Legal Document

435 U.S. 734 98 Supreme Court Reporter 1388 55 United States Reports Lawyer’s Edition 2d Series KF101.8 U54 682 DEPARTMENT OF REVENUE the STATE WASHINGTON, Petitioner,v.ASSOCIATION WASHINGTON STEVEDORING COMPANIES et al. Number 76-1706. Argued Jan. 16, 17, 1978. Decided April 26, Syllabus 1. The State of Washington's business and occupation tax does not violate Commerce Clause by taxing interstate commerce activity stevedoring within State. Complete Auto Transit, Incorporated versus brady, 430 274, 97 1076, 51 326, followed; Puget Sound Stevedoring company Tax Comm'n, 302 90, 58 72, 82 L.Ed. 68, Joseph Carter & Weekes Co., 330 422, 67 815, 91 993, overruled. Pp. 743-751. (a) A under appropriate conditions may directly privilege conducting business. Brady, supra. Pacific KF135 P2 745. (b) When a general levies only on value services performed State, is properly apportioned multiple burdens cannot occur. 746-747. (c) All state do imperm ssibly impede commerce, balance tips against when it unfairly exacting from more than its just share cost government. 747-748. (d) taxes are valid Clause, where they applied to having substantial nexus with fairly apportioned, discriminate related provided State; here Washington in question meets this standard, since operations entirely conducted levied solely loading unloading occurring rate as well generally businesses rendering services, there nothing record show that protection 750-751. 2. Nor tax, so reach wholly imports, exports, other goods, among "Imposts or Duties" prohibited Import-Export Clause. Michelin Tire Corporation Wages, 423 276, 96 535, 46 495. 751-761. application threatens none Clause's policies precluding disruption foreign policy, protecting federal revenues, avoiding friction trade barriers States. restrain Federal Government's ability conduct policy. Its effect import revenue merely compensate for extended policy rivalry vindicated, similar if falls upon taxpayer reasonable discriminate, relates reasonably 751-755. While, distinguished supra, goods taxed were no longer transit, occurs while imports exports nevertheless fall themselves but reaches ships, i. e., transporting cargo, hence "Impost Duty" violates 755-757. While stevedores load unload whereas touched approach analyzing nature determine whether should apply taxation involving imports. Any relating can be tested conformity States, although serve revenues view fact Constitution forbids exports. 757-758. an absolute ban all Duties." 759-760. (e) To say because remain part would resurrect now rejected "original package" analysis whereby enjoyed immunity long retained their status remaining packages. 760. (f) invalid constituting i position transit fee inland customers, since, case jurisprudence, will chafe pays enjoys. Fair assured prohibition discrimination requirements apportionment, nexus, relationship between benefits. 760-761. 88 Wash.2d 315, 559 Reporter, 2nd 997, reversed remanded. Slade Gorton, Atty. Gen., Olympia, Wash., petitioner. Mr. Justice BLACKMUN delivered opinion Court. 1 For second time century, stevedoring. State's first was unsuccessful, held unconstitutional violative Clause1 Constitution. 68 (1937). faces attempt either Clause.2 2 * cargo ships.3 Private companies constitute respondent Association Companies; Public Ports nonprofit corporation consisting port authorities engage activities. App. 3. In 1974 petitioner Department Revenue adopted Revised Rule 193, pt. D, Wash.Admin.Code 458-20-193-D, implement 1% set forth Wash.Rev.Code §§ 82.04.220 82.04.290 (1976).4 applies reads pertinent margin.5 3 193D restores original scope tax. After initial imposition 1935,6 then Commission7 198 Rules Regulations Relating Act 1935.8 That permitted taxpayers deduct certain income received commerce. Income stevedoring, however, described deductible. When, 1937, invalidated Commission complied adding list deductions.9 deduction remained until revision 193 1974.10 4 Seeking retain theretofore-enjoyed exemption respondents January 1975 sought Superior Thurston County, declaratory judgment violated both They urged controlled Sound, which had reaffirmed 433, 821, 993 (1947) (together, Cases ). Absent clear invitation Court, submitted could avoid force Cases, never been Record 9.11 Petitioner replied invited rejection those cases casting doubt direct indirect Id., at 25-37, citing, e. g., Interstate Pipe Line Stone, 337 662, 69 1264, 93 1613 (1949); Western Live Stock Bureau Revenue, 303 250, 546, 823 (1938). also argued did intrastate activity, namely, 17-20, nondiscriminatory 20-22. impose any Duties Imports Exports" themselves, id., 22-25, citing Canton R. Rogan, 340 511, 71 447, 95 488 (1951). surprisingly, considered itself bound Cases. It therefore issued extent 17-18.12 5 appealed Appeals. 