# Petition for Writ of Certiorari — Veneman v. Pacific Merchant Shipping Ass'n > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386004_1662%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1996 - **Citation:** 517 U.S. 1221 ## Text , Supreme Court, U.@, | FIRS D 1) “no. BB156'S mag 2 8 1998 OFFICE OFTHE cteR $$ In The Supreme Court of the United States October Term, 1995 . ANN M. VENEMAN, Secretary, CALIFORNIA DEPARTMENT OF FOOD AND AGRICULTURE; ISLAM SIDDIQUI, Assistant Director, CALIFORNIA DIVISION OF PLANT INDUSTRY; STATE OF CALIFORNIA, Petitioners, PACIFIC MERCHANT SHIPPING ASSOCIATION, Respondent -o-—---——--— On Petition For Writ Of Certiorari To The Supreme Court Of The State Of California - ¢ PETITION FOR WRIT OF CERTIORARI SJ Dante. E. LUNGREN Attorney General of the State of California Roperick E. WALSTON Chief Assistant Attorney General Cuaries W. Getz IV (Counsel of Record) Assistant Attorney General Linus MASOUREDIS Deputy Attorney General 50 Fremont Street, Suite 300 San Francisco, CA 94105-2239 Telephone: (415) 356-6348 Counsel for Petitioners COCKLE LAW BRIEF PRINTING CO, (800) 225-6964 OR CALL COLLECT (402) 62-2831 QUESTIONS PRESENTED The State of California collects an agricultural pest inspection fee from certain marine vessels that are engaged in foreign commerce and that arrive in Califor- nia from abroad. During the relevant time period, some of these fees were given to the United States Department of Agriculture (“USDA”) so that USDA could enforce more thoroughly federal agricultural pest inspection and quarantine laws against vessels and other conveyances in foreign commerce entering California. The other portion of the fees was spent by the California Department of Food and Agriculture on a public information program to educate persons arriving in California from abroad about USDA pest inspection and quarantine laws. California also conducts its own agricultural pest inspections of commercial trucks at State border stations which enforce State pest quarantines against interstate commerce. California, however, does not charge truckers a fee for these border inspections. The questions pre- sented are: 1. Does California’s collection of inspection fees from marine vessels engaged in foreign commerce but not from trucks engaged in interstate commerce violate the dormant Commerce Clause by facially discrimi- nating against foreign commerce, as the California Supreme Court held, even though the fees were used to supplement federal pest regulation of foreign com- merce? 2. Does California’s collection of fees from marine ves- sels but not from trucks facially discriminate even though the two types of inspections are completely different in scope, cost and purpose? il PARTIES TO THE PROCEEDINGS Petitioners herein are: Ann M. Veneman, Secretary of the California Department of Food and Agriculture; Islam Siddiqui, Assistant Director of the California Division of Plant Industry; the California Department of Food and Agriculture; the California Division of Plant Industry; and the State of California. Petitioner Veneman succeeded to the office of Secretary of the California Department of Food and Agriculture, replacing Henry Voss, who was a party-defendant in this action. All of petitioners, with the exception of Veneman, were defendants below. Respondent herein, who was plaintiff below, is: the Pacific Merchant Shipping Association (“PMSA”), a Cali- fornia unincorporated association of ocean carriers. lll TABLE OF CONTENTS Page SUPE URMEOUD UMMM EIEED pe icicenvesscsucceccecece i PARTIES TO THE PROCEEDINGS. ............... i iC. CPeasubucassscccsecseseaecvetes l eas Coc rahe becc puss ce sdives ses 1 CONSTITUTIONAL AND STATUTORY PROVI- I ane Ss hae bib paves am a0k 06h veces 1 ae es ad: SE 3 REASONS WHY THE PETITION SHOULD BE eB Caen GaN e ROSAS Vd 0 SS5'p- 0 ce eke 14 EEC Teh one we U NOES aes 5 wc. 4 cb-wh ease eee 17 I. BECAUSE CONGRESS HAS APPROVED FEE “DISCRIMINATION” BETWEEN FOREIGN AND INTERSTATE COMMERCE, DORMANT COMMERCE CLAUSE RESTRAINTS DO NOT EE I va coe cas écnekeegnaeotss 17 Il. THERE IS NO ECONOMIC PROTECTIONISM A Es ee 22 [il. BECAUSE THERE ARE MAJOR DIFFERENCES BETWEEN MARINE VESSEL AND TRUCK INSPECTIONS, THERE IS EITHER NO DIS- CRIMINATION OR A VALID JUSTIFICATION Fe me yo | Se 25 IV. THIS COURT’S WASTE DISPOSAL PRECE- DENTS ARE DISTINGUISHABLE AND INAP- GER EEGR Fe SRC eet ea ee a eR 28 CONCLUSION iv TABLE OF AUTHORITIES Page CASES Alaska Airlines, Inc. v. Department of Food and Agri- culture, 33 Cal.App.4th 506 (1995)..........6e ee eee 12 Barclays Bank PLC v. Franchise Tax Board of Califor- mia, 114 S.Ct. 2268 (1994) .........cccecccscecnenes 20 C & A Carbone, Inc. v. Town of Clarkstown, New York, 114 S.Ct. 1677 (1994) .......cceecesscences 22, 24 Chemical Waste Management, Inc. v. Hunt, 504 US. SOE TED as oss oes Kaci ches chekeveeheeen 13, 28, 29 Clark v. Paul Gray, Inc., 306 U.S. 583 (1939).......--. 27 Evansville Airport v. Delta Airlines, 405 U.S. 707 PROUEE vnc cannes ssdbueceeeeahasaes chee Cheenaves 25, 27 Hughes v. Alexandria Scrap Corp., 426 U.S. 794 i.) SPE oe eee T aE Cr? Tir ieite eae 23 Ite! Containers International Corp. v. Huddleston, 507 OCS. CD CURED ii vin koe cae sdves anon tis ceeds rues. 21 Kraft General Foods, Inc. v. lowa Dept. of Revenue, SOS U.S. 72. CIGGA) « «oc vvincncenecsies cies ceews sey es 24 Maine v. Taylor, 477 U.S. 131 (1986) .....--.+-+++++-. 20 McLean v. Denver & Rio Grande Railroad Co., 203 oO Fe} Pens ree Cs Pec ei ee 27 Merrion v. Jicarilla Apache Tribe, 455 U.S. 130 (1982) Fa caceeeened ccckuuak hie (60hGe a eee aera ee 18, 21, 22 New Energy Co. of Indiana v. Limbach, 486 U.S. 269 ¢) | ree rrmrrote ro. sy oer tee 23 Northwest Airlines, Inc. v. County of Kent, Michigan, 114 S.Ct. 855 (1994) ......... cece ence ence neenceees 27 TABLE OF AUTHORITIES - Continued Page Oregon Waste Systems v. Dept. of Environmental Quality, 114 S.Ct. 1345 (1994) ceeidvecks 13, 28, 29, 30 Pacific Merchant sits Assn. v. Voss, 12 Cal.4th PO Me eo cs os ao ccs coceees By Serre ae Pacific Merchant Shipping Assn. v. Voss, 36 aoe i a, .. en eee ace ae ie eS Prudential Insurance Co. v. Benjamin, 328 U.S. 408 END Eins Sey des tb adiled- ed bo died keee oo Sa, .17 Pure Oil Co. v. State of Minnesota, 248 U.S. 158 UN oa vicd wae ut aie Ske ics vad bee vae ek eee 27 South-Central Timber Development v. Wunnicke, 467 U.S. 82 (1984) : , Ss ere Wardair Canada, Inc. v. Florida Dept. of Revenue, 477 Sees BO eo vee enone ae kee eee 18, 21, 22 West Lynn Creamery, Inc. v. Healy, 114 S.Ct. 2205 SUE > xis eA ds ba aiee carci rs yey a pees ee © Oe 22 CONSTITUTIONAL PROVISIONS U.S. Const., Art. I, section 8, cl. 3 (Commerce NES = Lvk- oon bs CEt Sour. PEAY ne EP yn apr lara ca STATUTES 1992 Agriculture, Rural Development, Food and Drug Administration and Related Agencies Appropriations Act, Pub. L. 102-142, 105 Stat. Ps 8 ne ak Fes seca kal dene peaSioc ener eral we es. 18 Anti-Head Tax Act, 49 U.S.C. section 1513 .......... 12 Vi TABLE OF AUTHORITIES —- Continued Page Federal Plant Pest Act, 7 U.S.C. sections 150aa et POG. cee ecescncccseveuguesseenesneeeheseeSeeunenens 3 Plant Quarantine Act of 1912, 7 U.S.C. sections 151 2 eee Ter errrrrrerrrri eerie r ere rie rere tr 3 7 United States Code Cy) eer rrr rer Terre rr errr fret ttt oe 4 jt: Fr PrN han reer rgy roi er ees yey: 3 tC ee rere a 4 RROD. ccc cccccauacescncsstsdcseheaes MauneeeeE™ 3 DEUEE's Sc actunreh ees Peter rer eyo ee oe 3 §150ee. . a pekeseaeeciweniek s 3 ETIUEE «wi cs cous 606006056 06060865000 CER ERA OE ORuEE 3 jh) SPP ESePeT Tere eye err Tree se Perey ee 3 BORG. occ ccascuciepeccntseteaucacmeeaee bene eee 3 | Se Pere rere rere res et 4, 20 21 United States Code bh rr eeerer rer rer TT eee ee 18, 19, 20 ESE MATEIAS vice ccs ncheusencice cakes cee eee 2 BESEGEM EN Clad bo hcd cc cis tacuesdckesseaa beeen 19 RE SOONMIL AIEEE oaks bxn'0'404404.0 504 4.0kd eae 19 TR) errr rr ee rrr reer rete re aie ee TABLE OF AUTHORITIES - Continued Page California Airport and Maritime Plant Quaran- tine, Inspection, and Plant Protection Act, Cal. Stats. 1990, ch. 1612, Cal. Food and Agriculture fee, ee re 2 RS, SOE oe. See cies « bee La dt de ec ee 5 E7400 55 WPCA ORC ke NRA bee eORRAVA See eh ee) 5 SESE eee aha hye ea ye EEN 5,7 §5350(d)....... TIVLY STL ee ere ee ee 6 ee re Fee et eee eS Ce eT Pee eee hee’ 8 Ae ere wes cesses meee EE 5440 0ccu UG Vsewens chbe Citic bie caspacnas 6, 7 FIER SRD IS Rete AURA AQF By xe eee 1, 6 NY B46 GAS OTE WA UCR L ARTE COV OEE N26 bake eeak Lacks 6 EE ie 555d o hob wk nde ee ek Uekcak es be tabe es . 6 | BAPE rane oe eer See ee eee 6 Cal. Food and Agriculture Code KK S052 OU OK Vaan eae o-84 14 RUNES e N 10 SE eee are oe on re ane nee eee ene 10 Vill TABLE OF AUTHORITIES - Continued Page ODA s 15.5% 0.0 0s men easd vad kas Soules Pale ee 19 POPMEGE Ss) 00a bas akr ous nee orckl accu ete 10 Cal, State. 1099, €. 76, pp. 99-92....... oe 10 Cal. Stats. 1907, c. 436, pp. 798-799, sections ERS Vee kK We Ad cole Ce ie Ba eee. 10 Cal. Stats. 1933, c. 25, p. 63, section 30 ............. 10 REGULATIONS F Mgehen WUE OEP a gba ek ava desde ee 3 7 C.F.R. DORE <5 wiv iouviwe whee dasunewrobei es cote eo. 3 OE SG ENG Sn keke oie RS eR ee ee ee Le ak eee 4 Kg | Ait iat Ayia oe ienh ile Dyan alten tC 4 BIRR OUTS oi cc eceteccalee toed} ce ee ee 4 PED ok isin pains So oa bao oe bce vues cee 4 SE tS oo is cs a ee 4 gy RN Se pn Ree MRM NW ir yet Cited errrat 4 3 Cal. Code Regs. sections 3152-59.................. 10 OTHER Au CTHORITIES 36 Fed: Rem. 2460397, 146099 (3999)... ohh hiv ee es 4 1X TABLE OF AUTHORITIES - Continued Page 57 Fed. Reg. (1992) Is Sc i a 9 I eda 8556 ca) owe ec ows Seyret tree Oe 18 pp. 14498, 14499 ........... ae SES PRL Re SU Bp 18 61 Fed Reg. 2660, 2662 (1996)....................... 18 Ribble, State and National Power Over Commerce 211 ti y Sree thane Be rer re er eT wee mee Plant Quarantines in California, University of Cali- fornia, Division of Agricultural Sciences (Sep- cog ee a ee | a Ieee ne 11 California Department of Food and Agriculture, The First 100 Years (December 1980)............. .11 PETITION FOR WRIT OF CERTIORARI Petitioners, Ann M. Veneman, et al. respectfully peti- tion this Court for a writ of certiorari to review the judgment of the California Supreme Court in this case. + OPINIONS BELOW The opinion of the California Court of Appeal, Third Appellate District (App. 43-65) is reported at 36 Cal.App.4th 212 (1995). The opinion of the California Supreme Court (App. 1-42) is reported at 12 Cal.4th 503 (1995) JURISDICTION The opinion and judgment of the California Supreme Court was issued on December 29, 1995. The jurisdiction of this Court is invoked under 28 U.S.C. section 1257(a). CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED The Commerce Clause of the U.S. Constitution, Art. 1 section 8, cl. 3, provides, in pertinent part, that Congress shall have power “To regulate Commerce with foreign Nations, and among the several States”. Cal. Food and Agriculture Code section 5353(b) - which is the marine vessel fee provision invalidated in this case — provides as follows: “Each commercial marine carrier engaged in for- eign commerce which carries animals or plants or other materials which are or likely to be, infected or infested with any pest shall pay a fee of two hundred dollars ($200) to the director [of the California Department of Food and Agricul- ture] upon the initial arrival in this state of the carrier on a voyage which originated outside the United States from a country identified and lis- ted by the director pursuant to section 5352, or which made an intermediate stop on that voy- age in a country identified and listed by the director pursuant to Section 5352.” Other relevant provisions of the California Airport and Maritime Plant Quarantine, Inspection, and Plant Protec- tion Act, Cal. Stats. 1990, ch. 1612, Cal. Food and Agricul- ture Code sections 5350-5353, (hereinafter “the California Inspection Act”) are reprinted in the Appendix. 21 U.S.C. section 136a(a)(1)(A) authorizes the United States Department of Agriculture (“USDA”) to collect fees for agricultural pest inspection of foreign commerce, and provides, in pertinent part: “The Secretary of Agriculture . . . may prescribe and collect fees to cover the cost of providing agricultural quarantine and inspection services in connection with the arrival at a port in the customs territory of the United States, or the preclearance or preinspection at a site outside the customs territory of the United States, of an international passenger, commercial vessel, commercial aircraft, commercial truck, or rail- road car.” Other relevant provisions of federal law which authorize USDA to conduct agricultural pest inspections, and to cooperate with States in controlling agricultural pests are reprinted in the Appendix. The Reimbursable Cooperative Agreement between USDA and the California Departmer: of Food and Agri- culture, under which the State transferred marine vessel fees to USDA for USDA enforcement of federal inspection and quarantine laws, is also reprinted in the Appendix cs ——— STATEMENT OF THE CASE i. The USDA implements an extensive regulatory pro- gram to prevent the introduction into the United States of agricultural pests from foreign countries. Pursuant to the Plant Quarantine Act of 1912, 7 U.S.C. sections 151 et seq and the Federal Plant Pest Act, 7 U.S.C. sections 150aa et seq., the USDA imposes agricultural pest quarantines on articles and conveyances in foreign commerce. 7 U.S.C. sections 160, 150dd. These federal quarantines apply to numerous products from specified countries or regions, and cover thousands of agricultural pests found outside the United States. See 7 C.F.R. Part 319 (Foreign Quaran- tine Notices). The USDA inspects goods and conveyances in for- eign commerce to enforce these quarantines. 7 U.S.C sections 150ee, 150ff, 156; 7 C.F.R. section 330.105; see also 7 U.S.C. section 147a(e); 7 U.S.C. section 149. The USDA funds its agricultural quarantine and inspection (“AQI”) services by collecting “user” fees from the owners or operators of the conveyances subject to inspection. 21 U.S.C. section 136a(a). By regulation, these AQI user fees vary for different classes or categories of foreign commerce. See 7 C.ER. section 354.3. The pur- pose and effect of AQI user fees is to “shift[] the financial support for certain AQI activities from the general tax- payer to identifiable recipients of these services.” 