Document: 507 U.S. 60 113 S.Ct. 1095 122 L.Ed.2d 421 ITEL CONTAINERS INTERNATIONAL CORPORATION, Petitionerv.Joe HUDDLESTON, Commissioner of Revenue Tennessee. No. 91-321. Argued Oct. 14, 1992. Decided Feb. 23, 1993. Syllabus * Petitioner Itel Containers is a domestic company that leases cargo containers for use exclusively in international shipping. After paying under protest Tennessee sales tax on its proceeds from the lease delivered State, filed refund action, challenging tax's constitutionality Commerce, Import-Export, and Supremacy Clauses. The last challenge was based an alleged conflict with federal regulations two Container Conventions signed by United States: 1956 Convention prohibiting imposition "chargeable reason importation," 1972 taxes "collected on, or connexion with, importation goods." State Chancery Court reduced assessment state-law grounds but rejected constitutional claims, Supreme affirmed. Held: Tennessee's tax, as applied to Itel's leases, does not violate Clause. Pp. ---- - ----. (a) pre-empted Convention. Conventions' text makes clear only those imposed act itself are disallowed, not, contends, all containers. fact other signatory nations may place indirect value added (VAT) container demonstrate direct prohibited, because do distinguish between taxes. While VAT system equivalent purposes calculation assessment, it Conventions: neither imposes importation. Federal Government agrees this Court's interpretation Conventions, advocating position one took Japan Line, Ltd. v. County Los Angeles, 441 434, 99 1813, 336. (b) which applies foreign goods without differentiation, impede objectives expressed related statutes regulations. regulatory scheme used commerce discloses no congressional intent exempt most taxation, contrast customs bonded warehouses, pre-empts state warehoused goods, see, e.g., McGoldrick Gulf Oil Corp., 309 414, 664, 84 L.Ed. 840. Nor so pervasive demonstrates purpose occupy field regulation taxation. precise policy regarding promotion satisfied limited proscription against upon discriminate containers' (c) clause Line's three-part test. First, concluded accepted Itel, satisfies test Complete Auto Transit, Inc. Brady, 430 274, 279, 97 1076, 1079, 51 326. This conclusion confirms both State's legitimate interest taxing transaction absence attempt interfere free flow commerce. Second, create substantial risk multiple taxation implicating concerns simply discrete occurring within State. need refrain merely also potentially subject sovereign. Moreover, reduces, if eliminates, crediting own any paid another jurisdiction same transaction. Third, prevent speaking voice when regulating commercial relations governments. creates consistent conventions, regulations, custom. (d) Import-Export Clause announced Michelin Tire Corp. Wages, 423 276, 285-286, 96 535, 540-541, 46 495. Because Michelin's first component mirrors Line requirement, third requirements, these components reasons survives Commerce scrutiny. second component—ensuring import revenues being diverted Government—is met imported nor imports exports transit meaning Richfield Bd. Equalization, 329 69, 78-79, 84, 67 156, 161-162, 164, 91 80. 814 S.W.2d 29 (Tenn.1991), KENNEDY, J., opinion Court, REHNQUIST, C.J., WHITE, STEVENS, O'CONNOR, SOUTER, THOMAS, JJ., joined, Parts IV V SCALIA, joined. concurring part judgment. BLACKMUN, dissenting opinion. Philip W. Collier, Louisville, KY, petitioner. Attorney General Charles Burson, Nashville, TN, respondent. Edwin S. Kneedler, Washington, DC, amicus curiae supporting Justice KENNEDY Court. 1 In case we consider validity affecting trade, have addressed once before. See 336 (1979). We sustain owned 2 large steel transport truck, rail ocean-going carrier major innovation transportation technology. 1990, States shipped, value, 60% marine 52% Containers, petitioner here, Delaware corporation principal business California. primary leasing participants shipping industry, restrict solicited negotiated through marketing offices California, Illinois, New Jersey, South Carolina, Texas, leased lessees their agents many 50 States, including deliveries occur either at Memphis terminal several designated third-party terminals. 3 December 1986, Department assessed $382,465 penalties earned period January 1983 November 1986. action refund, Clause, conventions signatory. Customs Dec. 2, 1972, [1975] 988 U.N.T.S. 43 (hereinafter Convention); May 18, 1956, [1969] 20 U.S.T. 301, T.I.A.S. 6634 Convention). $158,012 claims. 4 On appeal Tennessee, maintained implementing court concluded, however, Congress has otherwise acted bar leases. Int'l Cardwell, 29, 34 (1991). Instead, held, prohibits duties containers, prohibition pre-empt duty. Id., 35-36. 5 claimed violates principles supra, "prevents 'speaking governments' " "creates taxation." Id. U.S., 451, S.Ct., 1823. argument transaction—the transferred possession Tennessee—and therefore trade. S.W.2d, 36-37. 