# Amicus Curiae Brief — McLane Western Western, Inc. v. Colorado Department of Revenue (No. 05-1294)

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2006

## Text

Supreme Court, U.S
FILED

{

JUN 1 2 2006 |

'

Jn the Supreme Court of the Gnited States

MCLANE WESTERN, INC.,

Petitioner,

¥.
DEPARTMENT OF REVENUE; STATE OF COLORADO, ET AL.

Respondents.

On Petition for a Writ of Certiorari to
the Colorado District Court of Appeals, Division IV

BRIEF OF THE AMERICAN TRUCKING
ASSOCIATIONS, INC., AND THE CHAMBER OF COM-
MERCE OF THE UNITED STATES OF
AMERICA AS AMICI CURIAE IN

SUPPORT OF PETITIONER
ROBERT DIGGES, JR. CHARLES A. ROTHFELD
ATA Litigation Center Counsel of Record
2200 Mill Road EVAN M. TAGER
Alexandria, VA 22314 Mayer, Brown, Rowe
(703) 838-1865 & Maw LLP
1909 K Street, NW
ROBIN S. CONRAD Washington, DC 20006
AMAR D. SARWAL (202) 263-3000

National Chamber Litigation
Center, Inc.

1615 H Street, NW

Washington, DC 20062

(202) 463-5337

Counsel for Amici Curiae

No. 05-1294 OFFICE OF THE CLERK |

QUESTION PRESENTED

Whether a facially neutral state tax that is structured in
such a way that it invariably imposes a greater burden on in-
terstate businesses than on identical businesses that confine
their operations to the taxing state violates the Commerce
‘Clause of the U.S. Constitution.

(I)

il

TABLE OF CONTENTS
Page
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REASONS FOR GRANTING THE PETITION ...............04. 3
A. The Coloradce Tax Imposes Discriminatory
Burdens On Interstate Commence ..............ccccseeeees 4

B. ‘A State Tax That Discriminates Against Inter-
state Commerce In Its Practical Effect Is In-
consistent With The Commerce Clause ................... 6

C. The Court Should Grant Review To Clarify
The Proper Treatment Of State Taxes That
Discriminate Against Interstate Commerce In
PIE METI ci cnacicnsanscesiantavensccnsceevencsnenssces 10

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TABLE OF AUTHORITIES
Page(s)
Cases:
American Trucking Associations, Inc. v. Conway,
DOB Ak S325 4 Vs BRO asisitissitcinenhisconsmnninten 12
American Trucking Associations, Inc. v. Cowan,
No.TX91-01608 (Ariz. Chancery Ct., 1992)... eee 12
American Trucking Associations, Inc. v. Denn,
No. C2-95-4910 (Minn. Dist. Ct.,
PG Cg LF sti sen iariecpnchin oot ena ppiarcienaaeneets 12
American Trucking Associations, Inc. v. Goldstein,
SR PE Fee COs. CO iisccniceinachnvsine catccentatsaancinacin tons 13
American Trucking Associations, Inc. v. Gray,
F968 SS. WORST T CAM TRG wivsiinisn ccittiiciiivarns 13
American Trucking Associations, Inc. v. Kline,
O07 TO GST Fd Fe eihkiiinimraiiont 13

American Trucking Associations, Inc. v. New
Hampshire, No. 89-E-00405 (N.H. Super. Ct.,
eR |) RRR eaR en ietiembn earn erin yeer em Ce UE 12

American Trucking Associations, Inc. v. New
Hampshire, No. 89-E-00405-B

(N.H. Super. Ct., Merrimack Co., 1995)... ee eeeeees 12
American Trucking Associations, Inc. v. Scheiner,

WES WEE. BOG CIPS cckkiesceicensnt icivbhawekakiSuicsh 5, 6, 8
American Trucking Associations, Inc. v. Secretary

of Acmin., 613 N.E. 2d 9S (Mass. 1993)...........:ccesseeees 12
American Trucking Associations, Inc. v. Secretary

of State, No. CV-89-410 (Me. 1990)..........cccccsseeeeeeeeees 12

American Trucking Associations, Inc. v. Secretary
of State, 595 A.2d 1014 (Me. 1991)... eee MM t2

iV
American Trucking Associations, Inc. v. Smith,
No. 89-0385 (Ark. Chancery Ct., 1992)... 12

American Trucking Associations, Inc. v. State,
556 N.W. 2d 761 (Wis. Ct. App. 1996), rev.

denied, 560 N.W.2d 274 (Wisc. 1996)...........cccseeeees 11,12
American Trucking Associations, Inc. v. State of

New Jersey, 852 A.2d 152 (N.J. 2004)... ceeesesseeeeees 12
American Trucking Associations, Inc. v. State of

