, 101 S Ct
2946, 69 L Ed 2d 884 (1981) (Dormant Commerce Clause does not seek
"to relieve those engaged in interstate commerce from their just
share of state tax burden even though it increases the cost of
doing business.").  Having been presented with no evidence of
discrimination or malapportionment in this case aside from
plaintiff's hypothetical projections, we cannot conclude, on this
record, that the flat-fee option at issue here violates the
Commerce Clause.
The decision of the Court of Appeals pertaining to non-farm-use carriers is reversed, the remainder is otherwise
affirmed, and the judgment of the circuit court is affirmed.
1. Article I, section 8, clause 3, of the United States
Constitution grants Congress the authority to "regulate Commerce *
* * among the several States[.]"  The United States Supreme Court
has interpreted that provision as imposing restrictions on state
taxes, fees, or regulations that discriminate against or unduly
burden interstate commerce.  See Oklahoma Tax Comm'n v. Jefferson
Lines, Inc., 514 US 175, 179, 115 S Ct 1331, 131 L Ed 2d 261
(1995) ("we have consistently held this language to contain a
further, negative command, known as the dormant Commerce Clause,
prohibiting certain state taxation even when Congress has failed
to legislate on the subject").
2. Plaintiffs filed their first Amended Complaint in December
2000 under the 1999 version of ORS 825.480.  With the exception of
a rate increase implemented in 2003, however, the text of that
provision has remained the same.  Because the operative text has
not changed since 1999, we use the current version of ORS 825.480
throughout this opinion.  That version of the statute provides, in
part:
"(1)(a) In lieu of other fees provided in ORS
825.474, carriers engaged in operating motor vehicles
in the transportation of logs, poles, peeler cores or
piling may pay annual fees for such operation computed
at the rate of six dollars and ten cents for each 100
pounds of declared combined weight.
"(b) Any carrier electing to pay fees under this
method may, as to vehicles otherwise exempt from
taxation, elect to be taxed on the mileage basis for
movements of such empty vehicles over public highways
whenever operations are for the purpose of repair,
maintenance, servicing or moving from one exempt
highway operation to another.
"* * * * * 
"(4)(a) In lieu of other fees provided in ORS
825.474, carriers engaged in the operation of motor
vehicles equipped with dump bodies and used in the
transportation of sand, gravel, rock, dirt, debris,
cinders, asphaltic concrete mix, metallic ores and
concentrates or raw nonmetallic products, whether
crushed or otherwise, moving from mines, pits or
quarries may pay annual fees for such operation
computed at the rate of six dollars and five cents for
each 100 pounds of declared combined weight.
"(b) Any carrier electing to pay fees under this
method may, as to vehicles otherwise exempt for
taxation, elect to be taxed on the mileage basis for
movements of such empty vehicles over public highways
whenever operations are for the purpose of repair,
maintenance, servicing or moving from one exempt
highway operation to another.
"(5)(a) In lieu of other fees provided in ORS
825.474, carriers engaged in operating motor vehicles
in the transportation of wood chips, sawdust, barkdust,
hog fuel or shavings may pay annual fees for such
operation computed at the rate of twenty-four dollars
and sixty-two cents for each 100 pounds of declared
combined weight.
"(b) Any carrier electing to pay under this method
may, as to vehicles otherwise exempt from taxation,
elect to be taxed on the mileage basis for movement of
such empty vehicles over public highways whenever
operations are for the purpose of repair, maintenance,
service or moving from one exempt highway operation to
another." 
3. The second weight-mile tax exception at issue on appeal involved the
exception for farm vehicles set forth in ORS 825.480(3).  As already noted above,
the Court of Appeals affirmed the trial court's judgment regarding that issue, and
the parties have not raised it on review.  Consequently, we do not address that issue
here.
4. The "internal consistency" test is a
component of the framework used to determine whether
state-levied taxes and fees affecting interstate
commerce have been fairly apportioned.  The test is
discussed in greater detail below.