77. court certified appeal § 2.06.030(c) (1976), Wash. Appeal I-14(1)(c) (now 4.2(a)(2), (1977)). accepting certification, two justices dissenting, affirmed 997 (1977). majority petitioner's argument recent cases13 eroded holdings concluded, nonetheless: 6 "[W]e must hold invalid; we recognition our duty abide controlling decisions construing constitution. Hence, find unnecessary discuss aforementioned beyond nowhere them language criticizing, expressly contradicting, overruling (even impliedly) cases. 7 8 "Fully mindful prior criticism principles reasoning stevedore (See Washington-Oregon Shippers Cooperative Schumacher, 59 159, 167, 367 112, 115-116 (1961)), instant invalid." Wash.2d, 318-320, P.2d, 998-999. 9 dissenting have upheld attack ground direct-indirect employed found violation themselves. Even importing exporting, impair transportation, burdens, regulate 320-322, 999-1000. 10 Because possible impact issues made intervening decision 326 (1977), filed after Court's ruling, granted certiorari. 434 51, 54 70 II Atlantic 11 according because: 12 "Transportation water impossible futile unless thing transported put aboard ship taken off destination. who person servants work indispensable much agency shipowner master." U.S., 92, S.Ct., 73. 13 Without further analysis, concluded: 14 "The being liberty doing return therefor percentage gross receipts. Decisions many controlling." 94, 74. 15 petitioners (officers New York City) overrule Sound. cases14 local proceeds derived therefore, preclude City receipts corporation. disagreed theory separate distinct 430-433, 819-821. This separation necessary, said served diminish threat commerce; actually fell less likelihood jurisdictions duplicate levy. 429, 819. Stevedoring, separated because, previously enunciated commerce: 16 "Stevedoring, conclude, essentially measured receipts, invalid. We reaffirm rule Company. 'What makes interference freedom commerce.' Freeman Hewit [329 249,] 256, 265." 821. 17 present indistinguishable issue Weekes, control today's precedent new require reasoning. 18 conclude business, requires such rejection. Auto, Mississippi gross-receipts appellant, Michigan motor vehicles manufactured outside Mississippi. shipped into railroad, appellant moved truck dealers. assumed appellant's 276 n. 4, 1077. 19 survived attack. Absolute exist " ' "was purpose clause relieve engaged burden even though increases business." 288, 1079, quoting 254, 548, Colonial Pipeline Traigle, 421 100, 108, 1538, 1542, 44 (1975). specifically overruled Spector Motor Service, O'Connor, 602, 508, 573 (1951), engaging invalidated. 288-289, 1083-1084. 20 lead us underpinnings First, burdened permits basis holding removed completely.15 21 Second, supported reaffirmance arguing threaten greater connected But recognized errors apportionment corrected o cur. 15, 1083-108416. 22 abstraction. No demonstrated. logically occur.17 supports automatic levy 23 Third, previous interfered support conclusion, cited Southern Arizona ex rel. Sullivan, 325 761, 767, 65 1515, 1519, 89 1915 (1945), Arizona's limitations length trains InSouthern Pacific, struck down legislation Instead, weighed interests limiting size trains: 24 decisive circumstances total law safety measure reducing accidents casualties slight problematical outweigh national interest keeping free . ." 775-776, 1523. 25 Only concluding railroad advanced regulations, invalidate them. contravened outweighed interests. 