Oregon, 124 P. 3d 1210 (Or. 2005)... eeeeteeeeeeeeee 13
Baldwin v. G.A.F. Seelig, Inc., 294 U.S. 511 1935)........... 7,9
Best & Co. v. Maxwell, 311 U.S. 454 (1940)........0....... 10, 14

Black Beauty Trucking, Inc. v. Indiana Dept. of
Revenue, 527 N.E. 2d 1163 (Ind. Tax Ct. 1988)......11, 13

Camps Newfound/Owatonna, Inc. v. Town of Har-

Piao, SAF AI SR CI vssiviisscccsnsvtenssnsvcanéonviinrssonsi 6, 14
Capitol Greyhound Lines v. Brice,

ae EF alk ac ect ta denice vache gmnaninbianinneee 9
Commonwealth Edison Co. v. Montana,

Bo ie EE aa witianiiadectacndasnhenerss acthisovinenternanns 7

Commonwealth Transportation Cabinet v. Ameri-
can Trucking Associations, Inc.,

FOS Ee ee I, CRO) inkiices ep cicesnsicacrninpeiventonins lL, B
Complete Auto Transit, Inc. v. Brady,

BP ods BP AE TD ckiskbiatntacicodsentcenmapiacmaaaes 7,7
Dean Milk v. Madison, 340 U.S. 349 (1951) ...... cc eeeeeeeeeeeees 10
Halliburton Oil Well Cementing Co. v. Reily,

a EN Teeny lea dandy mane aoa tReeeor otra 4
Hunt v. Washington State Apple Advertising

CE Sk AI. SIF IGT) vccsvecsicdisinccnienscds tncasssinees 10

Marx v. American Trucking Associations, Inc.,
GEE Se Bk EEG CIR. BY oi sisi aesesdicciennsstencivenesenmnciin 1]

Vv

Nippert v. City of Richmond, 327 U.S. 416 (1946)...... 7, 8, 10
Oklahoma Tax Comm'n v. Jefferson Lines,

mT 2 BE Bg 8 & bs 5 pengrenent imipenem serene or Ne 5, 6, 7, 13
Oregon Waste Sys., Inc. v. Dep't of Envtl. Qual-

Ba SEE as FEA AI ies idcastereasntctsen nn Miasiniasmacenaten 14
Raymond Motor Tranport, Inc. v. Rice,

oan ey EL, | OER ES CoE EN R EOTCY 1]
West Lynn Creamery, Inc. v. Healy, 512 U.S.

BI ID oss cessncsavidatscucesbarakakcinas teindensetunnterecsennteenen passim

Statutes, Rules And Regulations:

BST AAO, ADR: $6 BEG, Di vvsiaccinivnccsccnccisesczesaassnntsucsnssinns 4,5
PATER TRAN TS RII vaiscsas acdestanssians cscs encase 12
RNS TE: Be bd siinicie es ends pertinence taken 12
PERE. TAN TO SAO esses hniiniin enasninicsntsicscvcniey tanrvvecairasis 12
Ark. Code Ann: § 26-55-7065 (2) e occscicsnsicssicsccsesssssasessesvanvens 12
PE, COGS AGA TORRE Bie chk avigiaiancn aims 13
PI TORO RS FOO isch ei Risccinanssintaceiicrteaasne 13
Colo. Rev. Stat. §29-28.5-10] .......sssscsascorsssncorsneneacsessesssseneses 3
Rie SU a hei i iciteincn decaennees 13
Ky. Rev. Stat. Ann. § 1388.660(4-7)............... cee cesseeseeseseee 13
Nees CH, LAWS OR. ZI, OFF ini acircres tccsncntsctecinacna 12
BVERDE. AFORE: TWIG RR GEG, BOT scisiis ssvisccsssecciastcccnnsadacestedinns 12
Md. Ann. Code art. 81, § 423(a)

CP eer MER I iG Gcicscn vnicedevenstconuarslpsvcauaoneniaaes 13
Me. Rev. Stat. Ann. tit. 29 § 246-A ........:.cssssssssssessseseseres 12
Me. Rev. Stat. Ann. tit. 29°§ 246-D. .......0:...sicscsssccsssssoreseceses 12

Se ee | : Nae ian ae ern crate a eer ncn 12

vi

Miss. Code Ann. § 27-61-5(1).........::ceseeesseeeeeees

Miss. Code Ann. § 77-7-119 ........cceeeseeccceseesnees

N.H. Rev. Stat. Ann. § 21-P:20, IV...
N.H. Rev. Stat. Ann. § 147-A:6, ID........... eee

N.H. Rev. Stat. Ann. § 260:52, V (Supp. 1988)

Peak Cts FAI, BESS RIG oo oesisccscavctcicsscesesssecarens
N.J. Stat. Ann. § 54:39A-10 oo... eee ceeceeeceeteees
Vt. Stat. Ann. Tit. 23 § 415 (1982) ......
Vt. Stat. Ann. Tit. 23 § 3007 (1982) .................
Wis. Admin. Code § SERB 4.03(2)(a)-(e)........