56 Fed. Reg. 14837, 14839 (1991) (Final Rule on AQI User Fees). The USDA is authorized to cooperate with State agri- cultural departments in controlling agricultural pests. For example, 7 U.S.C. section 450 provides, in pertinent part, that: “In administration of Federal .. . laws and regu- lations relating to . . . the control or eradication of plant and animal diseases and pests, the Sec- retary of Agriculture is authorized . . . to enter into cooperative arrangements with State departments of agriculture and other State agen- cies charged with the administration and enforcement of such State laws and regulations and to provide that any such State agency which has adequate facilities, personnel, and pro- cedures, as determined by the Secretary, may assist the Secretary in the administration and enforcement of such Federal laws and regula- tions to the extent and in the manner he deems appropriate in the public interest.” See also 7 U.S.C. section 147a(a); 7 U.S.C. section 148. ' Current USDA AQI user fees are $369.50 for commercial vessels of 100 net tons or more, 7 C.F.R. section 354.3(b)(1); $2 for each commercial truck, id., section 354.3(c)(1); $7 for each railroad car, id., section 354 3(d)(1); $61 for each commercial aircraft, id., section 354.3(e)(1); and $1.45 for each passenger aboard an international aircraft flight, id., section 354.3(f)(1). : ; j 2. The California Inspection Act was enacted in 1990 to supplement USDA’s agricultural pest regulation of for- eign commerce. App. 128-129, 412. USDA has never had sufficient personnel to inspect every conveyance entering California from abroad. App. 96, 49; 122, 44; 132, 46. With the expansion of Pacific Rim trade and without a concomitant increase in the USDA budget, the State was worried that a smaller and smaller percentage of foreign commerce entering California was actually being inspected by USDA. App. 94-95, {3; 129, 412. The 1989-90 medfly infestation in California had cost $62 million to eradicate. App. 95, ¥5. Consequently, the State Legisla- ture wanted to intensify efforts at excluding pests from initial entry into the State to avoid later and more costly eradication efforts once pests had become established. App. 95, {94-5; 113-115. The California Inspection Act authorizes the Califor- nia Department of Food and Agriculture (“CDFA”) to “establish a program for the inspection of conveyances entering California through airport and maritime facili- ties to prevent the introduction into, or the spread within, this state of pests.” Cal. Food and Agriculture Code sec- tion 5350(a). The California Inspection Act also autho- rizes CDFA to (1) maintain plant quarantine inspection Stations at airports and marine terminals, id., section 9350(b); (2) establish an informational program at such points of entry to provide users of the entry facilities with information about pest control and quarantine require- ments, id., section 5350(c); and (3) identify and establish a list of countries which are believed to be a potential source of exotic plant and animal pests, id., section 5352. Section 5353(b) - which is tie provision of the Act in dispute - authorizes CDFA to charge commercial marine vessels an inspection fee if the vessel departed from or made a stop in a country listed under section 5352 as a potential source of exotic pests. The marine vessel inspec- tion fees may be levied only “[t]o the extent permitted by federal law.” Id., section 5352. Similar inspection fees (which are not at issue in this case) are also authorized for air carriers engaged in foreign commerce. See Sections 9351, 5353(a). The inspection fees collected under the California Inspection Act are to be used solely to implement Califor- nia Inspection Act programs and activities. Id., section 5353(e). The inspection fees can be revised either upward or downward, depending upon whether the revenue gen- erated by the fees is either insufficient or in excess of the amount needed to conduct an effective inspection pro- gram. Id., section 5353(f). CDFA also can exempt vessels or aircraft from inspection requirements if the vessels or aircraft already have been inspected outside the State. Id., section 5350(d). The California Inspection Act also allows CDFA to “contract with federal . . . agencies . . . to assist the [CDFA] in carrying out the purposes of this section and Section 5350.” Id., section 5353(g). 3. To accommodate industry concerns about dual regu- lation, minimize burdens on foreign commerce, and avoid potential conflicts with federal regulation, CDFA imple- mented the California Inspection Act in a limited manner App. 96-97, $10; 127, $7; 128, {11; 132, 45. First, the State has not established any separate State quarantines against SJ foreign commerce. App. 127, 48. The State has acknow!- edged in this litigation that it is preempted from estab- lishing State quarantines against foreign commerce which conflict with federal quarantines. App. 98, 413. Second, the list of foreign countries harboring exotic pests that CDFA was authorized to prepare under Cal. Food and Agriculture Code section 5352 was derived from the fed- eral quarantine list, and drawn up in coordination with USDA personnel. Consequently, only vessels coming from foreign ports on the federal quarantine list are sub- ject to the State’s inspection fee. App. 96, {7. Third, while the State has set up and staffed its own quarantine inspection stations at some airports and marine termi- nals, it has not established a separate inspection program. App. 126-127, {7. Instead, the State has implemented the California Inspection Act by collecting agricultural pest inspection fees from air and marine carriers engaged in foreign commerce which enter the State, as is authorized by Cal. Food and Agriculture Code sections 5353(a) and (b). During the relevant time period, these fees were spent mainly in two ways: (1) a portion of the money was transferred to USDA to augment USDA’s federal pest inspections and quarantine enforcement in California; and (2) the other portion of the fees was used by CDFA for the public information program authorized by Cal. Food and Agriculture Code section 5350(c), and to allow “blitzes”, i.e., intense inspections, using State and federal inspectors. The transfer of inspection fees from the State to USDA was formalized in a Reimbursable Cooperative Agreement (“RCA”) which CDFA and USDA entered into in 1991. App. 97, 911; 106-113; 121, 2. The RCA makes clear that the California Inspection Act fees transferred to USDA were used to augment federal enforcement of fed- eral inspection and quarantine laws, not state quarantine requirements. App. 107-108, 114. As a result of receiving these fees, USDA was able to hire seven additional marine and forty-four additional airport inspectors. App. 4. Even with this additional staffing, USDA does not inspect every vessel entering California. App. 96, 9; 122, 14; 132, J6. Consequently, inspectors periodically con- duct “blitzes” whereby an intensive inspection effort is concentrated at a particular California port of entry for a brief period of time. App. 96, 49; 101-105; 134, 410. The public information program funded by inspec- tion fees seeks to inform passengers and the crew of vessels and aircraft entering California of pest dangers and federal quarantine requirements. App. 133-134, 49. For example, passengers on cruise ships returning from Mexico often bring back fresh fruit unaware of federal quarantines against fresh produce. App. 103. Because not every ship or conveyance can be inspected, education programs must be utilized to encourage voluntary com- pliance with federal quarantine laws. In 1992-93, CDFA collected approximately $4.3 mil- lion in fees under the California Inspection Act which was spent as follows: 55% for inspections; 23% for the public information program; 15.2% for administration and operations; 3.7% for investigation, and 2.3% for blitzes. App. 8; 133, 18. All of the monies collected as fees were spent on pest inspection and prevention programs; none of the money was transferred to the State’s general fund for use in other programs. App. 99-100, 419; 134, G1. According to USDA, shippers who must pay both the California Inspection Act fee and the USDA AQI user fee are not being subjected to duplicate fees or “double- billing”. See 57 Fed. Reg. 755, 762 (1992). When USDA calculates its user fee, it does not include in the rate base for its fee the costs of the additional USDA inspectors who are funded by California’s fees. Id. Consequently, the California and USDA fees are not duplicative but fund different portions of the USDA inspection program. Shippers can be exempted from California Inspection Act fees in several ways. If a vessel has been inspected by USDA at an earlier port of entry into the United States, the vessel is exempt from California’s inspection fee. App. 98-99, 4415, 16; 135, 412. Shipments from Hawaii, Guam and Puerto Rico are also exempt from the Califor- nia fee because USDA has inspection programs for these areas. App. 98, 414. If a shipper can establish that the commodities onboard a vessel pose no risk to California, or that the commodities do not originate from a port on the federal quarantine list, no fees are required. App. 135, q12. In 1994, CDFA decided that USDA funding had improved such that the State no longer needed to transfer inspection fees to USDA to augment USDA's inspection program. App. 7. Consequently, the State discontinued its funding of USDA inspections, and reduced its California Inspection Act fee from $200 to $100 for vessels. Id. These reduced inspection fees are now used for CDFA’s public education and information program, and for oversight 10 and coordination with USDA on federal inspections and investigations of smuggling.? Id. 4. Since the 1920s, California has conducted state border inspections to exclude entry into the State of agricultural pests from other States.? There are 16 state-run agri- cultural inspection stations along California’s border which enforce 37 state quarantines against pests found in other parts of the United States. See 3 Cal. Code Regs. sections 3152-59. App. 125-126, 43. These state quaran- tines differ from USDA foreign quarantines in that the latter exclude pests found outside the United States. The state border inspections do not generally enforce USDA foreign quarantines because it is assumed that any for- eign commerce entering California from another State * Because Respondent seeks refund of the marine vessel fees that were collected before 1994 and transferred to USDA, the validity of those fees is not moot. Further, California may wish to raise the fees and increase inspections in the future as needs dictate. * The current authority for border inspections resides mainly in Cal. Food and Agriculture Code sections 403 (authorizing CDFA to prevent the introduction and spread of animal pests and plant diseases into the State), section 5322 (authorizing CDFA to establish quarantines), section 5341 (authorizing establishment of plant quarantine inspection Stations) and section 5341.5 (requiring inspections and a certificate of inspection for motor vehicles entering the State with agricultural commodities). However, predecessor legislation authorizing inspections and quarantines dates back almost a hundred years. See Cal. Stats. 1899, c. 76, pp. 91-92; Cal. Stats. 1907, c. 436, pp. 798-799, sections 2319b-e; Cal. Stats. 1933, c. 25, p. 63, section 30. 11 was already inspected by USDA when the products first entered the United States. Id.4 The main focus of the border inspection effort is on commercial trucks, although inspectors have authority to inspect any vehicle entering the State.° Approximately 280,000 commercial trucks are inspected each year. Id. These inspections take between five to thirty minutes to complete. App. 126, 45. CDFA does not charge truckers a fee for routine border inspections; however, if special services like fumigation are provided, fees are charged. App. 8, n.6. The State currently pays for border inspec- tions from its general fund, and has done so for decades, long before the California Inspection Act was enacted. The cost of the border inspections as of 1992 was approxi- mately $8.4 million per year. App. 9. 5. Respondent PMSA filed suit shortly after the Califor- nia Inspection Act was enacted, contending, inter alia, that the collection of inspection fees from marine carriers 4 If, however, foreign quarantined pests are discovered at a state border inspection station, CDFA would take steps to exclude the pests from entry into the State. App. 125-126, {3. 5 While commercial trucks are now the main focus of border inspections, private automobiles were a significant pest : pathway when border stations were first established in the 1920s. At that time, alfalfa fields in neighboring Nevada were infested with the alfalfa weevil. Automobile travellers (who were more likely then to camp by the roadside rather than stay 3 in motels) could carry weevils in camping equipment and bedrolls. See Plant Quarantines in California, University of California, Division of Agricultural Sciences (September 1969) pp. 9, 18; California Department of Food and Agriculture, The First 100 Years (December 1980). Se aM rn POR MS han RARE ett git ee 7 nm 12 under the Act imposed a discriminatory and unreason- able burden on foreign commerce in violation of the dormant Commerce Clause. The trial court granted PMSA summary judgment, and held that the California Inspection Act discriminated on its face against foreign commerce because no comparable fees were imposed for interstate commerce inspections of trucks at California border stations. The California Court of Appeal reversed on the ground that there was a triable issue of fact whether the marine vessel and truck inspections were sufficiently sim- ilar and could be validly compared for purposes of assessing discrimination under the Commerce Clause. See Pacific Merchant Shipping Assn. v. Voss, 36 Cal.App.4th 212 (1995). The California Supreme Court, in turn, reversed, and held that the marine vessel fee provisions of the Califor- nia Inspection Act unjustifiably discriminated on their face against foreign commerce. Pacific Merchant Shipping Assn. v. Voss, 12 Cal.4th 503 (1995). The California Supreme Court acknowledged that the alleged fee “dis- crimination” did not benefit in-state commerce or any other parochial California economic interest. App. 17-18. Nonetheless, the court thought that this Court’s decisions © Certain air carriers also filed suit challenging the aircraft inspection fees imposed under the California Inspection Act. The aircraft fees have been upheld against a challenge that they are preempted by the Anti-Head Tax Act, 49 U.S.C. section 1513. See Alaska Airlines, Inc. v. Department of Food and Agriculture 33 Cal.App.4th 506 (1995). That case is now final as to the parties on that issue, but remains active on the same issue raised herein. Viaoaatlout tet a wapeacabe taal Sen eee ee cd SARE Os Nh te OLAS SL GME ILS TA EERE DEEP sa Ss ai ca Ct tess abd Luc Kichiipnde 13 in Chemical Waste Manayement, Inc. v. Hunt, 504 U.S. 334 (1992) and Oregon Waste Systems v. Dept. of Environmental Quality, 114 S.Ct. 1345 (1994) “require[] us to conclude that the provisions [of the California Inspection Act] facially discriminate