26 Although balancing naturally differs financial needs, has significant fair 1083. Accord, 1542; 548. impermissibly activity. Again, then, rejected. B 27 Respondents' additional arguments demonstrate wisdom of, need for, preserving distinguish so-called movement cases, broad, nonmovement traditionally narrower. Brief Respondents 23-28. Movement involve transport, Texas natural gas pipeline Michigan-Wisconsin Calvert, 347 157, 74 396, 583 (1954). Nonmovement move Mexico publishing newspapers magazines Revenue. distinction, disregards moving per se unconstitutional. 28 concerned is, railhead 26-28. purported distinction ignores facts. interstate, segment out-of-state manufacturer in-state Moreover, completely Washington, situation same case, thus, distinguishable one. 29 suggest what regard important change jurisprudence come Congress begin with, law. primary alteration occurred Auto. change, offend separation-of-powers principle restrict prohibition; grants specific power Congress. prohibitive results Supremacy See, Cooley Board Wardens, How. 299, 996 (1852); Gibbons Ogden, Wheat. 1, (1824). If prefers act.18 30 Consistent commission stand contrary, each Contract 31 With thus discarded, constitutionality depends practical exaction. As (1938), bear burden. repeatedly sustained E. General Motors 377 436, 84 1564, (1964); Northwestern Cement Minnesota, 358 450, 79 357, (1959); Memphis Gas 335 80, 1475, 92 1832 (1948); Wisconsin Judge C. Penney 311 435, 61 246, 85 267 (1940); see 279, 8, 1079. 32 proved facts that, above test, justify invalidation contains minimizes obvious respondents; indeed, entire successfully attacked system. challenge Washington. varies type demonstrated how rate, discriminates Finally, suggests short, relied below developed factual declare members III 33 Having decided face contravenes parties dispute meaning Exports," agree erects 32-33; 9-10; Tr. Oral Arg. 13, 22. noted before states ban, Richfield Oil Board, 329 69, 75, 156, 80 (1946). On hand, touches regulation bans Exports." 290-294, 537, 543-544, 495 (1976). resolution issue, dispose question. 34 ad valorem property imported tires tubes. surveyed history purposes determine, time, hich 283-286, 539-541. Previous exporting processes banned James baron Beam Distilling 341, 343, 1247, 1248, 362 76, 160; 445, 827 (Douglas, J., part); Anglo-Chilean Alabama, 288 218, 226-227, 53 373, 375, 77 710 (1933); License 504, 575-576, 256 (1847) (opinion Taney, J.). Before Michelin, consideration review reached respect original-package doctrine Brown Maryland, 419, 678 (1827); see, g. Co.; Alabama; Low Austin, Wall. 29, 517 (1872), Wages. So packages, taxation. dispositive entered "export stream," final, continuous journey out country. Kosydar National Cash Register 417 62, 70-71, 94 2108, 2113, 40 660 (1974); Empresa Siderurgica County Merced, 154, 995, 1276 G. Spalding Bros. Edwards, 262 66, 43 485, 486, 865 (1923); Coe Errol, 116 517, 526, 527, 475, 477, 478, 715 (1886). soon began, attached. 35 initiated different ignored simple tubes analyzed Duty." 543-544. Specifically, examined exaction offended three considerations leading presence Clause: 36 Framers alleviate main concerns .: Government speak one voice regulating commercial relations governments, tariffs, might affect relations, implemented consistently exclusive power; major source diverted States; harmony disturbed seaboard crucial ports entry, levying citizens flowing through situated favorably geographically." 285-286, 540. (footnotes omitted). 37 these policies. usurp authority "fall place origin." 286, 541. applicable used create special protective tariffs selectively encourage discourage importation manner inconsistent Further, deprived entitled. paid fire police protection, supplied increase consumers, demand insubstantial. significantly number duties deprive indirectly. disturb coastal receive compensation intending prevent abusing geographical positions, expect residents subsidize headed inland. concluded Georgia Duty," behind 38 demonstrates virtually created tariff. assessments vessel taxed. Respondents, impediment posed 39 identical Michelin. compensates ships desire vary See Hartman, Taxation 2-3 (1953).19 third vindicated explained Part II-C, presently developed, reveals factors. 41 Under qualify subject 42 qualified observation "no transit." 