Miscellaneous:

U.S. Department of Transportation & U.S. De-
partment of Commerce, 2002 Commodity
FE IE ecccnciiathncisdinh tucaaiives babndvibsavssin’

INTEREST OF THE AMICI CURIAE'

American Trucking Associations, Inc. (ATA) is a non-
profit corporation incorporated under the laws of the District
of Columbia, with its principal place of business in Alexan-
dria, Virginia. ATA is the national trade association of the
trucking industry. It has more than 2,000 direct motor carrier
members and, in cooperation with state trucking associations
and affiliated national trucking conferences, ATA represents
tens of thousands of motor carriers. ATA was created to
promote and protect the interests of the trucking industry,
which consists of every type and geographical scope of mo-
tor carrier operation in the United States, including for-hire
carriers, private carriers, leasing companies and others. ATA
regularly advocates the trucking industry’s position before
this and other courts.

Interstate commercial operations of the trucking industry
are massive in size and scope. As of July 2004, the U.S. De- -
partment of Transportation’s Federal Motor Carrier Safety
Administration had on file 524,309 registered interstate mo-
tor carers. Almost eight billion tons of freight, with a value
of $6.2 trillion, moved by truck in interstate commerce in
2002. U.S. Department of Transportation & U.S. Depart-
ment of Commerce, 2002 Commodity Flow Survey, at Table
la. Millions of shipments per day are necessary to move that
volume of freight and service the needs of the American
economy.

ATA and its members have a critical interest in the pro-
tection of interstate commercial activity against all forms of

' Pursuant to Rule 27.6 of the Rules of this Court, amici state that
this brief was not authored in whole or in part by counsel for a
party and that no person or entity, other than the amici curiae, their
members, and their counsel made a monetary contribution to its
preparation and submission. The written consents of the parties to
the filing of this brief have been filed with the Clerk of the Court.

2

discriminatory state taxation and regulation. Discrimination
that impedes the free flow of products in interstate commerce
negatively affects the trucking industry in the same manner
as does direct discrimination against interstate trucking itself.
The interstate trucking industry historically has been one of
the principal targets of discriminatory state taxation and regu-
lation. As a result, ATA and its members have brought or
participated in Commerce Clause challenges to a wide range
of state taxes, fees, and regulations before this Court and
other state and federal courts.

The Chamber of Commerce of the United States of
America is the world’s largest business federation, represent-
ing a membership of more than three million businesses and
organizations of every size, in every industry sector and geo-
graphical region of the country. A central function of the
Chamber is to represent the interests of its members in im-
portant matters before the courts, Congress, and the Execu-
tive Branch. To that end, the Chamber has filed amicus briefs
in numerous cases in this Court addressing issues of vital
concern to the Nation’s business community, and has regu-
larly participated in cases involving the meaning of the
Commerce Clause.

The Chamber has a substantial interest in the issue pre-
sented in this case: businesses in all sectors of the economy
have been affected by state taxes that discriminate against
interstate commerce in their practical effects. Such discrimi-
nation, moreover, discourages the conduct of business across
state lines and works a substantial drag on the national econ-
omy. The Chamber believes that the experience of its mem-
bers with these problems makes it well situated to address the
issues presented here.

STATEMENT

This case involves a challenge to a Colorado tax on ac-
tivities related to the distribution of certain tobacco products
in the State. Insofar as is relevant here, the tax is collected

3

from the person in the distribution chain who “first receives”
the products in Colorado. Colo. Rev. Stat. §29-28.5-101, 102.
During the time at issue in this case, the tax was imposed at a
rate of twenty per cent on the price paid by the first Colorado
distributor of the products.

Under this tax regime, the more that is done to the prod-
uct (for example, marketing, sales, and distribution activity)
outside Colorado, the higher the price of the product will be
when it finally reaches and is “first receive[d]” by a distribu-
tor in the State -- and the higher the tax due on the product
will be. The court below recognized this, acknowledging
that, “if the manufacturer and all the distributors were located
within Colorado, the tax base would be at its lowest level.”
Pet. App. 6a. That is so because the tax is imposed only once
per product, and when manufacturing and all distribution of
the product takes place in Colorado, the tax is calculated at
the time of first in-state distribution on the basis of a price
that has not yet been inflated by the mark-ups related to
transportation, marketing, and related activities that inevita-
bly take place along the distribution chain. Thus, as petitioner
explains (at Pet. 4), this tax structure means that the tax base
is higher (and the amount collected correspondingly greater)
when more of the products’ distribution chain is located out-
side Colorado.