against foreign commerce.” Id. at 19. The court reasoned that because this Court’s waste dis- posal cases had held that imposing higher fees for the disposal of out-of-state waste than for in-state waste con- stituted Commerce Clause discrimination, California’s imposition of inspection fees upon marine vessels in for- eign commerce but not upon trucks in interstate com- merce constituted similar proscribed discrimination. Id. at 19-23. The California Supreme Court also rejected the Court of Appeal’s determination that a triable issue of fact existed as to whether vessel and truck inspections were “substantially similar” for purposes of Commerce Clause discrimination. Id. at 23-25. The court doubted that a “substantially similar” requirement applied outside the tax context, id. at 26, and thought that differences in the time and cost of the inspections, or the type and danger of the pests targeted, were not significant. Id. at 30-32. The fact that USDA used a portion of the inspection fees for its enforcement of federal law also was “without significance,” according to the court. Id. at 24. The California Supreme Court also held that Califor- nia’s fee discrimination was not justified by a legitimate local purpose. Id. at 32-37. Although excluding pests was a legitimate local purpose, the court thought there was no justification for imposing fees on foreign but not inter- state commerce. The fact that vessel inspections were more time-consuming and targeted more dangerous pests Tey cee 14 might justify a different fee scale, according to the court, but could not justify charging no fee at all for truck inspec- tions at border stations. /d. at 35-36. The court also thought that there were two non- discriminatory alternatives available to the Legislature: either (1) remove the fee for vessel inspections so that all inspections are funded by the State, or (2) impose fees for State border inspections like the fees imposed upon ves- sels. Id. at 37. The State’s argument that public revenues to fund foreign commerce inspections were not available, id. at 37-38, and that collecting fees from each truck passing through California’s border stations would snarl traffic and cause excessive administrative collection bur- dens were rejected. Id. at 39-40. > REASONS WHY THE PETITION SHOULD BE GRANTED 1. The California Supreme Court's use of the concept of “discrimination” under the dormant Commerce Clause was Overly simplistic and mechanical. The California court saw different treatment of vessels in foreign com- merce and trucks in interstate commerce, and concluded that the Commerce Clause had been violated. The court failed to appreciate three key factual characteristics of this case which ensure that any fee “discrimination” passes muster under the dormant Commerce Clause. First, Congressional regulation of agricultural pests in foreign commerce is not “dormant.” Congress has not only authorized USDA to conduct agricultural pest inspections of foreign commerce, but it has authorized | | acho, 15 the imposition of federal inspection fees upon foreign commerce. Because no comparable federal inspection fees are imposed upon interstate commerce, Congress has approved or sanctioned the very fee “discrimination” between foreign and interstate commerce which the Cali- fornia Supreme Court thought violated the dormant Commerce Clause. Second, there is no hint in this case of economic protectionism, or any attempt by the State to benefit in- state economic interests at the expense of out-of-state competitors. The shippers of foreign commerce that are subject to the California Inspection Act fee include both California and out-of-state businesses. Consequently, the burden of the alleged “discriminatory” fee falls on in- state economic interests just as much as on out-of-state interests. The commerce that is supposedly benefited by not having to pay the California inspection fee is not in- state commerce but out-of-state commerce which is inspected by the State free of charge at the State’s bor- ders. The State’s taxpayers subsidize this benefit to out- of-state producers. Consequently, the alleged “discrimi- nation” in this case amounts to: (1) in-state interests, i.e., the State’s taxpayers, subsidizing inspections of out-of- state commerce which seeks to enter the State, (2) which thereby “discriminates” against shippers engaged in for- eign commerce who pay an inspection fee but who include both in-state and out-of-state businesses. At worst, this “discrimination” makes access to California markets cheaper for interstate commerce than for foreign commerce (which improves the competitive position of out-of-state producers vis-a-vis in-state producers). But 16 Congress already imposes this same type of fee “discrimi- nation” between foreign and interstate commerce under federal law so there is nothing “suspect” about this type of discrimination under the dormant Commerce Clause. Third, the conclusion that the State has discriminated between foreign and interstate commerce is predicated on the notion that the inspections for these two streams of commerce are comparable. They are not. State border inspections of trucks enforce different quarantines, target different pests and commodities, take much less time to conduct, and are less costly than inspections of marine vessels. Moreover, there are valid non-protectionist rea- sons for not charging fees for border inspections. These include the administrative burden of collecting small fees for the high volume of trucks being inspected, and the potential disruption of traffic at border stations if fees are collected. Consequently, the California Supreme Court should have held either that: (1) the State’s collection of inspection fees from marine vessels was not subject to dormant Com- merce Clause scrutiny because: (a) the State’s fee collection is consistent with, and implicitly authorized by, federal regulation of agricultural pests in foreign commerce; and, (b) no economic protectionism taints the State’s fee collection; or, (2) if dormant Commerce Clause scrutiny applies, the State has valid non-protectionist reasons for collecting inspection fees from marine vessels engaged in foreign commerce, but not from commercial trucks engaged in interstate commerce. a i 4 : fa csi OTR Br wee pt Bett bie x aN 17 2. The second main reason why this Court should grant review is to clarify dormant Commerce Clause principles in the context of cooperative federal-state regulation, like that in this case. There is a long history of federal-state cooperation in the area of agricultural pest eradication and control. In this case, State fees were used to fund USDA pest inspections of foreign commerce. There may be future instances of federal-state cooperation prompted by shortfalls in the budget of one sovereign or the other, or for reasons of economic or bureaucratic efficiency. This Court should clarify whether and to what extent the dormant Commerce Clause stands in the way of such federal-state cooperation. As the Court said in Prudential Insurance Co. v. Benjamin, 328 U.S. 408, 439 (1946): “It would be a shocking thing, if state and federal govern ments acting together were prevented from achieving the end desired by both, simply because of the division of power between them.” quoting Ribble, State and National Power Over Commerce 211 (1937). If left unreviewed, the California Supreme Court's decision may cast a dormant Commerce Clause cloud over future federal-state cooper- ation. ARGUMENT I. BECAUSE CONGRESS HAS APPROVED FEE “DIS- CRIMINATION” BETWEEN FOREIGN AND INTERSTATE COMMERCE, DORMANT COM- MERCE CLAUSE RESTRAINTS DO NOT APPLY IN THIS CASE The dormant Commerce Clause imposes restraints on state action only “when Congress has not acted or 18 purported to act.” Merrion v. Jicarilla Apache Tribe, 455 U.S. 130, 154 (1982). “Once Congress acts, courts are not free to review state taxes or other regulations under the dor- mant Commerce Clause. When Congress has struck the balance it deems appropriate, the courts are no longer needed to prevent States from burdening commerce”. Id. See also Wardair Canada, Inc. v. Florida Dept. of Revenue, 477 U.S. 1, 12 (1986). Here, “we do not confront federal governmental silence of the sort that triggers dormant Commerce Clause analysis.” Wardair, supra, 477 U.S. at 9. Instead, Congress has authorized both the imposition of AQI inspection fees upon foreign commerce, and cooperation between USDA and States in pest control efforts. Signifi- cantly, Congress has not imposed comparable AQI inspection fees upon interstate commerce.? Consequently, Congress has approved the very fee “discrimination” between interstate and foreign commerce which the Cali- fornia Supreme Court found to be impermissible under the dormant Commerce Clause. 21 U.S.C. section 136a, which authorizes AQI inspec- tion fees, does not place any maximum dollar cap on the ” The 1992 Agriculture, Rural Development, Food and Drug Administration and Related Agencies Appropriations Act, Pub. L. 102-142, 105 Stat. 886, barred USDA from collecting AQI user fees from “domestic” commerce between Puerto Rico and Hawaii, and the mainland United States. Because of this legislation, USDA withdrew proposed regulations for AQI user fees for such domestic or interstate commerce. See 57 Fed. Reg. 14498, 14499 (1992); 57 Fed. Reg. 14475 (1992). See also 61 Fed Reg. 2660, 2662 (1996) (“We do not have user fees for domestic programs. User fees apply only to import and export services.”). oe ee ee cae Py ee Eee es ee a ee a 19 amount of marine vessel fees that may be collected.* Nor does that statute indicate that USDA’s collection of AQI fees is intended to be exclusive. The only statutory requirement for inspection fees is that they be reasonably “commensurate with the costs of agricultural quarantine and inspection services with respect to the class or per- sons or entities paying the fees.” 21 U.S.C. section 136a(a)(1)(D). Because USDA has concluded that Califor- nia’s inspection fee is not duplicative of USDA's inspec- tion fee, but instead funds additional USDA AQI services, see supra, p.9, California’s fee satisfies the “commensura- bility” requirement of 21 U.S.C. section 136a(a)(1)(D). In sum, the indicia of federal approval of the State’s inspection fee includes the following: (1) Congress had expressly authorized feder- ally-imposed inspection fees upon shippers of foreign commerce for AQI services under 21 U.S.C. section 136a; (2) Congress has approved the “discrimina- tory” imposition of inspection fees upon ship- pers in foreign commerce shippers because comparable AQI fees may not be imposed upon shippers engaged in interstate commerce under federal law; (3) Congress has refrained from setting any maximum cap on the amount of AQI fees that may be imposed upon marine vessels, and has 8 There were maximum caps on the amount of inspection fees that could be collected for airport, commercial truck, and railroad car inspections for Fiscal Years 1992 and 1993, but no such cap was enacted for marine vessel fees. See 21 U.S.C. sections 136a(a)(1)(B), (C). ee 20 only required in 21 U.S.C. section 136a that fees be commensurate with the cost of AQI services; (4) Congress has expressly authorized USDA to cooperate with States in agricultural pest con- trol in several statutes, including 7 U.S.C. sec- tion 450; and, (5) USDA entered into a cooperative agree- ment with California pursuant to 7 U.S.C. sec- tion 450, whereby California transferred a portion of its inspection fees to USDA for USDA AQI enforcement. This level of federal authorization or approval should eliminate any dormant Commerce Clause scrutiny in this case. When a State discriminates against interstate com- merce, Congressional authorization of such discrimina- tion and economic protectionism must be “unmistakably clear.” South-Central Timber Development v. Wunnicke, 467 U.S. 82, 92 (1984); Maine v. Taylor, 477 U.S. 131, 139 (1986). However, this “clear statement” rule does not apply to State regulation of foreign commerce when the state regu- lation is untainted by any economic protectionism. See Barclays Bank PLC v. Franchise Tax Board of California, 114 S.Ct. 2268, 2282-2283 (1994) (“Congress may more passively indicate that certain state practices do not ‘impair federal uniformity in an area where federal uniformity is essen- tial,’ Japan Line, 441 U.S. at 448, 99 S.Ct. at 1821: it need not convey its intent with the unmistakable clarity required to permit state regulation that discriminates against interstate commerce”). (Emphasis added). The reason why a lesser standard of Congressional authorization applies in this context is because of the different Commerce Clause principles implicated. The ee ee _ eae Pee 21 core Commerce Clause concern about economic protec- tionism applies to interstate not foreign commerce: the Framers contemplated a domestic “free trade” regime, but not an international one. In contrast, when a State regulates foreign commerce without any taint of eco- nomic protectionism, the relevant Commerce Clause con- cern is whether state regulation impairs the United States’ conduct of foreign relations and its ability to “speak with one voice” in foreign affairs. See Wardair, supra, 477 U.S. at 8; Itel Containers International Corp. v. Huddleston, 507 U.S. 60, 74-75 (1993). The Federal Execu- tive’s foreign affairs responsibilities place it in a position to assist the Court in evaluating the impact of state regu- lation upon the Nation’s foreign affairs interests. [tel Con- tainers, supra, 507 U.S. at 75-76. Consequently, a lesser standard of Congressional intent or approval applies to state regulation of foreign commerce untainted by eco- nomic protectionism because of the different Commerce Clause principles implicated. Here, the fact that USDA entered into a cooperative agreement with the State, and spent a major portion of the inspection fees collected by the State should be a clear indication that California’s inspection fee did not impair the federal government's foreign affairs interests. If the State’s fee had threatened any foreign affairs interest, USDA presumably would not have entered into the coop- erative agreement which contemplated the imposition of State fees upon foreign commerce. USDA’s actions are analogous to the Secretary of the Interior’s approval of the tribal taxing ordinance in Merrion v. Jicarilla Apache Tribe, supra, 455 U.S. 130, 155-156, which removed the ordinance from dormant Commerce Clause scrutiny even 22 though there was no express Congressional indication that Indian taxes were immune from dormant Commerce Clause scrutiny. Id. at 155, n. 21. Here, as in Wardair, supra, “[i]Jt would turn dormant Commerce Clause anal- ysis entirely upside down to apply it where the Federal Government has acted, and to apply it in such a way as to reverse the policy that the Federal Government has elected to follow.” 