interstate commerce

Alabama Department of Revenue v. CSX Transportation, Inc.

Issues

Does a state discriminate against railroads when competing forms of commercial transportation are exempt from a diesel fuel tax that remains applicable to rail-based carriers?

This case presents the Supreme Court with an opportunity to resolve whether federal legislation to promote interstate commerce would override a state’s right to determine how to tax competing industries. The Alabama Department of Revenue (“ADR”) argues that state taxation is entitled to deference from the courts, so long as a state provides a justification for why its taxing plan for one industry differs from that of a competing industry. CSX Transportation, on the other hand, argues that the ADR’s differentiated tax plan is discriminatory when applied to its direct competitors, and that the tax plan therefore inhibits interstate commerce. This case will ultimately decide the extent of state discretion in designing state tax codes pertaining to different industries. 

Questions as Framed for the Court by the Parties

Whether a State “discriminates against a rail carrier” in violation of 49 U.S.C. §11501(b)(4) when the State generally requires commercial and industrial businesses, including rail carriers, to pay a sales-and-use tax but grants exemptions from the tax to the railroads' competitors.

IN ADDITION TO THE QUESTION PRESENTED BY THE PETITION, THE PARTIES ARE DIRECTED TO BRIEF AND ARGUE THE FOLLOWING QUESTION: “Whether, in resolving a claim of unlawful tax discrimination under 49 U.S.C. §11501(b)(4), a court should consider other aspects of the State’s tax scheme rather than focusing solely on the challenged tax provision.”

In 1976, Congress enacted the Railroad Revitalization and Regulatory Reform Act, known as the 4-R Act. Railroad Revitalization and Regulatory Reform Act, 49 U.S.C. § 11501. This act makes it illegal for a state to “impose a tax that discriminates against a rail carrier.” Id.

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Commerce Clause

The Commerce Clause refers to Article 1, Section 8, Clause 3 of the U.S. Constitution, which gives Congress the power “to regulate commerce with foreign nations, among states, and with the Indian tribes.”

DaimlerChrysler Corp. v. Cuno; Wilkins v. Cuno

Issues

Does either the investment tax credit or the property tax exemption at issue violate the Commerce Clause of the United States Constitution or the Equal Protection Clauses of the United States or Ohio State Constitutions by discriminating in favor of businesses locating new investments in Ohio and against incumbent businesses or those locating elsewhere?

Do the Respondents here (and plaintiffs below) have standing as the state and municipal taxpayers to challenge the tax incentive programs at issue?

 

The Ohio State investment tax credit (Ohio Revised Code ? 5733.33) encourages development in economically depressed areas by providing tax breaks to companies or individuals that choose to locate in such areas and to install new manufacturing machinery and equipment. The personal property tax incentive, under Ohio Rev. Code Ann. ?? 5709.62 and 5709.631, permits municipalities to grant property tax exemptions to corporations that develop in economically depressed areas and meet certain employment and investment levels. Together, these two statutes create incentives for corporate development in Ohio in otherwise unfavorable locations. Respondents, state and non-state taxpayers and one Ohio business forced to relocate upon the construction of a DaimlerChrysler plant, argue that this tax-incentive scheme is unconstitutional under the dormant Commerce Clause, which prohibits state taxes from discriminating against interstate commerce. Petitioners assert that (1) the Respondents lack standing to bring the suit, and (2) the dormant Commerce Clause prevents only state taxes which discourage companies from doing businesses in other states and not incentives that encourage companies to locate within the state.

Questions as Framed for the Court by the Parties

DaimlerChrysler Corp. v. Cuno (04-1704):

Whether Ohio's investment tax credit, Ohio Revised Code ? 5733.33, which seeks to encourage economic development by providing a credit to taxpayers who install new manufacturing machinery and equipment in the State, violates the Commerce Clause of the United States Constitution.

Whether Respondents have standing to challenge Ohio's investment tax credit, Ohio Rev. Code Ann. ? 5733.33.

Wilkins v. Cuno (04-1724):

Does the dormant Commerce Clause allow a State to attempt to attract new business investment in the State by offering credits against the State's general corporate franchise or income tax, where the amount of the credit is based on the amount of a business's new investment in the State?

Whether Respondents have standing to challenge Ohio's investment tax credit, Ohio Rev. Code Ann. ? 5733.33.