Petitioner brought this suit in Colorado state court, con-
tending that the Colorado tax is unconstitutional under the
Commerce Clause of the U.S. Constitution because it dis-
criminates against interstate commerce in its practical effect.
The trial court upheld the tax (Pet. App. 14a-25a) and the
Colorado Court of Appeals affirmed. /d. at 1a-13a. The court
of appeals recognized that, under the Colorado scheme, “the
location of the manufacturers, suppliers, or distributors in-
volved in the product’s distribution network” has an impact
on the size of the tax base and that, as a consequence, “the
tax base will be higher the later in the distribution network
the product is taxed.” /d. at 6a. The court also acknowledged

4

that this regime “may place the product” that is distributed
interstate “at a competitive disadvantage in the marketplace
because the higher tax is added to the price.” Jd. at 8a. But
the court nevertheless held the Colorado tax constitutional
-because it does not “tax[] out-of-state transactions or entities
at a rate higher than it taxes in-state transactions, entities, or
products, or * * * exemp([t] in-state transactions, entities, or
products from an otherwise uniform tax.” /d. at 7a.

REASONS FOR GRANTING THE PETITION

The Coiorado tax imposes an obvious impediment to in-
terstate commerce; the court below itself candidly acknowl-
edged that the levy places products at a competitive
disadvantage if more of their distribution chain is located out
of state. This discriminatory impact on goods that are moved
interstate should render the Colorado tax unconstitutional. In
reaching the contrary conclusion, the court below was of the
view that a tax’s discrimination against interstate commerce
in practical effect is immaterial so long as the levy does not
overtly accord interstate commerce disparate treatment. But
that conclusion, which invites states to develop subtle means
of discrimination against interstate businesses, surely is
wrong. Because the decision below illustrates a resistance to
fundamental Commerce Clause principles that is found in
many state tax regimes — and because it adopts an approach
to the Clause that is inconsistent with the imperative for a
uniform national economy that the Constitution was designed
to foster — further review is warranted.

A. The Colorado Tax Imposes Discriminatory
Burdens On Interstate Commerce

At the outset, there should be no doubt that the Colorado
tax is inconsistent with the Commerce Clause. Petitioner
demonstrates in detail that the tax should not survive applica-
tion of the rule articulated in Halliburton Oil Well Cementing
Co. v. Reily, 373 U.S. 64 (1963). See Pet. 10-13. Unsurpris-
ingly, the tax also runs afoul of the broader principles that

5

animate this Court’s Commerce Clause jurisprudence. The
Court has understood the Clause to prevent states ‘from re-
treating into economic isolationism or jeopardizing the wel-
fare of the Nation as a whole” (Oklahoma Tax Comm'n v.
Jefferson Lines, 514 U.S. 175, 179-180 (1995)), either by
directly discriminating against interstate commerce or by im-
posing taxes that more subtly “exert[] an inexorable hydrau-
lic pressure on interstate businesses to ply their trade within
the State that enacted the measure rather than ‘among the
several States.”” American Trucking Associations, Inc. v.
Scheiner, 483 U.S. 266, 286-287 (1987) (quoting U.S.
Const., Art. I, § 8, cl. 3). The Colorado tax does both.

The discriminatory impact of the tax is manifest. The
amount of the levy turns on the price paid for the taxed prod-
uct by the distributor who “first receives” the product in
Colorado. As a consequence, it necessarily is the case that the
amount of tax due will go up as more of the distribution
chain is located outside Colorado, even if the products, pack-
aging, marketing, and all other aspects of distribution are
identical in every respect save location. There is no doubt
about this effect of the tax. Indeed, the court below expressly
acknowledged that “the location of the manufacturers, sup-
pliers, or distributors involved in the product’s distribution
network and the price mark-up of each impacts the tax base
or the price upon which the constant twenty percent tax rate
is imposed” and “agree[d] with McLane’s assertions that the
tax base will be higher the later in the distribution network
the product is taxed.” Pet. App. 6a. The court accordingly
agreed, as well, “that the tax base calculated on the price paid
by the taxable distributor may place the product at a competi-
tive disadvantage in the marketplace because the higher tax is
added to the price.” /d. at 8a. That effect casts grave doubt on
the constitutionality of the tax: “Under [this Court’s] consis-
tent course of decisions in recent years a state tax that favors
in-state business over out-of-state business for no other rea-

son than the location of its business is prohibited by the
Commerce Clause.” Scheiner, 483 U.S. at 286.

