Jump to Navigation
Jump to Content

Oregon Waste Sys., Inc. v. Department of Envtl. Quality

ELR Citation: 24 ELR 20674
Nos. Nos. 93-70, -108, 511 U.S. 93/(U.S., 04/04/1994) Rev'd & remanded

The Court rules that the state of Oregon's imposition of a surcharge on the in-state disposal of solid waste generated in other states that is nearly three times that imposed on the disposal of waste generated within Oregon violates the Commerce Clause of the U.S. Constitution. Oregon imposed a $2.50 per ton surcharge on in-state disposal of out-of-state waste and an $0.85 per ton fee on the in-state disposal of waste generated in-state. The Oregon Supreme Court upheld the surcharge because the charge's express nexus to actual costs incurred by state and local governments rendered it a facially constitutional "compensatory fee."

The Court first holds that Oregon's surcharge is facially discriminatory and thus invalid under the negative Commerce Clause, because the surcharge subjects waste from other states to a fee almost three times greater than the $0.85 per ton charge imposed on in-state solid waste. Despite respondents' claim that the surcharge has a compensatory aim, the purpose or justification for a law has no bearing on whether it is facially discriminatory. Here, the surcharge effectively makes a geographic distinction that favors shippers of Oregon waste over their counterparts handling waste generated in other states, making the higher surcharge patently discriminatory against interstate commerce.

The Court next holds that respondents failed to identify a legitimate local purpose that the surcharge advances and that cannot be adequately served by reasonable nondiscriminatory alternatives. The Court rejects the notion that the higher surcharge on out-of-state waste can be justified as a compensatory tax, because Oregon does not impose a specific charge of at least $2.25 per ton on shippers of waste generated in-state, for which the out-of-state surcharge might be considered compensatory. Moreover, although intrastate commerce may pay its share of the costs underlying the surcharge through general taxation, the in-state and out-of-state levies under this system are not imposed on substantially equivalent events. The court also rejects respondents' argument that Oregon has an interest in spreading the costs of in-state disposal of Oregon waste to all Oregonians, because the necessary result is that shippers of out-of-state waste bear the full costs of in-state disposal, but shippers of in-state waste bear less than full cost. Characterizing the surcharge as resource protectionism is of no avail to respondents, because a state may not accord its own citizens a preferred right of access over consumers in other states to natural resources located within its borders.

In dissent, Chief Justice Rehnquist and Justice Blackmun justify the fee as compensatory by arguing that in-state producers of solid waste support the Oregon regulatory program through state income taxes and by paying, indirectly, the numerous fees imposed on landfill operators and the dumping fee on in-state waste. Prior U.S. Supreme Court case law confirms that a state may enact a comprehensive regulatory system to address an environmental problem or a threat to natural resources within the confines of the Commerce Clause. Oregon has such a system to address the shrinking availability of safe landfill disposal sites, and its approach is satisfactory as health and safety regulation. They also argue that Oregon's neighbors will now operate under a competitive advantage against their Oregon counterparts, because they can now produce waste and avoid paying concomitant state taxes to develop new landfills and clean up retired landfill sites. They also argue that the $2.25 per ton fee on out-of-state waste, which works out to $0.14 per week cost for the average solid waste producer, is only an incidental effect on interstate commerce.

[The Oregon Supreme Court's decision is published at 24 ELR 20065. The briefs presented to the U.S. Supreme Court are digested at PEND. LIT. 66303.]

Counsel for Petitioners
Andrew Pincus
Mayer, Brown & Platt
2000 Pennsylvania Ave. NW, Washington DC 20006
(202) 463-2000

Counsel for Respondents
Theodore Kulongoski, Ass't Attorney General
Attorney General's Office
100 Justice Bldg., Salem OR 97310
(503) 378-4402