477 U.S. at 12. (Emphasis in original). il. THERE IS NO ECONOMIC PROTECTIONISM IN THIS CASE The main evil which the Commerce Clause seeks to combat is economic protectionism, i.e., state efforts to economically benefit in-state interests at the expense of out-of-state competitors. See e.g., C & A Carbone, Inc. v. Town of Clarkstown, New York, 114 S.Ct. 1677, 1682 (1994): West Lynn Creamery, Inc. v. Healy, 114 S.Ct. 2205, 2211 (1994). There is no hint of economic protectionism in this case. First, the State’s inspection fees falls on shippers engaged in foreign commerce. Because those shippers include California businesses as well as out-of-state busi- nesses, App. 96, ¥8; 136, 913; CT 650-671 (list of class action members), the fee burden falls on in-state interests just as much as on out-of-state interests. Second, the commerce that is supposedly benefited by the State’s “discriminatory” fee is not in-state com- merce, but out-of-state or interstate commerce which is inspected free of charge at California border stations. California’s taxpayers subsidize these border inspections thereby improving the competitive position of out-of- state producers vis-a-vis in-state producers. If a State can legitimately subsidize in-state industry under the market ee ee eee ae ee ine 23 participant doctrine, and provide in-state commercial interests an advantage over out-of-state competitors, see Hughes v. Alexandria Scrap Corp., 426 U.S. 794, 806-810 (1976); New Energy Co. of Indiana v. Limbach, 486 U.S. 269, 278 (1988), then the State’s taxpayers should be able to subsidize inspections for out-of-state commerce, which should be, a fortiori, less suspect under the dormant Com- merce Clause. Third, assuming that shippers of foreign commerce pass on the costs of the State’s inspection fee to foreign producers, the worst effect that California’s fee has is to make access to California markets cheaper for interstate commerce over foreign commerce.? However, federal law already imposes this same discrimination in favor of inter- state over foreign commerce. Fourth, the inspection fees collected by the State are used entirely for the California Inspection Act program, and are not added to the general fund for other govern- mental programs. Consequently, the inspection fee is not being used as a general revenue raising device. The process-based explanation for dormant Com- merce Clause vigilance is that courts should look care- fully when the burden of state regulation falls entirely on out-of-state interests that are unrepresented in the local 9 It is not clear that the products that are being shipped in foreign commerce and that are subject to inspection fees are in competition with the products carried by commercial truckers which are not subject to fees. If the State subsidizes inspection fees for certain products which are not in competition with other products that pay an inspection fee, then any fee “discrimination” has no relevant economic impact for Commerce Clause purposes. 24 legislative process. See e.g., South-Central Timber Develop- ment, supra, 467 U.S. at 92; C & A Carbone, Inc, supra, 114 S.Ct. at 1689 (O’Connor, a concurring). However, because the bite of California’s fee falls on major in-state interests, i.e, California taxpayers and California shippers engaged in foreign commerce, any process-based con- cerns are absent. Discrimination against foreign commerce may still violate the Commerce Clause even if in-state interests are not benefitted by the discrimination. See Kraft General Foods, Inc. v. lowa Dept. of Revenue, 505 U.S. 71, 79 (1992). But the reason for this is not because the Commerce Clause mandates an international free trade regime like the national free trade regime contemplated by the Framers, but because of the foreign affairs implications of such state discrimination, including possible foreign retaliation. See Kraft, supra. Here, however, there are no adverse foreign affairs implications because the federal government has already spoken on the issue. Congress has decided to charge foreign commerce but not inter- state commerce for agricultural pest inspections. The State in this case is merely providing additional money to USDA for foreign commerce inspections, and it is raising this money in the way that Congress has already approved, namely, by collecting inspection fees from shippers of foreign commerce. Consequently, none of the Commerce Clause discrim- ination rationales apply in this case: (1) there is no economic protectionism, and no attempt to benefit in-state interests at the expense of out-of-state competitors; 25 (2) there is no process-based concern about economic burdens falling exclusively on unre- presented out-of-state interests; and, (3) there are no foreign affairs concerns because Congress has already decided that ship- pers in foreign commerce should pay the very type of inspection fee which California has imposed. In sum, the combination of Congressional authorization and the absence of any economic protectionism should remove this case from any dormant Commerce Clause scrutiny. III. BECAUSE THERE ARE MAJOR DIFFERENCES BETWEEN MARINE VESSEL AND TRUCK INSPECTIONS, THERE IS EITHER NO DISCRIM- INATION OR A VALID JUSTIFICATION FOR DISCRIMINATION Even if California’s inspection fee is subject to dor- mant Commerce Clause scrutiny, that fee still should be upheld. The California Supreme Court’s conclusion that charging fees for marine vessel but not truck inspections constitutes improper discrimination was based on the faulty premise that these two types of inspections are comparable. Logically, there can be no “discrimination” in the treatment of two transactions or events unless the events are substantially similar. Discrimination may lie either in the different treatment of similar things, or the same treatment of different things. See Evansville Airport v. Delta Airlines, 405 U.S. 707, 717 (1972) (where there is an “inherent difference between . . . two classes of flights ... the application of the same fee to both would amount 26 to discrimination against one or the other”). (Emphasis added). }° Here, there are major differences between marine vessel and truck inspections which justify different fee treatment. The most relevant difference is the cost, time, and complexity of the inspections. Commercial truck inspections at state border stations take between 5-30 minutes, enforce a smaller number of state-imposed quar- antines, and cover a much larger number of conveyances (roughly 280,000 commercial trucks a year). In contrast, inspections of a vessel and its cargo take much more time, enforce a greater number of federal quarantines, and involve far fewer inspections. Because truck inspections are relatively simple, the State forgoes fees for this ser- vice but charges fees for more complicated AQI services such as fumigation. Collecting individual fees from each of the 280,000 trucks that are inspected could impose administrative collection burdens that are not worth the expense. Col- lecting fees also could disrupt traffic flow at border sta- tions which would inconvenience the thousands of passenger cars that pass through State border stations daily. Consequently, there are valid “non-protectionist” reasons why the State forgoes collection of fees from commercial trucks. In addition, state border inspections have been conducted for decades, long before the Califor- nia Inspection Act program for foreign commerce was enacted. Consequently, collecting fees under one program 10 That the California Supreme Court questioned whether a ‘substantially similar” requirement applied in Commerce Clause cases outside the tax context, see App. 28-29 illustrates the limitations of its Commerce Clause analysis. ‘ 27 but not the other can be explained by the different histor- ical circumstances and budgetary philosophies which were current when the programs were established. The major differences in time, cost, and scope of commercial truck and marine vessel inspections are indis- putable. The California Supreme Court held, however, that while these differences might justify a lower fee for truck inspections, they could not justify charging no fee for truck inspections. The California Supreme Court used an excessively exacting standard in reaching this conclu- sion. This Court has rejected the argument that user fees on commercial activity must be exactly tailored to the cost of the state services to avoid invalidation under the Commerce Clause. See Northwest Airlines, Inc. v. County of Kent, Michigan, 114 S.Ct. 855, 859-866 (1994); Evansville Airport, supra, 405 U.S. at 714-717 (fees need only be based on “fair approximation of use”); Pure Oil Co. v. State of Minnesota, 248 U.S. 158, 162-163 (1918). When there is no economic protectionism, all that is required under the dormant Commerce Clause is a reasonable relationship between the fee and the cost of state services, see Clark v. Paul Gray, Inc., 306 U.S. 583, 597-600 (1939), or valid non-protectionist reasons for fee distinctions. See McLean v. Denver & Rio Grande Railroad Co., 203 U.S. 38, 53-54 (1906) (inspection fee on hides shipped out of State but not on hides within State upheld based on legitimate law-enforcement reasons for the distinction). Given the lesser costs of truck inspections, the administrative and traffic consequences of collecting trucking fees «t border stations, and the different histori- cal circumstances of the two inspection programs, the - 28 State could properly collect fees for marine vessel inspec- tions without having to charge fees in its longstanding border inspection program. IV. THIS COURT’S WASTE DISPOSAL PRECEDENTS ARE DISTINGUISHABLE AND INAPPLICABLE The California Supreme Court erroneously thought that Oregon Waste Systems v. Dept. of Environmental Quality, supra, 114 S.Ct. 1345, and Chemical Waste Management, Inc. v. Hunt, supra, 504 U.S. 334, compelled the conclusion that Califor- nia’s inspection fees violated the dormant Commerce Clause. Those cases, however, are distinguishable. First, both Oregon Waste and Chemical Waste were classic examples of economic protectionism. In both cases, the States were trying to benefit in-state interests at the expense of out-of-state ones by charg- ing higher fees for the disposal of out-of-state waste than for in-state waste. Here, there is no comparable economic pro- tectionism at work. Second, in Chemical Waste and Oregon Waste, the States were discriminating by charging different disposal fees for identical waste. See Oregon Waste, supra, 114 S.Ct. at 1348 (noting that in Chemical Waste, higher fees were imposed on the disposal of out-of-state waste “than on the disposal of identical waste from Alabama.”) (emphasis added); Chemical Waste, supra, 504 U.S. at 348 (“the record establishes that the hazardous waste at issue in this case is the same regardless of its point of origin”) (emphasis added). There also was no evidence that the out-of-state waste in those cases was more costly to dispose of or more hazardous than in-state waste. See Chemical Waste, supra, 504 U.S. at 343-344 (noting the trial court's finding that “there is absolutely no evidence before this Court 29 that waste generated outside Alabama is more dangerous than waste generated in Alabama.”); Oregon Waste, supra, 114 S.Ct. at 1351 (“No claim has been made that the disposal of waste from other States imposes higher costs on Oregon . . . than the disposal of in-state waste.”). Here, in contrast, the inspections for vessels and trucks are significantly different in terms of cost, time, and scope. Consequently, the justification for different fees which was entirely absent in Chemical Waste and Oregon Waste is undisputed in this case. Further, the very essence of the foreign pest inspections is to intercept pests not known to exist in the United States, including California. A fortiori, these foreign commodities present threats different from and more dangerous than domestic interstate pests. App. 93-94, 42. Finally, congressional authorization or federal approval of the challenged state regulation was not an issue in the waste cases. See Chemical Waste, supra, 504 U.S. at 346 n.9 (noting that the issue of congressional authorization was pretermitted because it was not relied on below nor was it briefed or argued by the parties). In contrast, the challenged fees here are not only consistent with the federal regulatory regime but were used partly to finance such federal regulation." S 11 The statement in Oregon Waste Systems, supra, 1145S.Ct. at 1351 n.5, that different state costs of disposing of in-state and out-of-state waste might justify “a differential charge” does not mean, as the California Supreme Court thought, that California can only adopt “differential” fees for vessels and trucks but cannot forego fees altogether for trucks. See App. 35. The “differential charge” discussion in Oregon Waste Systems arose in a case where there were no other non-protectionist 30 CONCLUSION One out of every five jobs in California is related to the State’s $19 billion a year agricultural industry, App. 8; CT 2128; hence the State’s interest in wanting to augment USDA's foreign pest control effort. The State’s inspection fee does not conflict with Congress’ “dormant” powers under the Commerce Clause. Instead, it augments the very pest regulation of foreign commerce that Congress has mandated. The anti-discrimination principle in the Commerce Clause has been distorted in this case to fur- ther the economic interests of a particular group of ship- pers rather than serve any of the rationales or purposes of the Commerce Clause. The petition for a writ of certiorari should be granted March 1996 Respectfully submitted, Danis. E. LUNGREN Attorney General of the State of California Roperick E. WaALsTon Chief Assistant Attorney General CHarLes W. Gertz IV (Counsel of Record) Assistant Attorney General Linus MASOuREDIS Deputy Attorney General reasons for not imposing fees. Because there are valid non- protectionist reasons for not imposing fees on trucks in this case, the “differential charge” discussion in Oregon Waste Systems is inapplicable. + In The Supreme Court of the United States Octroser Term, 1995 ANN M. VENEMAN, Secretary, CALIFORNIA DEPARTMENT OF FOOD AND AGRICULTURE; ISLAM SIDDIQUI, Assistant Director, CALIFORNIA DIVISION OF PLANT INDUSTRY; STATE OF CALIFORNIA, Petitioners, PACIFIC MERCHANT SHIPPING ASSOCIATION, Respondent. On Petition For Writ Of Certiorari To The Supreme Court Of The State Of California ¢ APPENDIX TO PETITION FOR WRIT OF CERTIORARI ¥ Se . 2 Pee a ee ae Petri. pha Pa ; i eg see’ pee ciate kn EE SORTS, lt tities os igs ONE Foy Aras e “, a ha ae a aR ‘ : PEASE Se Ra es ;* wi "2 ee SK vara iS 7 Se 4 . 