By the same token, taxes like Colorado’s place “an inexo-
rable hydraulic pressure on interstate businesses to ply their
trade within the State that enacted the measure rather than
‘among the several States.’” The court below denied that ef-
fect, declaring that “the OTP tax scheme does not pressure
out-of-state businesses to move to Colorado.” Pet. App. 10a.
But the court gave no explanation for its conclusion, which
plainly is wrong. After all, when the distribution network is
entirely in one state the tax is lower than when otherwise
identical distribution activities cross state lines. See id. at 6a.
Such a regime “place[s] interstate commerce at a disadvan-
tage as compared with commerce intrastate.” Jefferson Lines,
514 U.S. at 185. Thus, “{a]s a practical matter, the statute en-
courages affected entities to limit their out-of-state” activities
(Camps Newfound/Owatonna, Inc. v. Town of Harrison, 520
U.S. 564, 576 (1997)), which necessarily encourages “ten-
dencies toward economic Balkanization.” Jefferson Lines,
514 U.S. at 180 (citations and internal quotation marks omit-
ted).

B. A State Tax That Discriminates Against Interstate
Commerce In Its Practical Effect Is Inconsistent
With The Commerce Clause

In nevertheless upholding the Colorado tax, the court be-
low construed this Court’s Commerce Clause decisions to
establish that “a tax is discriminatory if it taxes out-of-state
transactions or entities at a rate higher than it taxes in-state
transactions, entities, or products, or if it exempts in-state
transactions, entities, or products from an otherwise uniform
tax.” The court accordingly found it dispositive that “[a}ll
taxable distnbutors of OTP are taxed at the same rate and on
a tax base determined in the same fashion.” /d. at App. 8a.
This focus on the superficial form of the tax — and the com-

7

plete disregard for the practical consequences of the tax’s
discriminatory effects — was a serious error.

Although the court below placed crucial weight on the
fact that the Colorado tax does not facially discriminate
against out-of-state entities in its rate or exemptions, this
Court has emphasized that “the Commerce Clause has a
deeper meaning that may be implicated even though state
provisions, such as the one[] reviewed here, do not allocate
tax burdens between insiders and outsiders in a manner that
is facially discriminatory.” Scheiner, 483 U.S. at 281. In giv-
ing force to this “deeper meaning,” the Court in its modern
Commerce Clause decisions addressing state taxation has
eschewed “a focus on * * * formalism [that] merely obscures
the question whether the tax produces a forbidden effect.”
Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 288
(1977). Instead, in its “more recent decisions” the Court has
““moved toward a standard of permissibility of state taxation
based upon its actual effect rather than its legal terminol-
ogy.’” Scheiner, 483 U.S. at 294-295 (quoting Complete
Auto Transit, 430 U.S. at 281). See, e.g., Jefferson Lines, 514
U.S. at 183; Commonwealth Edison Co. v. Montana, 453
U.S. 609, 615 (1981).

Starting from this perspective, the Court’s “cases have
eschewed formalism for a sensitive, case-by-case analysis of
purposes and effects.” West Lynn Creamery, Inc. v. Healy,
512 U.S. 186, 201 (1994). This means that ““‘[w)hat is ulti-
mate is the principle that one state in its dealings with an-
other may not put itself in a position of economic isolation.
Formulas and catchwords are subordinate to this overmaster-
ing requirement.’” /d. at 202 (quoting Baldwin v. G.A.F.
Seelig, Inc., 294 U.S. 511, 527 (1935)).

The Court has applied this principle repeatedly to invali-
date state taxes that do not facially discriminate in their rates,
exemptions, or tax bases, but that necessarily place interstate
commerce at a competitive disadvantage. In Nippert v. City

of Richmond, 327 U.S. 416 (1946), for example, one of the
seminal cases establishing the Court’s modern Commerce
Clause doctrine,’ the Court struck down a flat municipal li-
cense fee imposed on solicitors (so-called “drummers”) do-
ing business in the city, explaining:

[T]he tax * * * cannot be taken to apply generally to lo-
cal distributors in the same manner and with like effects
as in application to out-of-state distributors. The very
difference in locations of their business headquarters, if
any, and of their activities makes this impossible. This,
of course, is but another way of saying that the very dif-
ference between interstate and local trade, taken in con-
junction with the inherent character of the tax, makes
equality of application between those two classes of
commerce, generally speaking, impossible.

Id. at 432.°

? The Court’s opinion in Nippert was authored by Justice Rutledge,
whose views anticipated the Court’s modern Commerce Clause
doctrine in significant respects and were substantially incorporated
in the Complete Auto Transit test. See Complete Auto Transit, 430
U.S. at 280-281, 282

> The Court placed particular emphasis on the practical conse-
quences of the challenged tax: “‘[The] tax imposes substantial ex-
cluding and discriminatory effects of its own. * * * [T]he small
operator and especially the casual or occasional one from out of
the State will find the tax not only burdensome but prohibitive,
with the result that the commerce is stopped before it is begun.
And this effect will be extended to more substantial and regular
operators, particularly those whose * * * market in any single lo-
cality * * * cannot be mined more than once every so often.” Such
a tax thus “can easily mean the stoppage of a large amount of
commerce which would be carried on either in the absence of the
tax or under the incidence of one taking account of those varia-
tions.” /d. “Whether or not it was so intended, those are [the flat
tax’s] necessary effects.” Jd. at 434.

