Supreme Court Rules Against Oregon In Out-Of-State Waste Fee Case

Washington, D.C. - In a case with widespread ramifications, the U.S. Supreme Court has struck down Oregon's policy of charging higher tipping fees for out-of-state garbage.

In Oregon Waste Systems v. Department of Environmental Quality of the State of Oregon and the related case Columbia Resource Co. v. Department of Environmental Quality of the State of Oregon, the court held that Oregon's $2.50-per-ton surcharge for the disposal of out-of-state waste, as opposed its instate fee of 85 cents-per-ton, constituted a violation of the Commerce Clause.

Attorneys for the state claimed that the charge was a valid "compensatory tax" necessary to make shippers of out-of-state waste pay their fair share of the costs imposed on Oregon by the disposal of their waste in the state.

In a 7-2 decision, the court rejected the state's argument, finding that, even if the fee were a legitimate payment for waste disposal, it nevertheless made a geographical distinction, and thus discriminated against interstate commerce. The court held that because the government interest was related to economic protectionism and gave domestic waste handlers a cost advantage over out-of-state competitors, it was in violation of the Commerce Clause.

Since the surcharge was discriminatory on its face, the court said it was necessarily invalid unless the state could show that it advanced a legitimate local purpose that could not be adequately served by reasonable nondiscriminatory alternatives.

The state argued that the citizens of Oregon should only be responsible for disposal of their own wastes, not that of other states, but the court held that the revenue from income taxes and general revenue taxes could not be divided into certain areas, such as waste disposal. Thus, it said, a general tax and the surcharge are not imposed on "substantially equivalent events."