4 3 Loe aN wee 3 2 ~ > * * - Daag ZR, Cs. Ss 2 ve + nf he Sac ty Ss, . ; i i cee Se es So PUTS. Ee Ne ee eee s alte Bas Ay Ke cee Se ‘ . . ~ ® _ * bal ooh a wi’ 7 t o A - 2 as be Cae aes Se as App. 1 [No. S044869. Dec. 29, 1995.] California Supreme Court PACIFIC MERCHANT SHIPPING ASSN., Plaintiff and Respondent, v. Henry VOSS, as Director, etc., et al., Defendants and Appellants. COUNSEL Daniel E. Lungren, Attorney General, Roderick E. Wal- ston, Chief Assistant Attorney General, Walter Wun- derlich, Assistant Attorney General, Charles W. Getz IV and Marc N. Melnick, Deputy Attorneys General, for Defendants and Appellants. Lillick & Charles, Sher & Blackwell, R. Frederic Fisher, Lawrence N. Minch, David F. Smith, Jeffrey F. Lawrence, Cindy Buys, Minder & Muro and Thomas G. Minder for Plaintiff and Respondent. OPINION MOSK, J. — In this appeal we consider whether two statutes and a regulation authorizing the California Department of Food and Agriculture to levy an inspection fee on ships carrying agricultural goods into California from foreign countries (Food & Agr. Code, §§ 5352 & 5353, subd. (b); Cal. Code Regs., tit. 3, § 3560, subd. (b)), when no such fee is levied on carriers bringing such goods into California from other states, unjustifiably discriminate on their face against foreign commerce in violation of the negative aspect of the foreign commerce clause of the United States Constitution. (U.S. Const., art. I, § 8, cl. 3.) ss App. 2 We shall conclude, as the trial court ruled, that the cited provisions are facially discriminatory and that the discrimination cannot be justified under the controlling “strictest scrutiny” standard. We therefore reverse the judgment of the Court of Appeal holding the provisions to be nondiscriminatory. Background The United States Department of Agriculture (USDA) has long maintained a comprehensive program for inspecting potentially contaminated or otherwise harmful agricultural products brought into the United States from foreign countries. (See, e.g., 7 U.S.C. § 151 et seq. [Plant Quarantine Act of 1912]; 7 U.S.C. § 150ee [“The Secretary lof the USDA] may promulgate such regulations requir- ing inspections of products and articles of any character whatsoever and means of conveyance . . . as a condition of their movement into or through the United States, or interstate, and imposing other conditions upon such movement, as he deems necessary to prevent the dissem- ination into the United States, or interstate, of plant pests,... "]; 7 C.F.R. § 330.100 et seq. (1995).) The USDA currently enforces federal quarantines against virtually every country in the world, and these quarantines cover literally thousands of agricultural pests found only out- side the United States. (See 7 C.F.R. § 319 (1995).) As part of this comprehensive program, all ships traveling from the specified foreign countries are subject to inspection by federal authorities at their first port of call in the United States. (Id., § 330.105(a) (1995).) As payment for its services, the USDA currently levies a “user fee” of App. 3 $369.50 per inspection on all owners of nonexempt ves- sels. (7 C.E.R. §§ 330.107, 354.3(b) (1995).) In 1990 our Legislature enacted the California Air- port and Maritime Plant Quarantine, Inspection, and Plant Protection Act (hereafter the Act) as part of a state- sponsored effort to supplement the USDA’s agricultural pest control efforts in California. (Stats. 1990, ch. 1612, § 1, p. 7753.) The Legislature adopted the Act as an urgency statute effective September 30, 1990, because in its view “It is necessary to enact programs that are alter- natives to the repeated application of pesticides in order to eradicate pests, including the Mediterranean fruit fly in Los Angeles County. This act would enact one such alternative and, in order to protect the people and the environment from the repeated application of pesticides and to protect California’s agriculture from pests as soon as possible, it is necessary that this act take effect imme- diately.” (Stats.1990, ch. 1612, § 8, p. 7755.) The Act added sections 5350-5353 to the Food and Agricultural Code,! which direct the California Depart- ment of Food and Agriculture (the Department) to “estab- lish a program for the inspection of conveyances entering California through airport and maritime facilities to pre- vent the introduction into, or the spread within, this state of pests.” (§ 5350, subd. (a).) The Act specifically requires that the Department maintain plant quarantine inspection stations at California’s airports and marine terminals (id., subd. (b)) and establish a program for disseminating 1 Unless otherwise indicated, all further statutory references are to this code. re : ; App. 4 information regarding the state’s agricultural pest control and quarantine requirements at such points of entry (id., subd. (c)). However, the Act does not expressly require the Department to establish and operate its own state-run inspection sites at airports and marine terminals, but instead broadly authorizes the Department to “contract with federal and state agencies . . . to assist [it] in carry- ing out the purposes of [the Act].” (§ 5353, subd. (g).) On June 24, 1991, the Department entered into a reimbursable cooperative agreement (RCA) with the USDA. The RCA provided that the Department would pay the USDA to intensify its existing regulatory efforts by hiring additional federal agents to inspect ships and airplanes carrying agricultural goods into California from outside the United States. As a result of the RCA, the USDA was able to hire seven additional marine inspec- tors and forty-four additional airport inspectors. The RCA expressly provided, however, that it was to have no effect on the nature of the federal inspections; rather, it was intended only to make it possible for the USDA to increase its staff and perform more inspections. This arrangement with the USDA is the sole means by which the Department has implemented its duty to provide airport and marine inspections under section 5350, subdi- vision (a); the Department has never established a state- run commercial inspection program at airports or marine terminals. The original RCA expired on September 30, 1991, but was renewed through September 30, 1992, with minor revisions. There is no indication in the record whether the RCA was renewed thereafter. For many years the Department has also inspected agricultural goods entering California by truck from App. 5 other states. (See §§ 5341 & 5341.5.)? Rather than contract- ing with a federal agency for this service, however, the Department itself maintains 16 state-run inspection sites on California’s borders, staffed by some 126 state inspec- tors. Unless there are extraordinary circumstances, these inspectors enforce only California’s agricultural quaran- tines; they do not regularly enforce federal quarantines or inspect commerce originating in foreign countries because the Department assumes that federal authorities inspected these goods when they first entered the United States and there is no reason to perform a second inspec- tion. The focus of this case is not on the legitimacy of California’s overall agricultural inspection program or the propriety of the particular means that the Department has chosen to implement its regulatory obligations. Rather, we are here concerned with only one narrow issue: whether the mechanism that the Legislature has created to fund the Department’s implementation of its statutory obligation under section 5350, subdivision (b), to provide for the inspection of ships carrying agri- cultural goods into California from foreign countries passes muster under the federal Constitution. We turn to that funding mechanism. Section 5352 of the Act requires the Department to derive the funding needed to satisfy its obligations by “levy[ing] a fee on commercial marine carriers, based on 2 The Department does not maintain truck inspection stations at the Mexican border. Instead, the USDA provides such inspections at federal inspection sites. (See 7 C.F.R. §§ 320.1-320.9 (1995).) 5; i ai a i App. 6 the schedule established pursuant to Section 5353, for the use of marine terminal facilities for plant and animal pest inspection, quarantine, and eradication.”3 Section 5352 also requires the Department to “identify and establish a list of countries which [it] has reason to believe are poten- tial sources of exotic plant and animal pests.” Section 5353, subdivision (b), then provides that “Each commer- cial marine carrier engaged in foreign commerce which carries animals or plants or other materials which are, or are likely to be, infected or infested with any pest shall pay a fee of two hundred dollars ($200) to the [Depart- ment] upon the initial arrival in this state of the carrier on a voyage which originated outside the United States from a country identified and listed by the [Department] .. . , or which made an intermediate stop on that voyage in a country identified and listed by the [Department]... . “4 * The Legislature has enacted a similar provision relating to airport inspections: “The [Department] shall levy a service charge . . . based on the schedule established pursuant to Section 5353, on each air carrier or foreign air carrier engaged in foreign air commerce . . . for the use of airport facilities for plant and animal pest inspection, quarantine, and eradication.” (§ 5351, subd. (a).) * Again the Legislature has enacted a virtually identical provision regarding airport inspections: “Each air carrier or foreign air carrier engaged in foreign air commerce which carries animals or plants or other materials which are, or are likely to be, infected or infested with any pest shall pay a charge of eighty-five dollars ($85) to the [Department] upon the initial landing in this state of each flight of the carrier which originates outside the United States.” (§ 5353, subd. (a).) The Department initially adopted a regulation setting the fee at $85 effective April 1, 1991; it later reduced the fee to $43 effective January 1, 1995. (Cal. Code Regs., tit. 3, § 3560, subd. (a).) App. 7 The Act further authorizes the Department “by regu- lation, [to] increase or decrease any of the charges or fees prescribed in [section 5353, subdivision (b)] upon deter- mining that the revenue received is inadequate or in excess of the amount needed to conduct an effective inspection program. The maximum adjusted charge or fee shall not exceed [$600].” (§ 5353, subd. (f).) The Depart- ment initially adopted a regulation setting the marine inspection fee at $200 effective April 1, 1991; it later amended the regulation by reducing the fee to $100 effec- tive January 1, 1995. (Cal. Code Regs., tit. 3, § 3560, subd. (b).) The Department gave the following explanation for the 1995 fee reduction in the informative digest section of the public notice of amendment: “Since this inspection program was established in 1991, the Department has contracted with the United States Department of Agricul- ture (USDA) to perform the authorized inspections. The Secretary [of the Department] has determined that an effective inspection program van now be conducted with revenues from the lower servi.e charge and user fee rates because the USDA is starting to provide inspections of international carriers at an adequate level. The USDA is now committed to supporting federal inspectors who pre- viously had been funded by state contract. “The revenue generated by the lowered service charges and user fees will be used for a program which will focus on oversight and coordination with the USDA on inspections of international carriers, investigations of smuggling, and intensification of public awareness and education efforts. Significant increases in the number of international travelers, levels of foreign trade and App. 8 repeated exotic pest infestations in California have cre- ated a need for an improved inspection program to pro- tect California’s $19.9 billion agricultural industry.”5 In the 1992-1993 fiscal year, the Department collected inspection fees under this program totaling approxi- mately $4.3 million, levied at the higher, pre-1995 rate. Of this $4.3 million, approximately one-fifth was collected as foreign marine inspection fees and approximately four- fifths as foreign airplane inspection fees. However, the Department used only $2.4 million of this aggregate amount to satisfy its obligations to the USDA for both airport and marine inspections. Approximately $1.6 mil- lion of the remaining $1.9 million was allocated to admin- istrative costs and educational activities. The Department's own state-run program for inspect- ing agricultural goods entering California from other states - as opposed to agricultural goods entering Califor- nia from foreign countries - is funded very differently. Carriers of such domestic goods pay no fee at all for routine inspections.® The state currently pays for routine domestic inspections from the general fund, and has done so for many years. As of 1992, the state-run inspection program for out-of-state domestic agricultural goods cost > Plaintiff's request that we take judicial notice of the Department's public Notice of Amendment of California Code of Regulations, title 3, section 3560, subdivision (b), is granted. (Evid. Code, §§ 452, subd. (b), 459, subd. (a).) ® They are charged only for special services such as fumigation, destruction of contaminated goods, or special delivery arrangements. App. 9 California taxpayers an average of approximately $8.4 million each year. In December 1991 plaintiff Pacific Merchant Shipping Association (hereafter Pacific Merchant), an unincorpo- rated association of marine carriers, brought this action on behalf of a class of carriers that had paid the foreign marine inspection fee. Pacific Merchant's operative plead- ing names Henry Voss, the director of the Department, and Islam Siddiqui, the assistant director of the Depart- ment and the head of its Plant Pest and Quarantine Division, as defendants in their official capacities,” and alleged that the Department’s overall mechanism for funding its agricultural inspection program is unconstitu- tional inter alia because it imposes a discriminatory and unreasonable burden on carriers in foreign commerce that is not imposed on carriers in domestic interstate commerce, in violation of the federal commerce clause.