9

The Court applied this same principle to invalidate flat
taxes on interstate motor carriers in Scheiner. Although the
levies were “facially neutral” (483 U.S. at 269), the Court
recognized that the challenged taxes necessarily disadvan-
taged interstate businesses: ‘“[T]he very nature of the market
that interstate operators serve prevents them from making full
use of the privilege * * * for which they have paid the State”
a flat fee. /d. at 284 n.16. Thus,

“the intrastate vehicle can and will exercise the privilege
whenever it is in operation, while the interstate vehicle
must necessarily forego [sic] the privilege some of the
time simply because of its interstate character, i.e., be-
cause it operates in other States as well. In the general
average of instances, the privilege is not as valuable to
the interstate as to the intrastate carrier.”

Id. at 291 (quoting Capitol Greyhound Lines v. Brice, 339
U.S. 542, 557 (1950) (Frankfurter, J., dissenting)).

Similarly, in Baldwin v. G.A.F. Seelig, supra, the Court
held dispositive the practical effect of a facially neutral levy.
There, New York established a uniform, minimum price for
all milk, wherever produced. But “[t]his Court * * * did not
hesitate to strike [the tax} down.” West Lynn Creamery, 512
U.S. at 193. Writing for the Court, Justice Cardozo ex-
plained:

Neither the power to tax nor the police power may be
used by the state of destination with the aim and effect
of establishing an economic barrier against competition
with the products of another state or the labor of its resi-
dents. Restrictions so contrived are an unreasonable clog
upon the mobility of commerce. They set up what is
equivalent to a rampart of customs duties designed to
neutralize advantages belonging to the place of origin.

294 U.S. at 527. As the Court subsequently described Bald-
win, “because the minimum price regulation had the same

10

effect as a tariff or customs duty — neutralizing the advantage
possessed by lower cost out-of-state producers — it was held
unconstitutional.” West Lynn Creamery, 512 U.S. at 194. See
also, e.g., Hunt v. Washington State Apple Advertising
Comm'n, 432 U.S. 333, 352-353 (1977); Dean Milk v. Madi-
son, 340 U.S. 349 354 (1951); Best & Co. v. Maxwell, 311
U.S. 454, 455-456 (1940).

In all of these cases, the challenged taxes — like the Colo-
rado levy — gave the appearance of equality. Like the Colo-
rado tax, none of the challenged levies “tax[ed] out-of-state
transactions or entities at a rate higher than it taxe[d] in-state
transactions, entities, or products, or * * * exemptled] in-
state transactions, entities, or products from an otherwise uni-
form tax.” Pet. App. 7a. Yet this Court invalidated them all
because they were structured so that their practical effects
placed interstate commerce at a disadvantage as compared to
otherwise identical commerce conducted exclusively in one
state. Precisely the same conclusion is warranted here: as was
true of the levy invalidated in Nippert, the Colorado tax
‘cannot be taken to apply generally to local distributors in the
same manner and with like effects as in application to out-of-
state distributors.”327 U.S. at 432.

C. The Court Should Grant Review To Clarify The
Proper Treatment Of State Taxes That
Discriminate Against Interstate Commerce In
Their Practical Effect

The fundamental question presented here — how courts
should approach state taxes that are facially neutral but dis-
criminate against interstate commerce in their practical effect
— is an important and recurring one that warrants this Court’s
review. It is an unfortunate reality that states have never
stopped experimenting with taxes that place subtle but sig-
nificant burdens on businesses that operate across state lines.
Express discrimination is rare; “[i]n fact, tariffs against the
products of other states are so patently unconstitutional that

11

[the Court’s] cases reveal not a single attempt by any State to
enact one. Instead, the cases are filled with state laws that
aspire to reap some of the benefits of tariffs by other means.”
West Lynn Creamery, 512 U.S. at 193.

There is no mystery about the reason for the perennial na-
ture of such state enactments. The practical burden of truly
evenhanded state taxes “‘usually falls on local economic in-
terests as well as other States’ economic interests, thus insur-
ing that a State’s own political processes will serve as a
check against unduly burdensome regulations.’” West Lynn
Creamery, 512 U.S. at 200 (quoting Raymond Motor Tran-
port, Inc. v. Rice, 434 U.S. 429, 444 n. 18 (1978)). But there
is no in-state political constituency to curtail the enactment of
tax regimes that disproportionately burden out-of-state tax-
payers. To the contrary, every state has an understandable
incentive to export as much of its tax burden as possible to
foreign entities -- a course that has the added benefit (from
the enacting state’s perspective) of providing a competitive
advantage to businesses that concentrate their operations in
the taxing state.