302, 548.20 Inasmuch inquiry, note distinctions transit. or, othe words, Despite existence leads conclusion steam operating exclusively Port Baltimore. operated marine terminal owned rail lines connecting docks trunk railroads. switched pulled cars, stored pending wharfage, rented crane. Somewhat half company's 1946 transport contended immune, primarily incidental broad themselves:21 difference handling port. An article export immune activities range wide. 45 ". broader definition tenders distorts ordinary terms. back every forest, mine, factory land zone imagined." 514-515, 449. (emphasis original). about ships.22 implied opinion, 515, 449, crossed waterline. without economic significance context. transportation settings necessary t import-export process. neither setting prompts discarded least service value.23 47 Another III-A, differed former, enter stream; latter, escape package. questions differed, example, package secure later began Until 48 formal differences, contained regarding export-tax vindicates identified precludes policy.24 protect U.S.Const., Article I, 9, cl. 5;25 Hvoslef, 237 459, 813 (1915). result, conformance constitutional disturbed, consistent respondents' Defendant 49 None convinces sustain 50 contend effects absolute, argue, order give apart contention dicta Oil, 75-78, 159-161, partial dissent i, 444-445, 827. Neither, provides persuasive term self-defining necessarily encompass taxes. address all. Oil's discussion limited sale right retail. 83-84, 163-164. apparently conceded precluded process exporting. 84, 164. use central approach, offending becomes suspect regardless creates friction. responds encompasses superfluous several terms Constitution, "Power lay collect Taxes, Duties, Imposts Excises." particular, include "Excises," "Imposts" "Duties." 291-292, 12, 543, M. Farrand, Records Convention 1787, Page 305 (1911), 203-204.26 mass citation How., 576, rejected, resurrects analysis. 574-575. Rather examining policies, explore lose precisely inquiry abandoned 537. Nothing fractioned produced nine opinions, constitutes export. 52 submit imposes consumers. Regardless validity toll problem explain harmonious preventing rivalries, friction, Clauses. years development governmental II, Requiring consumers exacerbate, rather diminish, rivalries hostility. relati nship intended preserve harmony, four safeguards vindicate protected 10, extend required dispute. based differences required. identify variation transit-fee E goods. IV reversed, remanded proceedings opinion.27 ordered. 56 BRENNAN took case. 57 POWELL, concurring result. N Dec. Immigration Nationality join exception III-B. section appears "direct-indirect" it. traditional, formalistic methods determining functional exaction's underlie (i) preservation uniform relations; (ii) imports; (iii) maintenance suggested run afoul 60 addresses today III-B gives negative answer, reasons. indicates "not port." 514, precedential proposition kind artificial harks arid favor framed light reality. reason surface appearance economic-reality turns test another guise. likens declares "[t]axation themselves." Ante, 757. apparent design fees imposed "directly" amount f bears relation $5 ton $10 cubic yard. These here, volume companies' and, turn, passing Thus, satisfactorily pronouncement stevedoring—in terms—is questioned. 62 my view, resolved reference mention concerning seek quid pro quo benefits conferred State: 63 "There why importer; ultimate pay accorded costs associated evil prevented peculiar enabled single destined effect, fashioned exactions [The issue] obviously stands footing, conflict whatsoever secured prohibiting assessment assessed." 289-290, 542. (Footnotes omitted.) 64 questioning "transit fees," bore answered goods; instead, inquiring simply making own way, opposed "the State." Ibid. already observes "nothing Since undoubtedly avail offers businesses, statement reason, fee" shall Power "To Nations, Indian Tribes "No shall, Consent Congress, Exports, except absolutely executing inspection Laws: net Produce Imposts, laid Use Treasury Laws Revision Control Congress." contain precise description respective members. By admitting allegations Petition Declaratory Judgment Validity Rule, 3-7, accepted paragraph VI petition. alleged private Companies "are taxable Co." follows: "What done prolonged stage incidents. True, end ship's side, placed sling attached tackle. carriage 'first rest,' means covered space convenient point discharge dock. stipulated, matter whom 'stevedoring essential waterborne always commence "first rest," vice versa.' 