® The trial court granted summary judgment in favor of Pacific Merchant on the ground that the marine inspec- tion fee unjustifiably discriminates on its face against foreign commerce in violation of the commerce clause of the United States Constitution. The court reasoned that ” For ease of reference, defendants Voss and Siddiqui will hereafter be referred to collectively as the Department. * Throughout this opinion, the terms “foreign commerce” and “foreign marine commerce” will be used to refer to agricultural goods brought into California from outside the United States. The term “domestic interstate commerce” will refer to agricultural goods brought into California from other states. The term “intrastate commerce” will denote agricultural goods transported exclusively within California. App. 10 “The evidence submitted by the [Department] in its sup- plemental papers is sufficient to support the imposition of a higher fee on foreign ship inspections as opposed to interstate trucking. However, the [Department] has pre- sented no evidence which explains why no fee is col- lected on interstate inspections. The facts are undisputed that overall the state incurs greater costs in performing the interstate inspections. Therefore it is the burden of the state to justify its fee system. The statute is facially dis- criminatory against foreign commerce and as such must be examined with the strictest scrutiny. The [Depart- ment’s] justification does not pass that test.” The court entered a judgment that declared the challenged provi- sions unconstitutional, enjoined the Department from col- lecting foreign marine inspection fees, and ordered a refund. The Department appealed. The Court of Appeal reversed the judgment on the ground that there was a triable issue of fact as to whether the particular types of foreign commerce and domestic interstate commerce involved in this case are sufficiently “similarly situated” that they can be compared for the purpose of determining whether the challenged funding mechanism is discriminatory.® * The Court of Appeal also concluded there were triable issues of fact regarding Pacific Merchant's other contentions, namely, that the foreign marine inspection fee violates the tonnage duty clause (U.S. Const., art. I, § 10, cl. 3) and export- import clause (id., art. I, § 10, cl. 2) of the federal Constitution, that it conflicts with the General Agreement on Tariffs and Trade, and that it is preempted by federal law. These claims were not properly before the Court of Appeal because the trial court expressly declined to address them in the first instance and limited its judgment to the commerce clause claim. App. 11 We granted review limited to the issue whether the foreign marine inspection fee in question violates the commerce clause of the United States Constitution. 1. The Negative Commerce Clause The commerce clause of the federal Constitution empowers Congress to enact laws “To regulate commerce with foreign nations, and among the several states, and with the Indian tribes.” (U.S. Const., art. I, § 8, cl. 3.) The actual language of the clause, however, places no express limits on the authority of the states to regulate such commerce. This rather striking omission has been charac- terized as one of the “great silences of the Constitution.” (Hood & Sons v. Du Mond (1949) 336 U.S. 525, 535 [93 L.Ed. 865, 872, 69 S.Ct. 657].) Nevertheless, the United States Supreme Court has repeatedly held for over a century that the commerce clause also limits the states’ power to regulate both domestic interstate and foreign commerce, whether or not Congress has acted. (See, e.g., Barclays Bank v. Franchise Tax Bd. of California (1994) 512 U.S. __ [129 L.Ed.2d 244, 257, 114 S.Ct. 2268, 2276] (Barclays Bank) [the commerce clause “has long been understood . . . to provide ‘protection from state legislation inimical to the national commerce [even] where Congress has not acted... . ’”]; Oregon Waste Systems v. Dept. of Env. Quality (1994) 511 U.S. ___ [128 L.Ed. 2d 13, 20, 114 S.Ct. 1345, 1349] (Oregon Waste) [“Though phrased as a grant of regulatory power to Congress, the Clause has long been understood to have a ‘negative’ aspect that denies the States the power unjustifiably to discriminate against or burden the interstate flow of articles of commerce.”]; mamma ia a ae App. 12 accord, Associated Industries of Missouri v. Lohman (1994) 511 U.S. __, ___ [128 L.Ed.2d 639, 645-646, 114 S.Ct. 1815, 1820]; Wyoming v. Oklahoma (1992) 502 U.S. 437, 454 [117 L.Ed.2d 1, 22-23, 112 S.Ct. 789]; Lewis v. BT Investment Managers, Inc. (1980) 447 U.S. 27, 35 [64 L.Ed.2d 702, 711, 100 S.Ct. 2009]; Welton v. State of Missouri (1876) 91 U.S. (1 Otto.) 275 [23 L.Ed. 347].) Thus, any state statute or regulation that impacts domestic interstate or foreign commerce is subject to judicial scrutiny under the com- merce clause unless the statute or regulation has been preempted, or expressly authorized, by an act of Con- gress. (See, e.g., Atlantic Coast Demo. v. Bd. of Chosen Freeholders (3d Cir. 1995) 48 F.3d 701, 710.) The commerce clause’s implicit, self-executing restriction on the states’ power to regulate domestic interstate and foreign com- merce is commonly referred to as the “negative” or “dor- mant” commerce clause. (Barclays Bank, supra, 512 U.S. __ __, fn. 9 [129 L.Ed.2d 244, 257, 114 S.Ct. 2268, 2276].) Although the negative commerce clause was derived essentially by implication from the clause’s express “posi- tive” grant of legislative authority to Congress, it is by no means simply an incidental emanation or penumbra of that clause. To the contrary, “The ‘negative’ aspect of the Commerce Clause was considered the more important by the ‘father of the Constitution,’ James Madison. In one of his letters, Madison wrote that the Commerce Clause ‘grew out of the abuse of the power by the importing States in taxing the nonimporting, and was intended as a negative and preventive provision against injustice among the States themselves, rather than as a power to be used for the positive purposes of the General Govern- ment.’ 3 M. Farrand, Records of the Federal Convention App. 13 of 1787, p. 478 (1911).” (West Lynn Creamery, Inc. v. Healy (1994) 512 U.S. __, ___ fn. 9 [129 L.Ed.2d 157, 166, 114 S.Ct. 2205, 2211]; see also Hughes v. Oklahoma (1979) 441 U.S. 322, 325-326 [60 L.Ed.2d 250, 255, 99 S.Ct. 1727] [commerce clause reflected the concern of the framers “to avoid the tendencies toward economic Balkanization that had plagued relations among the Colonies and later among the States under the Articles of Confederation” ]; Baldwin v. G.A.F. Seelig (1935) 294 U.S. 511, 522 [79 L.Ed. 1032, 1038, 55 S.Ct. 497, 101 A.L.R. 55] [“a chief occasion of the commerce clauses was ‘the mutual jealousies and aggressions of the States, taking form in customs barriers and other economic retaliation’ ”]; see generally, The Fed- eralist Nos. 41, 42 [Madison]; 2 Bailyn, The Debates on the Federal Constitution (1993) p. 662 [Madison’s speech at the Virginia Ratifying Convention, June 11, 1788]; 3 Farrand, Records of the Federal Convention of 1787 (rev. ed. 1966) p. 547 [Madison’s Preface to Debates in the Convention of 1787, stating inter alia that under the Arti- cles of Confederation the “want of a general power over Commerce led to an exercise of this power separately, by the States, [which] not only proved abortive, but engen- dered rival, conflicting and angry regulations.”].) James Madison was not alone in his views. Another important contemporary figure, Alexander Hamilton, wrote that the federal government should be authorized to regulate domestic interstate and foreign commerce and that the states’ legislative power on this topic should be limited, lest “The interfering and unneighbourly regula- tions of some States contrary to the true spirit of the Union . . . be multiplied and extended till they became not less serious sources of animosity and discord, than pet : : App. 14 injurious impediments to the intercourse between the different parts of the confederacy.” (The Federalist No. 22 (Cooke ed. 1961) p. 137.) According to Hamilton, the absence of such uniform national control might gradually lead to what we would now call the balkanization of the several states, undermine Congress’s ability to enter into agreements with foreign nations on behalf of the United States as a whole, restrict foreign commerce to the point that our national resources would lie fallow, and eventu- ally cause citizens of each state to treat the citizens of other states like foreigners rather than fellow citizens of the United States. (Id. at pp. 135-137; see also The Feder- alist No. 11 [Hamilton].) Indeed, there is evidence to suggest that Hamilton’s prophecy could well have come true had the states not consented to give up the power to regulate commerce by ratifying the Constitution. (See Brown v. Maryland (1827) 25 U.S. (12 Wheat.) 419, 445-446 [6 L.Ed. 678, 688] [“The oppressed and degraded state of commerce, previous to the adoption of the constitution, can scarcely be forgotten. It was regulated by foreign nations, with a single view to their own interests; and our disunited efforts to counteract their restrictions, were rendered impotent, by want of combination.”]; Gibbons v. Ogden (1824) 22 U.S. (9 Wheat.) 1, 226 [6 L.Ed. 23, 77] (conc. opn. of Johnson, J.) [Prior to the adoption of the Constitution “There was not a state in the Union, in which there did not . . . exist a variety of commercial regulations; . . . ”].) Thus, despite the fact that there is no express textual basis in the commerce clause to justify a limitation on the states’ authority to regulate domestic interstate and for- eign commerce, there can be no doubt whatever that such App. 15 a limitation was intended by the framers and that the matter was of paramount concern to many or all of the delegates to the Constitutional Convention of 1787. Indeed, Chief Justice John Marshall later wrote that “It may be doubted, whether any of the evils proceeding from the feebleness of the federal government [under the Articles of Confederation], contributed more to that great revolution which introduced the present system, than the deep and general conviction, that commerce ought to be regulated by congress.” (Brown v. Maryland, supra, 25 U.S. (12 Wheat.) 419, 446 [6 L.Ed. 678, 688].) 2. The Issue of Facial Discrimination Having placed the matter in perspective, we focus on the narrow issue before us: whether the inspection fee levied on vessels in foreign commerce by authority of the challenged provisions (§§ 5352 & 5353, subd. (b); Cal. Code Regs., tit. 3, § 3560, subd. (b)) violates the negative commerce clause of the United States Constitution. "(T]he first step in analyzing any law subject to judi- cial scrutiny under the negative Commerce Clause is to determine whether it ‘regulates evenhandedly with only “incidental” effects on interstate [or foreign] commerce, or discriminates against interstate [or foreign] com- merce.’ .. . If a restriction on commerce is discriminatory, it is virtually per se invalid. [Citations.] By contrast, non- discriminatory regulations that have only incidental effects on interstate [or foreign] commerce are valid unless ‘the burden imposed on such commerce is clearly excessive in relation to the putative local benefits.’ ” (Ore- gon Waste, supra, 511 U.S. ___, __, [128 L.Ed.2d 13, 21, 114 w App. 16 S.Ct. 1345, 1350].) The party challenging the statute’s validity bears the burden of showing discrimination. (Hughes v. Oklahoma, supra, 441 U.S. 322, 336 [60 L.Ed.2d 250, 261-262].) In this context “ ‘discrimination’ simply means differ- ential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter.” (Oregon Waste, supra, 511 U.S. __, ___ [128 L.Ed.2d 13, 21, 114 S.Ct. 1345, 1350].) Such discrimination may take any of three forms: first, the state statute may facially discrim- inate against interstate or foreign commerce; second, it may be facially neutral but have a discriminatory pur- pose; third, it may be facially neutral but have a discrimi- natory effect. (Chemical Waste Management, Inc. v. Hunt (1992) 504 U.S. 334, 344, fn. 6 [119 L.Ed.2d 121, 133, 112 S.Ct. 2009] (Chemical Waste) [statute may be discrimina- tory either in purpose or effect]; Hughes v. Oklahoma, supra, 441 U.S. 322, 336 [60 L.Ed.2d 250, 261] [state statute may discriminate “either on its face or in practical effect”]; SDDS, Inc. v. State of S.D. (8th Cir. 1995) 47 F.3d 263, 267 [listing the three types of discrimination and citing cases illustrating each].) In determining whether a state statute is facially dis- criminatory, the following matters are irrelevant: the jus- tification that the state offers for the discrimination, the legitimacy of the state interests that the statute is designed to protect, the degree and scope of the discrimi- nation, and the volume of commerce affected. (Oregon Waste, supra, 511 U.S. __, __ [128 L.Ed.2d 13, 22, 114 S.Ct. 1345, 1350] [“the purpose of, or justification for, a law has no bearing on whether it is facially discrimina- tory”]; Kraft General Foods, Inc. v. lowa Dept. of Revenue and App. 17 Finance (1992) 505.U.S. 71, 81 [120 L.Ed.2d 59, 69, 112 S.Ct. 2365] (Kraft General Foods) [“a State may not advance its legitimate goals by means that facially discriminate against foreign commerce”]; Chemical Waste, supra, 504 U.S. 334, 341-342 [119 L.Ed.2d 121, 131-132] [listing high court decisions invalidating state statutes attempting to further a “ ‘presumably legitimate goal’ ” through illegiti- mate discriminatory means]; Wyoming v. Oklahoma, supra, 502 U.S. 437, 455 [117 L.Ed.2d 1, 23] [“The volume of commerce affected measures only the extent of the dis- crimination; it is of no relevance to the determination whether a State has discriminated... . ”]; SDDS, Inc. v. State of S.D., supra, 47 F.3d 263, 271, fn. 12 [degree and scope of discrimination irrelevant].) Pacific Merchant contends that the statutes and regu- lation here at issue facially discriminate against foreign commerce because they impose inspection fees only on vessels “engaged in foreign commerce . . . on a voyage which originated outside the United States from a coun- try identified and listed by the [Department] .. . , or which made an intermediate stop on that voyage in a country identified and listed by the [Department]” (§ 5353, subd. (b)), while no state statute or regulation authorizes the Department to levy such an inspection fee on carriers of domestic interstate commerce, whether transported by truck, ship, or any other means; instead, the Legislature has allowed the Department to provide routine inspections to such domestic carriers free of charge at California taxpayer expense. We recognize that this case is somewhat atypical in that Pacific Merchant contends the cited provisions are discriminatory because they favor domestic interstate . if , . App. 18 commerce over foreign commerce, but does not contend the provisions also favor California intrastate commerce. It is perhaps more common for a party challenging a state statute on commerce clause grounds to contend the stat- ute constitutes local protectionism because it discrimi- nates against out-of-state commercial interests in favor of in-state interests. (See, e.g., Baldwin v. G.A.F. Seelig, supra, 294 U.S. 511, 527 [79 L.Ed. 1032, 1040] [key principle underlying negative commerce clause is that “one state in its dealings with another may not place itself in a position of economic isolation”].) But this is a distinction without