ATA’s experience demonstrates this reality. Following
this Court’s landmark Scheiner decision in 1987, which held
that flat state taxes on interstate motor carriers violate the
Commerce Clause, ATA hoped that states would recognize
the decision’s unequivocal condemnation of flat, annual
charges on interstate trucking operations and quickly elimi-
nate them. Instead, most states tried to evade Scheiner’s
principles and forced ATA to undertake an ongoing, decades-
long litigation effort to enforce the Commerce Clause re-
quirements that Scheiner articulated. See, e.g., Common-
wealth Transportation Cabinet v. American Trucking
Associations, Inc., 746 S.W. 2d 65 (Ky. 1988); Black Beauty
Trucking, Inc. v. Indiana Dept. of Revenue, 527 N.E. 2d 1163
(Ind. Tax Ct. 1988); American Trucking Associations, Inc. v.
Secretary of State, 595 A.2d 1014 (Me. 1991); American
Trucking Associations, Inc. v. State, 556 N.W. 2d 761 (Wis.

12

Ct. App. 1996), rev. denied, 560 N.W.2d 274 (Wis. 1996).
All told, ATA has been forced to bring suit against 15 states
challenging more than two dozen flat state taxes and fees im-
posed on interstate trucking.’ Indeed, that effort continues to

4 American Trucking Associations, Inc. v. State of New Jersey, 852
A.2d 152 (N.J. 2004) (hazardous waste transporter fee (N.J. Stat.
Ann. § 13:1E-18)); American Trucking Associations, Inc. v. State,
556 N.W. 2d 761 (Wis. Ct. App. 1996), rev. denied, 560 N.W.2d
274 (Wisc. 1996) ($400-per-company hazardous material transpor-
tation fee (Wis. Admin. Code § SERB 4.03(2)(a)-(e)); American
Trucking Associations, Inc. v. New Hampshire, No. 89-E-00405-B
(N.H. Super. Ct., Merrimack Co., 1995) ($200-per-unit hazardous
waste transporter fee (N.H. Rev. Stat. Ann. § 147-A:6, II) and $25-
per-unit hazardous material fee (reduced to $5-per-truck during the
litigation) (N.H. Rev. Stat. Ann. § 21-P:20, IV)); American Truck-
ing Associations, Inc. v. Denn, No. C2-95-4910 (Minn. Dist. Ct.,
Ramsey Cty., 1995) ($40-per-vehicle cab card fee (Minn. Stat. §
221.31)); American Trucking Associations, Inc. v. Secretary of
Admin., 613 N.E. 2d 95 (Mass. 1993) ($7-per-truck license fee and
$7-per-truck “user of special fuels” license fee (Mass. Gen. Laws
ch. 62C, § 67) and $200-per-truck hazardous waste carrier fee
(Mass. Gen. Laws ch. 21C, § 7)); American Trucking Associations,
Inc. v. Smith, No. 89-0385 (Ark. Chancery Ct., 1992) ($10-per-
truck fuel decal tax (Ark. Code Ann. § 26-55-708 (2)); American
Trucking Associations, Inc. v. Cowan, No.TX91-01608 (Ariz.
Chancery Ct., 1992) ($125-per-truck cargo tank fee (Ariz. Rev.
Stat. § 28-3005) and $100-per-carrier, $25-per-truck hazardous and
special waste transporter fees (Ariz. Rev. Stat. §§ 28-2421 and 28-
2422)); Marx v. American Trucking Associations, Inc., 600 So. 2d
212 (Miss. 1992) ($12-per-truck fuel identification fee (Miss. Code
Ann. § 27-61-5(1)) and $13-per-truck bingo stamp fee (Miss. Code
Ann. § 77-7-119)); American Trucking Associations, Inc. v. Secre-
tary of State, 595 A.2d 1014 (Me. 1991) ($25-per-truck hazardous
waste fee (Me. Rev. Stat. Ann. tit. 29 § 246-D)); American Truck-
ing Associations, Inc. v. New Hampshire, No. 89-E-00405 (N.H.
Super. Ct., Merrimack Co., 1991) ($20-per-truck decal fee (N.H.
Rev. Stat. Ann. § 260:52, V (Supp. 1988))); American Trucking
Associations, Inc. v. Secretary of State, No. CV-89-410 (Me.

13

this day: ATA’s challenge to Oregon’s flat motor carrier tax,
which was successful in the Oregon Court of Appeals but
rejected by the Oregon Supreme Court, is now pending in
this Court. See No. 05-1177, American Trucking Associa-
tions, Inc. v. State of Oregon (cert. pending) (challenging
American Trucking Associations, Inc. v. State of Oregon, 124
P. 3d 1210 (Or. 2005)).