6 Last, argued prevents affairs per se impermissible 80 (1946). dismissed similar given analysis, 38, held Richfield's restriction destined export. 33. granted certiorari, 502 ----, 112 1158, 117 406 (1992), now affirm. II 7 proscribed Conventions. authority signatories requiring grant "temporary admission" into borders, exportation "within three months date importation" unless extended authorities. Convention, Arts. 4; 3. Temporary admission status permits enter nation "free taxes" Art. 1; 2. 8 define key phrases terms. defines "import mean "Customs duties, taxes, fees charges collected amount approximate cost services rendered." 1. "not whatsoever chargeable importation." claim dut[y]" Rather, says would be available lease, hence must goods" contravention 9 cannot accept Our begin, always, Air France Saks, 470 392, 397, 105 1338, 1341, 289 (1985). text, instead broad construction, presence jurisdiction, determines whether thus disallow itself. contrast, covered each is, definition, result temporary reading superfluous qualifying language 10 counteract prohibit asserts practice prior prove read proscribe borders. Factor Laubenheimer, 290 294-295, 54 191, 196, 78 315 (1933). overstates probative actions. 11 As evidence places reliance Economic Community Sixth Directive Kingdom Value Added Tax (VAT), illuminated brief Kingdom. Brief Great Britain Northern Ireland Amicus Curiae 7-9. Under European system, VAT, Council 17, 1977, 14(1)(i) 15(13), reprinted CCH Common Mkt.Rep. &Par; 3165P 3165Q. 12 included transporting turn calculating liability. admits tantamount claims distinction (paid consumer goods) lessor lessee container) significant. Whether abstract, there significant difference methods differentiate depending legal incidence tax. For example, declaration Protocols Signature states inclusion weight conflicts even though fall lessee. Protocol Signature, U.N.T.S., 74; U.S.T., short, container, permit some basis. 13 further support position, points statements objecting With due respect statements, adhere our interpretation. mindful (Denmark, Finland, France, Germany, Italy, Japan, Netherlands, Norway, Spain, Sweden Kingdom), least sent diplomatic note submitting they "impose (or different nomenclatures) among Contracting Parties Conventions." App. 1a. ascribe phrase "equivalent clear. enacted nations, means Trinova Michigan Dept. Treasury, 498 358, 365-366, n. 3, 111 818, 825, 884 But discussed above, determining importation, system—that Only latter form equivalence relevant 14 Directing attention (1979), next interpreted Even were true, Government's current quite different; expresses agreement 12. 15 moreover, did say prohibited Its gave "the gives laws articles admitted 'bonded manufacturing warehouse." O.T. 1978, 77-1378, p. 25 (quoting 19 U.S.C. § 1311). Starting premise that, like warehouses see 428-429, 669-670, 840 (1940), frustrate designed benefit 27-29, 22. declined, continue decline, adopt expansive view pre-emptive effect infra, And, event, pre-emption present themselves violated 16 "transfer title possession, both, exchange, barter, rental, conditional, otherwise, manner tangible personal property consideration." Tenn.Code Ann. 67-6-102(23)(A) (Supp.1992). It general application products effect. Indeed, bears relation whatsoever. III 17 argues underlying granting favored particular 1322 CFR 10.41a (1992). Hines Davidowitz, 312 52, 67, 61 399, 404, 85 581 (1941) (state law "stands obstacle accomplishment execution full Congress"). parallels creating found goods. R.J. Reynolds Tobacco Co. Durham County, 479 130, 107 499, 93 449 (1986); Xerox Harris, 459 145, 103 523, 74 323 (1982); supra. 18 decisions misplaced. progeny, stated created where could stored while continuous supervision local officials "in order encourage merchants here abroad make American ports." 151, 527. By allowing importers defer time escape altogether reexported warehouse "enabled importer, threat financial loss, his markets return them and, flexibility, encouraged facilities." R. J. Co., 147, 510. objective frustrated distribution, regardless discriminated destination. 150-154, 526-528. 144-147, 509-510; McGoldrick, 669-670. said acknowledged "[t]he desirability uniform treatment commerce" "reflect[ed] national remove impediments containers." 452-453, 1824. hold relied laws, along proof customary norm home port California's creation asymmetry maritime ad valorem impeding ability 'spea[k] voice' conducting nation's affairs. Ibid. better claiming scheme, doubt can considered scheme. provides continual strict bonding requirements special rules, §§ 1555 1557; CFR, pt. whereas former more certification 1322; 115.25-115.43 correct point, Congress' regulation. fact, specifically such purpose. 