5. The following list is by no means exhaustive:
 Oregon Waste Systems, Inc. v. Environmental Quality
Commission of the State of Oregon, 511 US 93, 114 S Ct
1345, 128 L Ed 2d 13 (1994) (facially different state
treatment of in-state and out-of-state economic
interests that benefit the former and burden the latter
is per se invalid under Commerce Clause, unless state
can show legitimate local purpose that cannot be
adequately served by reasonable nondiscriminatory
alternatives); Armco Inc. v. Hardesty, 467 US 638, 644,
104 S Ct 2620, 81 L Ed 2d 540 (1984) (state tax does
not discriminate in violation of Dormant Commerce
Clause if it possesses internal consistency, i.e., if
same tax could be applied by every other state with no
impermissible interference with free trade); Complete
Auto Transit, Inc. v. Brady, 430 US 274, 97 S Ct 1076,
51 L Ed 2d 326 (1977) (state tax statute will be
sustained against Commerce Clause challenge if taxed
activity has a substantial nexus with the state and tax
is fairly apportioned, does not discriminate against
interstate commerce, and is fairly related to services
provided by state); Evansville-Vanderburgh Airport
Authority District v. Delta Airlines, 405 US 707, 716-17, 92 S Ct 1349, 31 L Ed 2d 620 (1972) (state toll is
constitutional when based on fair approximation of use
or privilege to use that does not discriminate against
interstate commerce and is not excessive in relation to
benefits conferred, even though alternative formula
might better reflect use of facilities by individual
users); Pike v. Bruce Church, 397 US 137, 142, 90 S Ct
844, 25 L Ed 2d 174 (1970) (state regulation
effectuating legitimate public purpose and having only
incidental effect on interstate commerce will be upheld
against Commerce Clause challenge unless burden imposed
clearly exceeds local benefits; extent of burden
tolerated depends on nature of local interest).
6. The Supreme Court has, however, used the test
for other purposes.  In Commonwealth of Massachusetts
v. United States, 435 US 444, 98 S Ct 1153, 55 L Ed 2d
403, (1978), the Court used the test -- substituting
the phrase "state function" for "interstate commerce" -- to hold that a federal registration tax on civil
aircraft did not violate the implied immunity of a
state government from federal taxation.  In Northwest
Airlines, Inc. v. County of Kent, Michigan, 510 US 355,
114 S Ct 855, 127 L Ed 2d 183 (1994), the Court also
used the test to ascertain whether fees assessed
against commercial airlines for the use of a county's
airport facilities were reasonable under the federal
Anti-Head Tax Act.  At the end of the day, the only
other case in which a majority of the Court has used
the Evansville-Vanderburgh test in a Commerce Clause
context is American Trucking Assns., Inc. v. Scheiner,
483 US 266.  In deciding Scheiner, however, the Court
did not actually apply the Evansville-Vanderburgh test
as its controlling rationale; instead, the Court relied
upon the internal consistency test set out in Armco,
467 US at 644 for that purpose.  The Court cited the
Evansville-Vanderburgh test primarily to refute the
State of Pennsylvania's argument that the taxes at
issue in Scheiner were just like the user fees that the
Court had upheld in Evansville-Vanderburgh.           
7. See, e.g., Oklahoma Tax Commission, 514 US
175 (applying test to sales tax on bus tickets);
Goldberg v. Sweet, 488 US 252, 109 S Ct 582, 102 L Ed
2d 607 (1989) (applying test to tax on telephone
calls); D.H. Holmes Co. v. McNamara, 486 US 24, 108 S
Ct 1619, 100 L Ed 2d 21 (1988) (applying test to state
use tax); Container Corp. of America v. Franchise Tax
Board, 463 US 159, 103 S Ct 2933, 77 L Ed 2d 545 (1983)
(applying test to franchise tax); Commonwealth Edison
Co. v. Montana, 453 US 609, 101 S Ct 2946, 69 L Ed 2d
884 (1981) (applying test to severance tax). 
8. Although defendants argue that other tests
are more appropriate, they have nevertheless presented
alternative arguments using the four-factor analysis of
Complete Auto Transit  to support their positions on
review.
9. External consistency focuses on the economic
justification underlying a state's claims upon a
particular value being taxed.  Oklahoma Tax Commission,
514 US at 185.  A tax that possesses external
consistency will not reach beyond the value that is
fairly attributable to the economic activity within the
taxing state.  Id.  As noted above, the external
consistency of the flat-fee option is not at issue
here. 
10. The record, in fact, suggests the opposite. 
As the trial court noted in its findings of fact, out-of-state sand and gravel carriers accounted for only
13.33 percent of Oregon's total flat-fee sand and
gravel milage logged during 2000.  At the same time,
those same out-of-state carriers garnered 31 percent of
the overall savings attributed to sand and gravel
haulers as a whole.  Translated into savings-per-mile,
the out-of-state haulers saved an average of four cents
per mile compared to weight-mile taxpayers, while in-state sand and gravel carriers saved an average of 1.5
cents per mile.