Although interstate motor carriers have been a particular
target of parochial state taxation, all businesses that operate
across state lines are potential victims of taxes that have a
discriminatory impact on interstate commerce. This Court’s
decisions, which over the years have resolved Commerce
Clause challenges brought by taxpayers in virtually all indus-
tries and sectors of the economy, illustrate that point graphi-
cally. See, e.g., West Lynn Creamery, 512 U.S. at 194 (citing
cases). Yet, as the decision below shows, the lower courts
continue to struggle with the principles that govern “practical
effects” discrimination.

1990) ($15-per-truck decal fee (Me. Rev. Stat. Ann. tit. 29 § 246-
A)); American Trucking Associations, Inc. v. Conway, 566 A.2d
1323 (Vt. 1989) ($50-per-truck fuel decal fee (Vt. Stat. Ann. tit. 23
§ 415 (1982)) and $50-per-truck retaliatory fee (Vt. Stat. Ann. tit.
23 § 3007 (1982))); American Trucking Associations, Inc. v. Gold-
stein, 541 A.2d 955 (Md. 1988) ($25-per-truck fuel decal fee (Md.
Ann. Code art. 81, § 423(a)(1987 Cum. Supp.)); Commonwealth
Transportation Cabinet v. American Trucking Associations, Inc.,
746 S.W.2d 65 (Ky. 1988) ($150-per-truck supplemental highway
use tax (Ky. Rev. Stat. Ann. § 1388.660(4-7)); American Trucking
Associations, Inc. v. Gray, 746 S.W.2d 377 (Ark. 1988) ($175-per-
truck highway use equalization tax (Ark. Code. Ann. §§ 75-817
and 75-819)); Black Beauty Trucking, Inc. v. Indiana Dept. of
Revenue, 527 N.E.2d 1163 (Ind.Tax Ct., 1988) ($50-per-truck sup-
plemental highway use tax (Ind. Code § 6-6-8-1 et seq.)); Ameri-
can Trucking Associations, Inc. v. Kline, 9 N.J.Tax 631 (N.J.,
1987) ($25-per-truck fuel decal fee (NJ. Stat. Ann. § 54:39A-10)).

14

This issue involves a matter of tremendous importance to
the national economy. As the Court has observed repeatedly,
the values embodied in the Commerce Clause “reflect a cen-
tral concern of the Framers that was an immediate reason for
calling the Constitutional Convention: the conviction that in
order to succeed, the new Union would have to avoid the
tendencies toward economic Balkanization that had plagued
relations among the Colonies and later among the States un-
der the Articles of Confederation.” Jefferson Lines, 514 U.S.
at 180 (citations and internal quotation marks omitted). See,
e.g., Oregon Waste Sys., Inc. v. Dep't of Envtl. Quality, 511
U.S. 93, 98 (1994).

Thus, as ATA emphasizes in its own pending petition for
certiorari in No. 05-1177, American Trucking Associations,
Inc. v. State of Oregon, whether or not “the facts of this par-
ticular case, viewed in isolation, * * * appear to pose any
threat to the health of the national economy,” the aggregate
effect of statutes like these cannot be gainsaid:

{H]istory, including the history of commercial conflict
that preceded the constitutional convention as well as
the uniform course of Commerce Clause jurisprudence
animated and enlightened by that early history, provides
the context in which each individual controversy must
be judged. The history of [the Court’s] Commerce
Clause jurisprudence has shown that even the smallest
scale discrimination can interfere with the project of our
federal Union. As Justice Cardozo recognized, to coun-
tenance discrimination of the sort that [Colorado’s] stat-
ute represents would invite significant inroads on our
“national solidarity.”

Camps Newfound/Owatonna, 520 U.S. at 595 (quoting
Baldwin, 294 U.S. at 523). In light of this important princi-
ple, the Court has acknowledged its “‘duty to determine
whether the statute under attack, whatever its name may be,
will in its practical operation work discrimination against in-

15

terstate commerce.’” West Lynn Creamery, 512 U.S. at 201
(quoting Best & Co., 311 U.S. at 455-456). Because the
Colorado tax is structured to work such a practical discrimi-
nation, because discriminatory state taxes of this sort regu-
larly pop up to bedevil taxpayers across the country, and
because the proper treatment of such taxes continues to con-
fuse state courts, this Court should grant review.

CONCLUSION
The petition for a wnt of certiorari should be granted.

Respectfully submitted.

ROBERT DIGGES, JR. CHARLES A. ROTHFELD
ATA Litigation Center Counsel of Record
2200 Mill Road EVAN M. TAGER
Alexandria, VA 22314 Mayer, Brown, Rowe
(703) 838-1865 & Maw LLP

1909 K Street, NW

ROBIN S. CONRAD Washington, DC 20006

AMAR D. SARWAL (202) 263-3000

National Chamber Litigation
Center, Inc.

1615 H Street, NW
Washington, DC 20062
(202) 463-5337

Counsel for Amici Curiae

JUNE 2006

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386008_0652%3A4. Public record. Not legal advice.