Court Opinion

ID: 9432011
Source: CourtListenerOpinion
Date Created: 2023-08-02 23:33:55.145155+00
Date Added: 2024-06-11T17:23:31.579972
License: Public Domain

Justice Scalia,
concurring in the judgment.
All agree in this case that state taxes or regulations that discriminate against the Federal Government or those with whom it deals are invalid under the doctrine of intergovernmental immunity. See ante, at 435 (opinion of Stevens, J.); post, at 451-452 (opinion of Brennan, J.); Memphis Bank & Trust Co. v. Garner, 459 U. S. 392, 398 (1983). The principal point of contention is whether North Dakota’s labeling requirement produces such discrimination. I agree with Justice Stevens that it does not, because the Federal Government can readily avoid that discrimination against its contractors by purchasing its liquor from in-state distributors, as everyone else in North Dakota must do. I disagree with Justice Stevens, however, as to why the availability of this option saves the regulation.
If I understand Justice Stevens correctly, the availability of the option suffices, in his view, whether or not North Dakota would have the power to prevent the Federal Government from purchasing liquor directly from out-of-state *445suppliers. So long as the Federal Government does not have to pay more tax than North Dakota citizens in order to obtain liquor, the principle of governmental immunity is not offended. For this proposition Justice Stevens relies on Washington v. United States, 460 U. S. 536 (1983), in which we upheld a state scheme for taxing building materials in which the Federal Government’s business partners paid a tax other market participants did not. There the State normally imposed a tax upon the landowner for the purchase of construction materials. Since it could not constitutionally do so where the Federal Government was the landowner, it imposed the tax instead upon the building contractor, though at a lower rate than the tax applicable to landowners. We upheld the contractor tax on the ground that the net result accorded the Federal Government treatment no worse than that received by its private-sector counterparts; at worst, it would have to reimburse its contractors for the tax paid, in which event (because of the lower rate for the contractor tax) it would still be better off than the private landowner. Id., at 542.
As an original matter I am not sure I would have agreed with the approach we took in Washington, for reasons of both principle and practicality. As a matter of principle, if (as we recognized in Washington) the Federal Government has a constitutional entitlement to its immunity from direct state taxation, then it seems to me the State cannot require it to “pay” for that entitlement by bearing the burden of an indirect tax directed at it alone. And as a matter of practicality, a jurisdictional issue (the jurisdiction to tax) should not turn upon a factor that is, as a general matter, so difficult to calculate as the Federal Government’s “net” position. But today’s case is in any event distinguishable from Washington in that the difficulty of calculation is not only an accurate general prediction but a reality on the facts before us. Unlike in Washington, where the relative burdens placed on the Federal Government and its private-sector counterparts were easily *446compared (one could simply look at the tax rates), North Dakota’s labeling requirement cannot be directly measured against the taxes imposed on other participants in the State’s liquor market. One might, with some difficulty, determine the cost of compliance with the labeling requirement and uphold the regulation if that cost is less than the taxes imposed upon nonfederal purchasers. But under that approach, the constitutionality of North Dakota’s regulation might vary year to year as the cost of compliance (the cost of buying and affixing labels) fluctuates. I do not think Washington compels us to uphold a regulatory requirement uniquely imposed on federal contractors that is so different from the offsetting burden on private market participants as to require difficult and periodic computation of relative burden.
This problem of comparability of burden does not trouble Justice Stevens because, he says, the rule of Washington is satisfied in this case because the Federal Government is given the option of purchasing label-free liquor from in-state distributors, and thus (by definition) the option of not carrying a higher financial burden than anyone else. That approach carries Washington one step further (though I must admit a logical step further) down the line of analysis that troubled me about the case in the first place. Washington said (erroneously, in my view) that you can impose a discriminatory indirect tax, so long as it is no higher than the general direct tax which the Federal Government has a constitutional right to avoid. But if economic comparability is the touchstone, reasons Justice Stevens — that is, if everything is OK so long as the Federal Government pays no more taxes than anyone else — then it should follow that you can impose a discriminatory indirect tax that is even greater than the constitutionally avoided direct tax, so long as the Federal Government is given the option of paying the direct tax instead. I would not make that extension, however reasonable it may be. Suffering a discriminatory imposition in the precise amount of the constitutionally avoidable tax is not the same *447in kind (though it may well be the same in effect) as suffering a discriminatory imposition in a higher amount with the option of escaping it by paying the constitutionally avoidable tax. If, therefore, in the present case, the State could not compel the Federal Government to purchase its liquor from in-state distributors, then I do not think it could force the Federal Government to choose between paying for a discriminatory labeling requirement and purchasing from in-state suppliers.
I ultimately agree with Justice Stevens, however, that the existence of the option in the present case saves the discriminatory regulation — but only because the option of buying liquor from in-state distributors (unlike the option of paying a direct tax in Washington) is not a course of action that the Federal Government has a constitutional right to avoid. The Twenty-first Amendment, which prohibits “the transportation or importation into any State ... for delivery or use therein of intoxicating liquors, in violation of the laws thereof,” is binding on the Federal Government like everyone else, and empowers North Dakota to require that all liquor sold for use in the State be purchased from a licensed in-state wholesaler. Nothing in our Twenty-first Amendment case law forecloses that conclusion. In all but one of the cases in which we have invalidated state restrictions on liquor transactions between the Federal Government and its business partners, the liquor was found not to be for “delivery or use” in the State because its destination was an exclusive federal enclave. See United States v. Mississippi Tax Comm’n, 412 U. S. 363 (1973); Collins v. Yosemite Park & Curry Co., 304 U. S. 518 (1938); cf. Johnson v. Yellow Cab Transit Co., 321 U. S. 383 (1944). In the remaining case, United States v. Mississippi Tax Comm’n, 421 U. S. 599 (1975), we held that the State could not impose a sales tax, the legal incidence of which fell on the Federal Government, on liquor supplied to a federal military base under concurrent state-federal jurisdiction. That decision rested on the con*448elusion that the Twenty-first Amendment had not abolished the Federal Government’s traditional immunity from state taxation. Id., at 612-613. I do not believe one must also conclude that the Twenty-first Amendment did not abolish the Federal Government’s immunity from state regulation. Federal immunity from state taxation, which has been a bedrock principle of our federal system since McCulloch v. Maryland, 4 Wheat. 316 (1819), is at least arguably consistent with the text of the Twenty-first Amendment’s prohibition on transportation or importation in violation of state law. Federal immunity from state liquor import regulation is not.
That is not to say, of course, that the State may enact regulations that discriminate against the Federal Government. But for reasons already adverted to, the North Dakota regulations do not do so. In giving the Federal Government a choice between purchasing label-free bottles from in-state wholesalers or purchasing labeled bottles from out-of-state distillers, North Dakota provides an option that no other retailer in the State enjoys. That being so, the labeling requirement for liquor destined for sale or use on nonexclusive federal enclaves does not violate any federal immunity.
For these reasons, I concur in the judgment.