Legal Document

462 U.S. 74 103 S.Ct. 2239 76 L.Ed.2d 427 UNITED STATES, Appellantv.Harry PTASYNSKI et al. No. 82-1066. Argued April 27, 1983. Decided June 6, Syllabus The Crude Oil Windfall Profit Tax Act of 1980 grants an exemption from the tax domestic crude oil defined as produced wells located north Arctic Circle or on northerly side divide Alaska-Aleutian Range and at least 75 miles nearest point Trans-Alaska Pipeline system. Held: This does not violate Uniformity Clause's requirement that taxes be "uniform throughout United States." Pp. 80-86. (a) Clause require Congress to devise a falls equally proportionately each State nor prevent defining subject by drawing distinctions between similar classes. 80-82. (b) Identifying "exempt Alaskan oil" in terms its geographic boundaries render invalid. Neither language this Court's decisions prohibit all geographically classifications. That gives wide latitude deciding what it considering isolated problems. Here, cannot faulted for determining, based neutral factors, required separate favorable treatment. Such determination reflects Congress' considered judgment unique climatic conditions region exempted windfall profit tax, which was devised "windfalls" some producers would receive result deregulation prices part Government's program encourage exploration production oil. 84-86. 550 F.Supp. 549, reversed. Lawrence G. Wallace, Washington, D.C., appellant. Stephen F. Williams, Boulder, Colo., appellees. Justice POWELL delivered opinion Court. 1 issue is whether excluding class coverage violates Clause. 2 * During 1970s Executive Branch regulated price See H.R.Rep. 96-304, pp. 4-5 (1979), U.S.Code Cong. & Admin.News 1980, p. 410. Depending vintage type, divided into differing classes tiers assigned corresponding ceiling price. Initially, there were only two tiers, lower tier "old upper new production. As regulatory framework developed, recognized.1 3 In 1979, President Carter announced remove controls September 30, 1981. id., 5. By eliminating controls, sought increase old marginally economic operations. H.R.Doc. 96-107, (1979). He recognized, however, deregulating produce substantial gains (referred "windfalls") producers. world market had risen markedly, anticipated already allow far excess their initial estimates. 2. Accordingly, proposed place excise additional revenue resulting decontrol. 4 responded enacting 94 Stat. 229, 26 U.S.C. § 4986 seq. (1976 ed., Supp. V). divides three tiers2 establishes adjusted base rate tier. §§ 4986, 4989, 4991. generally reflect selling particular categories under rates vary according vintages types included within tier.3 Joint Committee Taxation, General Explanation 26-36 (Comm. Print 1981). House Report explained "designed impose relatively high where expected respond very much further increases low whose likely responsive price." 7; see S.Rep. 96-394, 6 594. 5 exempts certain tax,4 4991(b), one oil," 4991(b)(3). It as: "any (other than Sadlerochit oil) 7 (1) reservoir has been commercial quantities through well Circle, 8 (2) System." 4994(e). 9 Although refers reference entirely accurate. Alaska tax. Indeed, less 20% current exempt.5 Nor limited Alaska. offshore territorial waters—beyond limits any State—is exemption. 10 thus drawn state political lines. Rather climactic exempt area treated H.R.Conf.Rep. 96-817, (1980). Senator Gravel explained, development arctic subarctic regions hampered "severe weather conditions, remoteness, sensitive environmental geological characteristics, lack normal social industrial infrastructure."6 125 Cong.Rec. S16327 (Nov. 8, 1979). These factors combine make average cost drilling 15 times greater elsewhere States. 126 S2630 (Mar. 19, 1980) (remarks Sen. Gravel).7 chose determined imposing such "would discourage reservoirs areas extreme conditions." 103, 656. 11 Six months after passed, independent royalty owners filed suit District Court Wyoming, seeking refund paid Act. On motion summary judgment, held violated Clause, Art. I, cl. 1.8 553 recognized power virtually without limitation, but noted question places specific limit indirect taxes. must uniform States, uniformity achieved when " 'operates with same force effect every found.' Id., (quoting Head Money Cases, 112 580, 594, 247, 252, 28 L.Ed. 798 (1884)). 12 Because State, court found apply uniformly could have "a rational justification exemption," concluded "[d]istinctions geography are simply allowed." F.Supp., 553. then unconstitutional provision exempting severed remainder 554. therefore entire 555. 13 We probable jurisdiction, --- ----, 1180, 429 (1983), now reverse. II 14 Appellees advance arguments support judgment. First, they contend constitutional States" prohibits taxation. They concede may take considerations account Brief Taxpayer 6-7. But argue prevents framing, did here, boundaries. Second, integral compromise struck Congress. Thus, inappropriate invalidate leave effect. we find constitutional, do consider severable. taxes.9 provides "all Duties, Imposts Excises shall 1. debates Constitutional Convention provide little evidence Framers' intent,10 concerns giving rise identify purpose more clearly. Detail remedy interstate trade barriers regulate commerce among States vested national government, agreed. M. Farrand, Records Federal 1787, 308 (rev. ed. 1937); C. Warren, Making Constitution 567-570 (1928). Some remained apprehensive regionalism marked Confederation persist. 586-588. There concern government use over disadvantage several measures designed exercise power. supra, 417-418; Knowlton v. Moore, 178 41, 103-106, 20 747, 771-72, 44 969 (1900). Story explained: 16 "[The Clause] cut off undue preferences another regulation subjects affecting common interests. Unless duties, imposts, excises uniform, grossest most oppressive inequalities, vitally pursuits employments people different might exist. agriculture, commerce, manufactures built up ruins those another; combination few secure monopoly branches business themselves, injury, if destruction, favored neighbors." J. Story, Commentaries 957 (T. Cooley 1873). 