149, 511. So, too, conclude adopting governing intended foreclose concurrent 21 find A. 22 Line. Const., I, 8, cl. began analysis reformulation test: 23 "In addition answering nexus, apportionment, nondiscrimination questions posed 24 [Transit, 326 (1977) ], inquire, first, notwithstanding second, governments.' Without passing assumed California question (1977), Proceeding had identified, incompatible both. established right, custom id., 447, 1820, full, "produce[d] fact." 452, prevented affairs, retaliation circumstances, [was] acute, necessity felt Nation whole." 453, 26 Four years later again offended clause, context unitary income America Franchise Bd., 463 159, 2933, 77 545 (1983). Although recognizing shared characteristics involved 187, 2951, nevertheless upheld distinguishing characteristics. 27 problem double "although real, 'inevitabl[e]' [income] scheme." 188, 2952 1820). hand, "[i]n strongly right entity part—a combination resulting necessarily 2952. That adopted rule forgo assessing foreign-owned "was unfair, than reflect express policy." 190, 2953. 28 noted [Container unlike Executive Branch ha[d] decided file opposition tax." 195, 2956. Together automatic nonintervention suggested presented serious policy. B Before reconciling holdings address test, assumed, arguendo, 451. A "when activity nexus fairly apportioned, interstate commerce, provided State." Auto, 1079. accepts "Tennessee's meets four-fold Auto," 36, retrace court's careful analysis. note, compliance relevance inquiries unique clause. fair measure contacts four aspects domestic. C 30 proceed evaluate factors. Left decide rests side scale, holding control. 31 invites numerous sufficient impose prohibitions. initial matter, course, nations. To extent invited others sovereigns, exercise independent judgment, chosen accept. 32 Furthermore, demand "Japan require forbearance extreme one-sided." 193, 2955. Wardair Canada Florida Revenue, 477 1, 9, 106 2369, 2373, (1986). according revenue code, accept, credits properly domestic, 67-6-313(f) (1989). measures, Absent "consistent [or] . policy," 2953, apportionment transactions conducted borders implicates concerns. 33 country follow lead will unable speak trade various degrees consequence, insists, owners users hit retaliatory arguing response above: engender problems, disagrees. Government, defined use. eliminate connection proscription, rational inference drawn distinct class permitted. Unlike defending law: "Far conflicting custom, appears promote it. 'to issue involving commerce." 24. submission "is dispositive." 195-196, strong indications method allowable, regard nuances "are much province Court," 2956, disagree States' infringe "It dormant entirely upside down apply acted, way reverse elected follow." Canada, 12, 2375. 35 final avenue attack 10, modern 495 (1976): 36 "The Framers Constitution sought alleviate main committing sole power lay imposts power: [1] governments, tariffs, might affect relations, implemented consistently exclusive power; [2] source should States; [3] harmony disturbed seaboard crucial ports entry, levying citizens flowing situated favorably geographically." 37 formulation mirror already undertaken 449-450, 1822, 14. And Washington Association Stevedoring Cos., 435 734, 754-755, 98 1388, 1401, 55 682 (1978) ("The vindicated falls taxpayer reasonable discriminate, relates reasonably State"). Having scrutiny, 38 leaves component: ensuring Government. detailed explanation what, any, substantive limits aspect channels, draw process divert reasons, reject transit," followed Oil, 161, 164. assuming been altered approach Michelin, inapplicable here. levied transferring parties Tennessee; service [import] value." Stevedoring, 757, 1403. Canton Rogan, 340 511, 513-514, 71 448-449, 95 488 (1951). VI 39 stated, judgment 40 ordered. 41 42 I join except sections disposing petitioner's "negative" Foreign arguments (Parts V, respectively). sections, concur previously recorded my contains component, self-operative historical record what says—an authorization regulate Tyler Pipe Industries, 483 232, 263, 2810, 2828, 199 (1987) (SCALIA, part); Trucking Assns., Smith, 496 167, 202-203, 110 2323, 2343-2344, 148 (1990) judgment). stare decisis grounds, enforce self-executing, circumstances: (1) facially discriminates commerce,1 (2) indistinguishable type unconstitutional Court.2 These acknowledgments precedent serve decisis, protect interests foster stability law. believe, significantly furthered continuing vague open-ended tests content negative-Commerce-Clause jurisprudence, four-factor set forth "balancing" Pike Bruce Church, Inc., 397 137, 90 844, 174 (1970). rank discrimination long appeared precedents Energy Indiana Limbach, 486 269, 273, 108 1803, 1807, 100 302 (1988), latest series doctrines successively applied, discarded, over years, invalidate nondiscriminatory regulation—including, "original package" doctrine, Leisy Hardin, 135 100, 681, 128 (1890), "uniformity" Case Freight Tax, Wall. 279-280, 146 (1873), cf. Cooley Board Wardens Port Philadelphia, How. 299, 319, 996 (1852), "directness" Hall DeCuir, 485, 488-489, 547 (1878), "privilege doing business" rule, Spector Motor Service, O'Connor, 602, 609, 508, 512, 573 Like almost predecessors, uncertain (and anticipated life-span) hardly deserving protection. 