93, Section reads: d collected act Such rates products, sales be." part: "Upon addition enumerated ; persons account equal multiplied percent. includes, others, hereof , 'sale retail' wholesale.' note, also, 82.04.460 "Any Code maintaining places contribute rendition computing liability 82.04.290, apportion portion his rendered state." temporary 6% base period June 1976, 30, 1979. 1977 Wash.Laws, 1st Ex.Sess., ch. 324, 1975-1976 130, 3, codified 82.04.2901 (Supp.1977). "In deducted thereof performance thereby impermissible placing thereon borne subjects risk repeated states. Transporting across state's boundaries exempt, supplying transporters facilities, arranging accommodations, providing funds like, taxable. "EXAMPLES EXEMPT INCOME: "1. consist actual exempt. TAXABLE "3. Compensation contracting, taxable." 1935 180. abolished 1967, specified exceptions, powers, duties, functions transferred Director 1967 7. 198, 1936 read classification 'Service Other Business Activities' therefrom Included commodities states; transmission communications versa; solicitation freight shipment; selling tickets passage accommodations." 1935, 122 (1936); 133 Effective May 1939, [is] contracting vessels directed 137 (1939). (1943), 123 (1970). reply brief, continuing argued: "Final, think conclusive, proof continued vitality lies 602 [71 573] 'major' tivity commerce." last Term 1083-1084, argument. oral : "It seem certainly swing away 8. sticks mind, comprehend, everyone shied minds brilliant mine able overturn thirty-eight 11. "Under land, exemplified decisions; implication, nor anyone reverse cases." 11, 13-14. stated, 318, 998, (1976); (1975); (1951); Central Greyhound Lines, Mealey, 334 653, 1260, 1633 (1948). cited, particular Wood Preserving Corp., 313 885, 1188 (1941). Indiana purchase resale timber Indiana. transaction transported, resale, Ohio creosote treatment McGoldrick Berwind-White 309 33, 388, 565 (1940). There Pennsylvania sold coal city office. Pennsylvania, conditioned delivery consumption York. Gallagher, 306 389, 83 586 California storage retention ownership brought use. fourth advertising. magazine circulation advertising published. parallels past. Hewit, 249, 265 609, 512. Freeman, 257, Both Galveston Haw. Hawai‘i KFH45 A2 &. S. Texas, 210 217, 638, 1031 (1908). 279; observed parallel brief Spector, Weekes. Subsequent concern "While decision, 'realities' raised possibility resulting answer shown here. Logically impossible, twice. deal abstractions. formula sense. failed do." 462-463, 364, (1959). commentators reliance burdens. Professor Hartman "is elements multiple." 204 (1953). confined phase "Thus, unconstitutionality premise exist, mind Justices." 205. Hellerstein, Historical Perspective, Vand.L.Rev. particularly There, production refinery extracted crude oil 300 yards pipeline. identified, incident, transfer declared amounted unapportioned gas. relate taxpayer's taking Texas. Today's judgment, apportions Taxes vulnerable "Two chief weaknesses Articles Confederation lack so. almost catastrophic sort harmful wars reprisals home (1953), Federalist Nos. 7, (Hamilton), (Madison). Commentators qualification questioned significance. W. Wages: Enhanced Imports, 1976 S.Ct.Rev. 99, 122-126; Comment, Rutgers L.Rev. 203 Note, Wake Forest 1055, 1062 Maryland others 513-514, 448, distinguishing (1946); Thames Mersey insurance 19, 496, 821 (1915); Fairbank 181 283, 648, 862 (1901). Richfield, overturned 439, (1827). Similarly, stamp bills lading effectively represented Arguably, activities, closer ships. issue. reserved companion 520, 522, 451, 501 applicability Our Brother indicates, prefer today, he agrees, ago, defer presented. At full argument, ramifications decided. Abramson, Exports: Stream Constitutionality, N.C.L.Rev. Duty exported Crosskey, Politics History 296-297 290-291, author argues concept "Duties" encompassed excises. He explain, "Taxes, Excises" Court: Toward More Unified Approach Constitutional Adjudication?, 75 Mich.L.Rev. 1426

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