a difference: as the United States Supreme Court recently held, “a State’s preference for domestic commerce over foreign commerce is inconsistent with the Commerce Clause even if the State’s own economy is not a direct beneficiary of the discrimination. As the absence of local benefit does not eliminate the international implications of the discrimination, it cannot exempt such discrimina- tion from Commerce Clause prohibitions.” (Kraft General Foods, supra, 505 U.S. 71, 79 [120 L.Ed.2d 59, 68].) Nor does this distinction render distinguishable the many high court precedents addressing commerce clause chal- lenges to state statutes that assertedly discriminate between intrastate and domestic interstate commerce. As the parties rightly concede, the fundamental issue is the same both when the challenging party asserts that a state statute discriminates between intrastate and domestic interstate commerce and when the party asserts that the statute discriminates between domestic interstate com- merce and foreign commerce: in each case the issue is whether the statute treats the federally protected class of commerce less favorably than other classes of commerce. j App. 19 (Compare, for example, Oregon Waste, supra, 511 U.S. ___, ___ [128 L.Ed.2d 13, 21-22, 114 S.Ct. 1345, 1350] [discrimi- nation between intrastate and interstate commerce], and Kraft General Foods, supra, 505 U.S. 71, 75 [120 L.Ed.2d 59, 65-66] [discrimination between domestic and foreign commerce].) Turning therefore to the merits of this appeal, we believe that the high court’s reasoning in two recent cases — Oregon Waste, supra, 511 U.S. __ [128 L.Ed.2d 13, 114 S.Ct. 1345], and Chemical Waste, supra, 504 U.S. 334 - requires us to conclude that the provisions in issue here facially discriminate against foreign commerce. In Chemi- cal Waste the high court reviewed the constitutionality of an Alabama statute imposing a base fee of $26.50 per ton on all hazardous waste disposed of at commercial facili- ties in Alabama and an “additional fee” of $72.00 per ton if the hazardous waste was generated out of state. In upholding the statute the Alabama Supreme Court identi- fied several purposes that it served, including protection of the health and safety of the local citizenry, environ- mental conservation, and compensation for the costs and burdens that out-of-state waste generators impose on Alabama by dumping their hazardous waste in that state. The United States Supreme Court acknowledged that “These may all be legitimate local interests” (504 U.S. at p- 343 [119 L.Ed.2d at p. 133]), but held them irrelevant to the question whether the statute facially discriminated against interstate commerce: “ ’ “[T]he evil of protection- ism can reside in legislative means as well as legislative ends. . . . [WJhatever [the state’s] ultimate purpose, it may not be [accomplished] by discriminating against arti- cles of commerce coming from outside the State unless App. 20 there is some reason, apart from their origin, to treat them differently.” ’ ” (Id. at pp. 340-341 [119 L.Ed.2d at p. 131].)!° The high court stressed (504 U.S. at pp. 340-341 [119 L.Ed.2d at p. 131].) that it had “ ’ “consistently found parochial legislation of this kind to be constitutionally invalid,” ’” citing a number of cases in which “ ‘a pre- sumably legitimate goal was sought to be achieved by the illegitimate means of isolating the State from the national economy.’ ” (Id. at pp. 341-342 [119 L.Ed.2d at pp. 131-132].) The court concluded that the Alabama statute was facially discriminatory because it imposed a higher fee on waste coming from outside the state than on waste generated in state, reasoning that “ ‘[A] State may not tax a transaction or incident more heavily when it crosses state lines than when it occurs entirely within the State.’ [Citations.]” (Id. at p. 342. [119 L.Ed.2d at p. 132].) Two years later, in Oregon Waste, supra, 511 U.S. __ [128 L.Ed.2d 13, 114 S.Ct. 1345], the high court considered a constitutional attack on Oregon statutes imposing a total fee of disposal of $3.10 per ton on disposal of waste originating out of state but only $0.85 per ton on disposal of waste originating in state. The court reasoned that “In Chemical Waste, we easily found Alabama’s surcharge on hazardous waste from other States to be facially discrimi- natory because it imposed a higher fee on the disposal of out-of-state waste than on the disposal of identical in- state waste. 504 U.S. at ___ [119 L.Ed.2d at 131-133], 112 S.Ct. at 2013-2014. We deem it equally obvious here that 10 The qualifying clause refers to the state’s burden to justify any discrimination found to be present, a separate step that we discuss below. (Pt. 3, post.) App. 21 Oregon’s $2.25 per ton surcharge is discriminatory on its face. The surcharge subjects waste from other States to a fee almost three times greater than the $0.85 per ton charge imposed on solid in-state waste. The statutory determinant for which fee applies to any particular ship- ment of solid waste to an Oregon landfill is whether or not the waste was ‘generated out-of-state.’ [Citation.] It is well-established, however, that a law is discriminatory if it ‘ “tax[es] a transaction or incident more heavily when it crosses state lines than when it occurs entirely within the State.” ’ Chemical Waste, supra, at __, [119 L.Ed.2d at 132-133] 112 S.Ct. at 2014 [citations]. “Respondents argue, and the Oregon Supreme Court held, that the statutory nexus between the surcharge and ‘the [otherwise uncompensated] costs to the State of Ore- gon and its political subdivisions of disposing of solid waste generated out-of-state,’ [citation] necessarily pre- cludes a finding that the surcharge is discriminatory. We find respondents’ narrow focus on Oregon’s compensa- tory aim to be foreclosed by our precedents. As we reiter- ated in Chemical Waste, the purpose of, or justification for, a law has no bearing on whether it is facially discrimina- tory. See 504 U.S. at __, [119 L.Ed.2d at 131-132], 112 S.Ct. at 2013. [Citation.] Consequently, even if the sur- charge merely recoups the costs of disposing of out-of- state waste in Oregon, the fact remains that the differen- tial charge favors shippers of Oregon waste over their counterparts handling waste generated in other States. In making that geographic distinction, the surcharge pat- ently discriminates against interstate commerce.” (511 U.S. at p. __ [128 L.Ed.2d at pp. 21-22, [114 S.Ct. at p. 1350], fn. omitted.) App. 22 The high court’s reasoning on the issue of facial discrimination is equally applicable to the statutes and regulation before us. Here, as in Oregon Waste and Chemi- cal Waste, the challenged provisions expressly burden a federally protected class of commerce - in this case for- eign commerce - by exacting a fee for all routine inspec- tions, while leaving all other classes of commerce — most notably domestic interstate commerce - entirely unbur- dened by such a fee. The sole “statutory determinant” for whether the fee applies to any particular shipment into California is whether it is carried in a vessel “engaged in foreign commerce . . . on a voyage which originated outside the United States from a country identified and listed by the [Department] .. . , or which made an intermediate stop on that voyage in a country identified and listed by the [Department]” (§ 5353, subd. (b)). The determinant is thus exclusively a matter of geography, and “In making that geographic distinction, the [inspec- tion fee] patently discriminates against [foreign] com- merce.” (Oregon Waste, supra, 511 U.S. _ __. {128 L.Ed.2d 13, 22, 114 S.Ct. 1345, 1350].) Indeed, the discrimination is even more patent in the matter before us than in Chemical Waste or Oregon Waste. In both of those cases the in-state beneficiaries of the statutory scheme paid at least some fee; here, carriers in domestic interstate commerce pay no fee whatever. The consequence is dramatic. In Oregon Waste, out-of-state waste was subjected to a total fee 3.6 times greater than in-state waste ($3.10 + $0.85); similarly, in Chemical Waste the disparity was 3.7 ($98.50 + 26.50). By contrast, if for example the domestic interstate commerce in the case at bar had been charged an inspection fee of even one dollar — FS App. 23 per shipment, foreign commerce would have been sub- jected to a fee one hundred times greater ($100 + $1). But the reality is still worse: the charge against domestic interstate commerce is zero. Because the disparity between any number and zero is infinite, foreign com- merce is thus subjected to a fee infinitely greater than domestic interstate commerce. The decision of the Court of Appeal to the contrary is predicated on an erroneous line of reasoning. The Court of Appeal in effect acknowledged the force of the United States Supreme Court decisions discussed above: “Pacific Merchant purports to lump all inspections performed by the Department into what it views as a single pest-pre- vention program, a view which allows it to posit facial discrimination in the statute at issue because it imposes fees only on certain inspections. Were we to accept this characterization, Pacific Merchant would need to do little other than point to the waste disposal fee cases cited above (or cases in which taxes are imposed on one type of commerce and not another) and demand that the Depart- ment produce evidence demonstrating a compelling rea- son for charging fees for one and not the other. This would be a Sisyphean task for the Department, because fees imposed in discriminatory manner by a single pro- gram (or discriminatory fees and taxes unrelated to a substantive regulatory program) are inevitably stricken down.” (Fn. omitted.) The Court of Appeal declined to so hold, however, because it believed that “Unlike the waste-disposal cases in which the high court was presented with a single regulatory program charging disparate fees (or cases where there are no regulatory programs at all), we here mt : 7 ’ App. 24 have an inspection program for ships (and planes) admin- istratively and financially segregated from either the general fund or even the remainder of the Department's budget; in point of fact, the inspections themselves are even per- formed almost entirely by a different sovereign [USDA] subsidized by California.” (Italics added.) This effort to distinguish Oregon Waste and Chemical Waste is unavailing. The “financial segregation” stressed by the Court of Appeal is the very disparity in the Department's funding scheme - i.e., foreign commerce is charged an inspection fee but domestic interstate com- merce inspections are paid for out of the general fund - that renders the scheme facially discriminatory under Oregon Waste and Chemical Waste. And the fact that the Department has contracted out the administration of the foreign commerce inspection program to the USDA is without significance: the discrimination is not in who administers the program, but in who pays for it. The funding scheme would be no less discriminatory if the Department were to abrogate its arrangement with the USDA and undertake to inspect foreign commerce itself.) 1! Although the Court of Appeal did not identify other differences in the way the Department administers foreign commerce and domestic interstate commerce inspection programs, any such differences would be equally immaterial: the federal constitutional validity of the funding scheme cannot be made to depend on the Department's administrative convenience. (See, e.g., Kraft General Foods, supra, 505 U.S. 71, 81 {120 L.Ed.2d 59, 69].) App. 25 From this premise, nevertheless, the Court of Appeal concluded that “Since we have discrete regulatory pro- grams under consideration, only one of which assesses the fees at is*~ \ Pacific Merchant must thus initially demonstrate that the inspections of its ships are suffi- ciently similar to the other inspections taking place under the Department’s other programs.” (Italics added.) The court then held that Pacific Merchant did not prove such “similarity” as a matter of law, and hence was not enti- tled to summary judgment on the issue of discrimination. The Court of Appeal cited no authority for its requirement that in order to show that the challenged fee structure is facially discriminatory Pacific Merchant must prove that the burdened class of foreign commerce and the unburdened class of domestic interstate commerce are “similarly situated.” The Department now contends that requirement is supported by Halliburton Oil Well Cement- ing Co. v. Reily (1963) 373 U.S. 64 [10 L.Ed.2d 202, 83 S.Ct. 1201] (Halliburton), and its progeny. Thus in Halliburton the high court declared that “equal treatment for in-state and out-of-state taxpayers similarly situated is the condi- tion precedent for a valid use tax on goods imported from out-of-state.” (Id. at p. 70 [10 L.Ed.2d at p. 207], italics ~ added.) More recently, in Kraft General Foods, supra, 505 U.S. 71, 80, footnote 23 [120 L.Ed.2d 59, 68], the high court reiterated that “In considering claims of discrimina- tory taxation under the Commerce Clause .. . it is neces- sary to compare the taxpayers who are ‘most similarly situated,’ ” citing Halliburton. It is unclear from the Supreme Court jurisprudence, however, whether the “similarly situated” requirement App. 26 applies outside the context in which it arose, i.e., chal- lenges to state taxes - particularly “compensatory” taxes - that assertedly discriminate against federally protected commerce. Halliburton is such a case, involving a state's use tax calculated on a higher basis for out-of-state manu- facturer-users than for in-state manufacturer-users. Kraft General Foods is also such a case, involving a state’s busi- ness tax on corporate income that taxed dividends received from foreign subsidiaries but not dividends received from domestic subsidiaries. And the same is true of the other progeny of Halliburton cited by the Depart- ment. !? This pattern does not appear to be a coincidence. Our research shows that the United States Supreme Court has never even cited, much less relied on, Halliburton, supra, 373 U.S. 64, in any case that did not involve a challenge to a state tax on foreign or domestic interstate commerce. Indeed, the Department cites no precedent of any kind that applies the “similarly situated” requirement outside the tax context. In particular, none of the high court cases reviewing a commerce clause challenge to a state regula- tory statute - whether involving discriminatory fees as in 12 Bacchus Imports, Ltd. v. Dias (1984) 468 U.S. 263 [82 L.Ed.2d 200, 104 S.Ct. 3049], involved a state’s excise tax on wholesale liquor sales that exempted the two locally made spirits. Armco Inc. v. Hardesty (1984) 467 U.S. 638 [81 L.Ed.2d 540, 104 S.Ct. 2620], dealt with a state’s gross receipts tax on businesses selling tangible property at wholesale that