Polar Tankers, Inc. v. Valdez, Alaska
Issues
Whether a city's property tax only on large vessels using the city's ports violates the Tonnage Clause of the Constitution, and whether a state's inclusion of certain out-of-state activities in its calculations of percentage value violates the Commerce and Due Process Clauses of the Constitution.
In 1999, the city of Valdez imposed a tax on vessels using its harbors. This case concerns the constitutionality of that tax and the apportionment methodology used to assess the tax. Petitioner Polar Tankers claims that the tax is a tonnage duty prohibited by the Constitution's Tonnage Clause. Polar Tankers argues that the apportionment methodology utilized by Respondent Valdez distorts a vessel's value, and that the effect of the distortion is to allow Valdez to make revenue that is grossly disproportionate to the amount of time a vessel actually spends using Valdez' ports. Furthermore, Polar Tankers argues that Valdez' apportionment scheme creates a risk of double taxation for vessels. Valdez, however, claims that the tax is nothing more than an ad valorem property tax. Valdez argues that the Tonnage Clause does not apply to ad valoremtaxes, and that its apportionment scheme is based on a vessel's productive activity in Valdez. Lastly, in response to the charge of creating a risk of double taxation for vessels, Valdez states that domicile states do not have exclusive authority to tax vessels for time spent on the high seas. Thus, the outcome of this case will affect taxation as it relates to interstate commerce.
Questions as Framed for the Court by the Parties
1. Whether a municipal personal property tax that falls exclusively on large vessels using the municipality's harbor violates the Tonnage Clause of the Constitution, art. I, § 10, cl. 3.
2. Whether a municipal personal property tax that is apportioned to reach the value of property with an out-of-State domicile for periods when the property is on the high seas or otherwise outside the taxing jurisdiction of any State violates the Commerce and Due Process Clauses of the Constitution.
Situated on the terminus of the Trans Alaska Pipeline System, Respondent the City of Valdez ("Valdez") serves as a crucial link in the transportation of crude oil from Alaskan oil fields to refineries. See City of Valdez v.