17 also Annals 378-379 (1792) Hugh Williamson); Address Luther Martin Maryland Legislature 29, 1787), reprinted 205. 18 general purpose, define precise scope raised repeatedly encompasses notion equality. settled fairly early State. Rather, stated (1884), "tax operates found." S.Ct., 252. 19 head persons coming country, choose who immigrated ports, inland cities. "the evil remedied legislation no existence our borders, immigration quarter needed regulation." 595, applied ports alike, "there meaning Constitution." Ibid. Subsequent cases confirmed Framers intend restrict ability objects taxed. intended wherever classification found. 106, (1900);11 Nicol Ames, 173 509, 521-522, 522, 527-528, 43 786 (1899). remains, taxed terms. addressed squarely.12 recently held, Bankruptcy Clause13 invalidation debtors. Regional Rail Reorganization 419 102, 161, 95 335, 367, 42 320 (1974). litigation, creditors bankrupt railroads challenged statute passed reorganize eight major northeast midwest country. argued because operated single statutorily region. "[t]he deny differences exist parts fashion resolve problems." U.S., 159, 366. fact unconstitutional. period effective, railroad reorganization proceeding pending outside 160, 21 concluding violated, relied large distinguish regions. rejected argument differs own applies designated . definition obscure reality pursuant 77 during time applies." 367 (emphasis added). B 22 With these principles mind, decision treat think construed requires apply, rate, portions Where defines nongeographic terms, satisfied. 772. say uses subject, invalidated. substance 156-161, 365-367.14 frame will examine closely actual discrimination. 160-161, 366-367. 23 case, hold constitutional. discussed above, necessary component perceived decontrol result—in circumstances—in profits essentially unrelated objective program, should various gave treatment increased prices. 24 clearly viewed that, consistent scheme Act, merited treatment.15 before ample disproportionate costs difficulties—the fragile ecology, harsh environment, remote location—associated extracting fault determination, indication benefit reasons offend Nothing Act's legislative history suggests grant preference expense other oil-producing especially clear itself heavily n. 5, supra. III 25 Had described constitutionality. identifying renders Where, exercised respect enormously complex problem, reluctant disturb determination. Reversed. addition lower- upper-tier oil, Energy Administration four oil: stripper North Slope Naval Petroleum Reserve, incremental tertiary disproportionately transportation forced keep wellhead below Fed.Reg. 41566-41568 (1977). incorporate extent developed Administration's crude-oil pricing regulations. Tier two, example, includes stripper-well petroleum reserve 4991(d). Generally, difference 4988(a). amount calculated multiplying applicable rate. 4987(a). barrel varies both established placed. identity producer nature Section 4991(b)(1), "from qualified governmental interest charitable interest." revenues used nonprofit entities, appropriate them 60-61 front-end 4991(b)(4). Subject sold finance recovery projects. 4994(c). Of total currently Alaska, 82.6% 12.4% "qualified interest," 4, 5.1% oil." Amicus Curiae 7. A problem results presence permafrost, exists area. Permafrost ground remains frozen continuously, thaw subside surface vegetation insulating disturbed. University Profiles, Yukon Region 98-100. To protect vegetation, Department Natural Resources vehicles machinery covered snow. construction seismic activities restricted primarily periods climate harshest. Temperatures -40 -50 degrees Fahrenheit uncommon, 15-16, normally accomplished relative ease becomes demanding task. American Institute reported comparative California, Louisiana, Texas. onshore $3,181,000. Institute, 1976 Association Survey Drilling Costs next highest $292,000 Louisiana. 28-29. Standard Poor's Industry Surveys, Oil-Gas Services, Vol. 150, 40, Sec. (Oct. 7, 1982). identical Gravel's figures, sources indicate developing exceeds Moreover, figures represent well, expenses incurred nonexempt areas. understate provides: "The Power lay collect Taxes, Excises, pay Debts Defence Welfare States; 9, direct apportioned population. Indirect taxes, rule uniformity. Hylton Dall. 171, 176, 556, (1796) (opinion Paterson, J.). August adopted 31 discussion. 417-418, 481 1937). When Style final draft 12, failed include 594 (Clause interlined James Madison). omission corrected days later appending 614. origins linked Port Preference 6. together, out special committee interrelated limitation government's power, 437; separated explanation draft. Moore represents detailed consideration 83-106, 764-773. Knowlton, presented variation (1884). distinguishing port cities, imposed progressive legacies varied legatees. receiving them; none. 83-84, 764-765. rejecting argument, reaffirmed conclusion Cases selecting Since occasion detail. See, e.g., Florida Mellon, 273 17, 47 265, 266, 71 511 (1927); LaBelle Iron Works 256 377, 392, 41 528, 532, 65 998 (1921). Downes Bidwell, 182 244, 770, 45 1088 (1901), duty merchandise imported Puerto Rico. assumed Rico 249, upheld country purposes either 287, 787. "To establish Laws Bankruptcies underlying looked interpretation clause determining other. 366-367, Railway Labor Executives' Assn. Gibbons, 455 457, 102 1169, 335 (1982), contrary. aid stated: inevitable [the statute] response problems bankruptcies problem: caused bankruptcy railroad." 470, 1177 original). case deal problem. view merits actions Administration, 1, President, H.R.Doc., Staff Design 20-23

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