exempted local manufacturers. And National Meat Ass’n. v. Deukmejian (9th Cir. 1984) 743 F.2d 656, affd. per curiam (1985) 469 U.S. 1100 [83 L.Ed.2d 766, 105 S.Ct. 768], involved a per-pound tax that California imposed only on out-of-state processed beef. App. 27 Oregon Waste and Chemical Waste or outright prohibitions on imports or exports as in Wyoming v. Oklahoma, supra, 502 U.S. 437, and Hughes v. Oklahoma, supra, 441 U.S. 322 - even mentioned, much less applied, the “substantially similar” requirement in their discussion of the issue of discrimination. It seems most appropriate that the requirement be imposed, moreover, in determining the validity of a com- pensatory tax. As the high court recently reiterated, a use tax that applies only to goods purchased out of state “may be saved from constitutional infirmity if it is a valid ‘compensatory tax’ designed simply to make interstate commerce bear a burden already borne by intrastate com- merce. . . . To ensure that the State is indeed merely imposing countervailing burdens on comparable transac- tions, we have required that the taxes on interstate and intrastate commerce be imposed on ‘substantially equiva- lent event(s].’” (Associated Industries of Missouri v. Loh- man, supra, 511 U.S. __, __, [128 L.Ed. 2d 639, 647, 114 S.Ct. 1815, 1821].) The point is underscored by one of the two recent regulatory fee cases we find controlling here, Oregon Waste. It is true, as the Department quotes in its brief, that in Oregon Waste the high court said that “the events on which the interstate and intrastate taxes are imposed must be ‘substantially equivalent’; that is, they must be sufficiently similar in substance to serve as mutually exclusive ‘prox[ies]’ for each other.” (511 US. | __ [128 L.Ed.2d 13, 24, 114 S.Ct. 1345, 1352].) What the Department overlooks, however, is that the quoted state- ment had nothing to do with the high court’s determina- tion whether the fee in question was discriminatory; its App. 28 discussion of that issue (part II of its opinion) ended several pages earlier. Instead, the quotation is from part III of its opinion, devoted to the wholly distinct issue of whether the fee, although discriminatory, was neverthe- less justified on a legal basis. Oregon had sought to justify its higher fee on out-of-state waste primarily on the basis that it was a compensatory tax, and the high court simply listed the “substantially equivalent” requirement as one of the three elements of that doctrine. The court explained that the compensatory tax doctrine itself is “merely a specific way of justifying a facially discrimina- tory tax as achieving a legitimate local purpose that can- not be achieved through nondiscriminatory means. See Chemical Waste, supra, 504 U.S. at __, n. 9, [119 L.Ed.2d at 134-135] 112 S.Ct. at 2016, n. 9 (referring to the compensa- tory tax doctrine as a ‘justiffication]’ for a facially dis- criminatory tax). Under that doctrine, a facially discriminatory tax that imposes on interstate commerce the rough equivalent of an identifiable and ‘substantially similar’ tax on intrastate commerce does not offend the negative Commerce Clause.” (511 U.S. at p. __ [128 L.Ed.2d at p. 23, 114 S.Ct. at p. 1352], italics added.) Reviewing Oregon’s contentions in that light, the court concluded that the fee could not be justified as a compen- satory tax. (Id. at p. __ [128 L.Ed.2d at pp. 23-25, 114 S.Ct. at pp. 1352-1353].) As will appear (pt. 3, post), in the case at bar the Department does not contend that its facially discriminatory inspection fee can be justified as a compensatory tax. In the absence of further guidance from the high court, we are reluctant to extend the “substantially simi- lar” requirement beyond the tax context where it is most a ys - ‘ App. 29 appropriate and to which the court has thus far limited it, or to depart from the high court’s often reiterated test of commerce clause discrimination by reading the require- ment into that test. Under this view of the federal prece- dents, the Department's contention is without merit. In any event, even if we assume arguendo that the “substantially similar” requirement does apply to regula- tory fee cases, when that requirement is properly under- stood it appears satisfied on the undisputed facts before us. Although the high court has not articulated a test for determining when events are “substantially similar” for commerce clause comparison, we may fairly infer from its tax decisions that the court deems such events are not “substantially similar” when they differ not just in degree but in kind. Thus in Halliburton, supra, 373 U.S. 64, 71 [10 L.Ed.2d 202, 207-208], the court held that an out-of-state manufacturer-user and an in-state retailer are not “sim- ilarly situated.” In Maryland v. Louisiana (1981) 451 U.S. 725, 758-759 [68 L.Ed.2d 576, 602-603, 101 S.Ct. 2114], the court held that the “first use” inside a state of natural gas piped in from outside the state and the “severance” of natural gas produced from wells in the state are not “ “substantially equivalent events.” In Armco Inc. v. Hard- esty, supra, 467 U.S. 638, 642-643 [81 L.Ed.2d 540, 545], the court held that manufacturing and wholesaling - even, presumably, of the same products - are not “ ‘substan- tially equivalent events.’ ” (Accord, Tyler Pipe Industries v. Dept. of Revenue (1987) 483 U.S. 232, 242-244 [97 L.Ed.2d 199, 210-212, 107 S.Ct. 2810] [same].) In Oregon Waste, supra, 511 U.S. ___, ___ [128 L.Ed.2d 13, 24-25, 114 S.Ct. 1345, 1353], the court held that the earning of income subject to general taxation and the disposal of waste v! App. 30 subject to a special regulatory surcharge are not “substan- tially equivalent events.” In the case at bar we are called on to compare inspec- tions of agricultural produce entering California (1) by ship from foreign countries, and (2) by truck from other states. The Department contends these inspections are substantially dissimilar in three respects, but none is persuasive. First, the Department states “The inspections seek different pests,” but fails to explain the relevance of the point. Even if the pest species are different, it does not follow that the inspections to find them are substantially dissimilar - or at least any more dissimilar than inspec- tions to find two different domestic pests (e.g., a fungus and a fly). More important, even if the different nature of foreign pests also means they are more difficult to find, that difference would be simply a matter of degree. It is true that such a difference could result in higher inspec- tion costs; as will appear, however, higher costs are not relevant to the issue of facial discrimination but to the issue of justification. Second, the Department states “Foreign pests are much more dangerous than domestic pests,” but again fails to explain the relevance of the point. While the added danger of foreign pests may mean it is more important to find them, it does not follow that it is more difficult to do so. And even if it did, the difference would again be simply a matter of degree and at most result in higher inspection costs irrelevant to the issue of discrimi- nation. The Department notes that in Chemical Waste, supra, 504 U.S. 334, 343-344 [119 L.Ed.2d 121, 133-134], the 7 :. i a3 re x ore a ™ as a a t ~ App. 31 “ed high court emphasized a finding to the effect that “ ‘there is absolutely no evidence before this Court that waste generated outside Alabama is more dangerous than waste generated in Alabama.’” The reliance is misplaced: the high court quoted this finding in its discussion of the issue of justification, not the issue of discrimination. (See also Oregon Waste, supra, 511 U.S. __, ___ [128 L.Ed.2d 13, 22-23, 114 S.Ct. 1345, 1351] [noting the absence of “any safety or health reason unique to nonhazardous waste from other States” in its discussion of justification]; Maine v. Taylor (1986) 477 U.S. 131, 140-152 [91 L.Ed.2d 110, 122-130, 106 S.Ct. 2440] [holding that facially discrimina- tory ban on importing out-of-state baitfish was justified by danger to state’s native fisheries].) Third, the Department states that “Truck inspections take significantly less time, effort and expenditure to complete.” Here the relevance of the point is plain but insufficient. On its face such a difference in inspection costs is a matter of degree; and like the higher costs that could flow from the first two distinctions proposed by the Department, such a differential would bear on justifica- tion rather than on discrimination. For example, in Ore- gon Waste the high court observed that Oregon could have claimed as a ground of justification - although it did not — that “the disposal of waste from other States imposes higher costs on Oregon and its political subdivi- sions than the disposal of in-state waste.” (511 U.S. __, __ [128 L.Ed.2d 13, 22, 114 S.Ct. 1345, 1351], fn. omitted.) In a footnote at this point the high court explained that “if out-of-state waste did impose higher costs on Oregon than in-state waste, Oregon could recover the increased cost through a differential charge on out-of-state App. 32 waste....” (Id. at p. __, fn. 5 [128 L.Ed.2d at p- 22, 114 S.Ct. at p. 1351].) Thus the court said only that higher costs could have justified the discrimination it had previ- ously found on the face of the statutes; it pointedly did not say that higher costs would have meant there was no discrimination in the first place because the burdened events were not “substantially similar.” In the case at bar the Department's programs to inspect ships in foreign commerce and trucks in domestic interstate commerce are programs that may differ in detail or degree but do not differ in kind or purpose: both are inspections of agricultural produce in search of harm- ful pests as that produce arrives at California’s borders, and both are designed to prevent such pests from enter- ing this state and damaging its agricultural industry. They may therefore be seen as “substantially equivalent events” for commerce clause purposes, and we may com- pare them in determining whether the fee structure imposed on such inspections by the challenged statutes and regulation is discriminatory. After making that com- parison we hold, under the controlling decisions of the United States Supreme Court discussed above, that the provisions facially discriminate against foreign commerce in violation of the negative aspect of the foreign clause of the United States Constitution. 3. The Issue of Justification A state statute that discriminates against a federally protected class of commerce “is virtually per se invalid.” (Oregon Waste, supra, 511 U.S. __, ___ [128 L.Ed.2d 13, 21, 114 S.Ct. 1345, 1350].) Such a statute must be declared App. 33 unconstitutional unless the state can justify the discrimi- nation by showing that it “ ‘advances a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives.’ ” (Id. at p. __ [128 L.Ed. 2d at p. 22, 114 S.Ct. at p. 1351].) The high court has repeatedly emphasized just how exacting this burden is: “Our cases require that justifications for discriminatory restrictions on commerce pass the ‘strictest scrutiny.’ [Citation.] The State’s burden of justification is so heavy that ‘facial discrimination by itself may be a fatal defect.’ [Citations.]” (Ibid.; accord, Chemical Waste, supra, 504 U.S. 334, 342 [119 L.Ed.2d 121, 132] [statutes discriminating against protected commerce are “typically struck down without further inquiry”]; Associated Industries of Missouri v. Lohman, supra, 511 U.S. __, __ [128 L.Ed.2d 639, 645-647, 114 S.Ct. 1815, 1820]; Hughes v. Oklahoma, supra, 441 U.S. 322, 337 [60 L.Ed.2d 250, 262-263]; Philadelphia v. New Jersey (1978) 437 U.S. 617, 624 [57 L.Ed.2d 475, 481-482, 98 S.Ct. 2531].)}5 The Department contends that the challenged provi- sions advance a legitimate local purpose, to wit, that they support a program of inspecting foreign marine com- merce in order to prevent harmful pests from entering '3 Contrary to the Department's assertion, the “virtually per se rule of invalidity” does not “hold only rhetorical value.” Indeed, one federal district court recently stated that Maine v. Taylor, supra, 477 U.S. 131, is “the only case to date that this Court has found where the Supreme Court upheld a facially discriminatory regulation under the negative Commerce Clause.” (Clajon Production Corp. v. Petera (D.Wyo. 1994) 854 F.Supp. 843, 859, fn. 30, italics added.) Our own research leads us to the same remarkable conclusion. App. 34 California from other countries and damaging the state’s agricultural iridustry. We do not doubt this is a legitimate local purpose. This conclusion, however, is only the beginning of our inquiry. Pacific Merchant does not contend, nor has it ever contended, that California’s overall agricultural inspection program unduly burdens foreign marine com- merce, or any other class of commerce for that matter. Instead, Pacific Merchant contends only that the Legisla- ture’s decision to impose an inspection fee on foreign marine commerce but to provide free inspections for domestic interstate commerce at state taxpayer expense unconstitutionally discriminates against foreign com- merce. It is solely the constitutionality of that fee struc- ture that we consider here. As will appear, we shall conclude that the Department’s proffered justifications for its discriminatory fee structure cannot withstand the exacting demands of “strictest scrutiny.” The weakness of the Department’s position is fore- shadowed by its preliminary contention that charging a fee for inspecting foreign commerce serves what it describes as “the ‘pay-as-you-play’ principle,” i.e., that “those who are subject to a regulation should pay for it to be implemented.” We agree with the well-established notion that every class of commerce is obliged to “ ‘pay its own way’ ” (Complete Auto Transit, Inc. v. Brady (1977) 430 U.S. 274, 281 [51 L.Ed.2d 326, 332, 97 S.Ct. 1076]), and that “It was not the purpose of the commerce clause to relieve those engaged in interstate [or foreign] commerce from their just share of the state tax [or regulatory] bur- den.” (Western Live Stock v. Bureau of Revenue (1938) 303 U.S. 250, 254 [82 L.Ed. 823, 827, 58 S.Ct. 546, 115 A.L.R. ee pig trie GRO ete ain ea ule Pri Lip App. 35 944].) However, the Department’s funding mechanism itself violates this principle. Carriers in foreign commerce pay at least their fair share of the expense that the Department incurs for the inspection of that commerce: for example, during the 1992-1993 fiscal year carriers in foreign marine and air commerce paid an aggregate of $4.3 million in inspection fees, yet the Department used only $2.4 million of the amount to support those inspec- tions. In stark contrast, carriers in domestic interstate [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386004_1662%3A1. Public record. Not legal advice.