44 hitherto occasion asserted negative "with Nations"—as opposed "among States" basic point conferred denied States) obviously portions assume categorical commerce—though deeply rooted field. reach case, since nothing garden-variety clearly Interstate bind me completely indeterminate "four-factored plus two" 446-451, 1820-1823, combines additional tests. 45 Pike, ultimately asks courts judgments—essentially, sorts "worth" effects One element so-called "speak voice" peculiar underscores inappropriateness engagement enterprise applying Applied literally, always satisfied, ever actually "prevent commerce," 1823 (emphasis added), "interfere [the States'] voice,' added). National explictly offending What, then, "one mean? Today, relies considerations passes it: treaties, certain proscriptions; Ante, considerations, invalidated construed today's opinion, ante, consideration ruling turns Branch. appropriated use, finds itself, area incompetent wield power, off (out "due regard" foreign-policy expertise) President. certainly agree he able currently subordinated Constitution, decision, Congress. Petitioner's Import -Export me, difficult matter. firm basis avoided showing nondiscriminatory.3 76, 160, come exemption, taxed good export "at accrued." 78, 161. think country, purpose, before shipped abroad. Richfield, shipment oil exported Zealand. accrued delivery purchaser, accomplished pumping vessel overseas. portion "used consumed States," 71, 158, "there equivocal probability use," 83, after (viz., empty lessee) loaded ("[E]ach [leased] initially ports"). said, attached, [their] started." 82, 163. protected satisfy (1976). 47 48 dissenting. 49 "that treaty generally 'construe[d] liberally give animates it' '[e]ven provision constructions, restricting, enlarging, rights it, liberal preferred.' Stuart, 489 353, 368, 109 1183, 1192, 388 (1989), quoting Bacardi Domenech, 311 150, 163, 219, 225, (1940); Nielsen Johnson, 279 47, 51-52, 223, 224, 73 607 (1929). recognized "national 'instruments traffic.' 1824, 1322(a); [1983] frustrates concluding majority studiously ignores realities leasing. All dedicated spend jurisdiction. new integral container-leasing operation. advantage rather owning shipper near destination having provide container. Tan, Containers: Lease-Buy Decision (London, International Cargo Handling Co-ordination Association, 1983). then transfers who needs carry location transports needed. Leased constantly crossing boundaries ends journeys. transfer little Each kind "impediments 1322(a), each, view, Their persuasive meaning. 396, 1340, (1985), Choctaw Indians 318 423, 431-432, 63 672, 678, 87 877 (1943) (" '[T]reaties private agreements, ascertain look beyond written words to. practical construction parties' "). Neither directly ("VAT") acknowledges, 5, 52 fit mistakenly equates analogous stage production distribution sale price. adds reflected An reaches price during distribution. analogue argue imposing argues, instead, every party themselves. 53 preventing "speaking 1823; 2955, show uniformity. correctly notes Solicitor General's decision 'is dispositive.' submission, separation powers, persuade. President, (Congress shall declare war); II, (President advice consent Senate, treaties); receive ambassadors), textually delegated alone. well authorize engage forbid," Maine Taylor, 131, 138, 2440, 2447, (1986) President filing brief. looks Tennessee's, infers permission supposed failure "[T]his exempted implied limitations [Commerce] direction 'unmistakably clear.' 139, South-Central Timber Development, Wunnicke, 467 91, 104 2237, 2242, 81 (1984). affirmative approval heightened [Tennessee's tax] ramifications Nation's borders." 92, 7, 2243, 7. Not invert finding silence, silence narrow 56 result, fear, patchwork burden respectfully dissent. syllabus constitutes prepared Reporter Decisions convenience reader. Detroit Lumber 200 321, 337, 282, 287, 499. Healy Beer Institute, 491 324, 344, 2491, 2503, 275 (1989) judgment); (1988); 387, 836, (1991) Amerada Hess Director, Div. Taxation, N.J. 490 66, 80, 1617, 1625, 58 Scheiner, 266, 304, 2829, 2851, 226 dissenting). 204, 2344, (1990); Quill North Dakota, 504 1904, 1907, 119 (1992) judgment) (slip op., 2). provides: "No shall, Consent Congress, Imposts Duties Imports Exports, absolutely necessary executing inspection laws. ."

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