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Factual Background

DaimlerChrysler contracted with the City of Toledo, Ohio in 1998, to construct a new vehicle-assembly plant in exchange for tax incentives. See Cuno v. DaimlerChrysler, Inc., 386 F.3d 738, 741. DaimlerChrysler forecasted its total investment in the project to be about $1.2 billion, which would result in tax incentives totaling an estimated $280 mil

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Kawasaki Kisen Kaisha v. Regal-Beloit Corp., Union Pacific Railroad Co., v. Regal-Beloit Corp.

Issues

Whether the Carmack Amendment applies to the inland portion of an intermodal shipping agreement when the parties agreed to a bill of lading that specified the Carriage of Goods by Sea Act to control.

 

Respondent, Regal-Beloit, (“Regal”) a manufacturer of electric motors, brought suit against Petitioners, Kawasaki Kisen Kaisha (“K-line”), and Union Pacific Railroad (“UPRR”), the shippers of the motors. Regal alleges that goods were damaged while they were traveling on a UPRR train that derailed in Oklahoma. K-line and UPRR sought and were granted dismissal at the trial level, pursuant to a forum selection clause in the bill of lading between the parties. Regal claims that the bill of lading clause should not apply because the Carmack Amendment governs this transaction, while Petitioners claim that it does not and urge that their contract be upheld. The Ninth Circuit held that the Carmack Amendment applied and reversed the lower court. This case highlights a conflict between the forum selection clause in the bill of lading and the Carmack Amendment, which preempts state and common law claims and provides that it be the exclusive remedy for interstate shipping, and also narrowly restricts the venues in which disputes may be heard. The court must decide whether the Carmack Amendment will apply in this case, where the shipping involved not only domestic rail travel from California to Midwest destinations, but also included an international carriage by sea from China to California. The Court’s decision in this case will impact manufacturers and shippers across all industries. Petitioners additionally charge that a decision for Regal may upset the settled expectations of the international shipping industry, while Regal contends that a decision for Petitioners denying the Carmack Amendment’s applicability could potentially lead to litigation chaos.

Questions as Framed for the Court by the Parties

(1) Whether the Carmack Amendment to the Interstate Commerce Act of 1887, which governs certain rail and motor transportation by common carriers within the United States, 49 U.S.C. §§ 11706 (rail carriers) & 14706 (motor carriers), applies to the inland rail leg of an intermodal shipment from overseas where the shipment was made under a "through" bill of lading issued by an ocean carrier that extended the Carriage of Goods by Sea Act, 46 U.S.C. § 30701 Note, to the inland leg, there was no domestic bill of lading for rail transportation, and the ocean carrier privately subcontracted for rail transportation.

Regal-Beloit (“Regal”), an electric motor company, contracted with Kawasaki Kisen Kaisha (“K-Line”), a shipping company, to have K-Line ship Regal’s goods from Shanghai, China, to several cities in the American Midwest. See Regal-Beloit Corp. v. Kawasaki Kisen Kaisha Ltd., 557 F. 3d 985, 987 (9th Cir. 2009).

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Kurns v. Railroad Friction Products Corp.

 

From 1947 to 1974, George Corson worked as a machinist in several locomotive repair and maintenance facilities. He subsequently died of malignant mesothelioma, caused by exposure to asbestos during his employment. Corson’s widow and executrix brought state-law tort claims against Respondents Railroad Friction Products Corporation and Viad Corporation, entities responsible for the manufacture and distribution of asbestos-containing locomotive parts. The district court dismissed Corson’s case—asserting that the Locomotive Inspection Act (“LIA”) preempted the state-law claims—and the United States Court of Appeals for the Third Circuit affirmed this determination. Corson’s representatives argue that their state claims are not preempted because the LIA only regulates those locomotives that are in actual use. The Respondents, however, contend that the state-law claims are precluded because the LIA was intended to regulate the entire field of design and construction of locomotives. The Supreme Court’s decision will determine the preemptive scope of the LIA, and will establish the appropriate boundaries between states’ traditional regulatory power over railroad safety and Congress’s power to establish national uniformity in railroad-safety standards.

Questions as Framed for the Court by the Parties

Did Congress intend the Federal Railroad Safety Acts to preempt state law-based tort lawsuits?

George Corson worked as a machinist, maintaining and repairing locomotives for the Chicago, Milwaukee, St. Paul and Pacific Railroad, from 1947 to 1974. See Kurns v. A.W. Chesterton, Inc., 620 F.3d 392, 393 (3rd Cir.

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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.

Court below

 

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.

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