520US2 564 Unit U54 09 10 99 19 36 34 PAGES PGT OPIN OCTOBER TERM 1996 Syllabus CAMPS NEWFOUND OWATONNA INC v TOWN OF HARRISON et al certiorari to the supreme judicial court of maine No 94 1988 Argued October 9 1996 Decided May 19 1997 Petitioner a Maine nonprofit corporation operates a church camp for children most of whom are not Maine residents Petitioner is financed through camper tuition and other revenues From 1989 to 1991 it paid over 20 000 per year in real estate and personal property taxes A state statute provides a general exemption from those taxes for charitable institutions incorporated in Maine With respect to institutions operated principally for the benefit of Maine nonresidents however a charity may only qualify for a more limited tax benefit and then only if its weekly charge for services does not exceed 30 per person Petitioner was ineligible for any exemption because its campers were largely nonresidents and its weekly tuition was roughly 400 per camper After respondent town of Harrison Town rejected its request for a refund of taxes already paid and a continuing exemption from future taxes which was based principally on a claim that the tax exemption statute violated the Commerce Clause petitioner filed suit and was awarded summary judgment by the Superior Court The Maine Supreme Judicial Court reversed holding that petitioner had not met its burden of persuasion that the statute is unconstitutional Held An otherwise generally applicable state property tax violates the Commerce Clause if its exemption for property owned by charitable institutions excludes organizations operated principally for the benefit of nonresidents Pp 571 595 a Because the Government lacked power to regulate interstate commerce during the Nation s first years the States freely adopted measures fostering local interests without regard to possible prejudice to nonresidents resulting in a conflict of commercial regulations destructive to the harmony of the States Gibbons v Ogden 9 Wheat 1 224 Johnson J concurring in judgment Arguably this was the cause of the Constitutional Convention Ibid The Commerce Clause not only granted Congress express authority to override restrictive and conflicting state commercial regulations but also effected a curtailment of state power even absent congressional legislation Pp 571 572 b The Court is unpersuaded by the Town s arguments that the dormant Commerce Clause is inapplicable here either because campers are 520US2 Unit U54 09 10 99 19 36 34 PAGES PGT OPIN Cite as 520 U S 564 1997 565 Syllabus not articles of commerce or more generally because interstate commerce is not implicated The camp is unquestionably engaged in commerce not only as a purchaser see e g Katzenbach v McClung 379 U S 294 300 301 but also as a provider of goods and services akin to a hotel see e g Heart of Atlanta Motel Inc v United States 379 U S 241 244 258 Although the latter case involved Congress affirmative powers its reasoning is applicable in the dormant Commerce Clause context See e g Hughes v Oklahoma 441 U S 322 326 n 2 The Town s further argument that the dormant Clause is inapplicable because a real estate tax is at issue is also rejected Even assuming as the Town argues that Congress could not impose a national real estate tax States are not free to levy such taxes in a manner that discriminates against interstate commerce Pennsylvania v West Virginia 262 U S 553 596 Pp 572 575 c There is no question that if this statute targeted profit making entities it would violate the dormant Commerce Clause The statute discriminates on its face against interstate commerce It expressly distinguishes between entities that serve a principally interstate clientele and those that primarily serve an intrastate market singling out camps that serve mostly in staters for beneficial tax treatment and penalizing those camps that do a principally interstate business Such laws are virtually per se invalid E g Fulton Corp v Faulkner 516 U S 325 331 Because the Town did not attempt to defend the statute by demonstrating that it advances a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives e g Oregon Waste Systems Inc v Department of Environmental Quality of Ore 511 U S 93 101 the Court does not address this question See Fulton Corp 516 U S at 333 334 Pp 575 583 d The rule applicable to profit making enterprises also applies to a discriminatory tax exemption for charitable and benevolent institutions The dormant Commerce Clause s applicability to the nonprofit sector follows from this Court s decisions holding not for profit institutions subject to laws regulating commerce e g Associated Press v NLRB 301 U S 103 129 and to the federal antitrust laws e g National Collegiate Athletic Assn v Board of Regents of Univ of Okla 468 U S 85 100 n 22 The Court has already held that the dormant Clause applies to activities not intended to earn a profit Edwards v California 314 U S 160 172 n 1 and there is no reason why an enterprise s nonprofit character should exclude it from the coverage of either the affirmative or the negative aspect of the Clause see e g Hughes v Oklahoma 441 U S at 326 n 2 Whether operated on a for profit or 520US2 Unit U54 09 10 99 19 36 34 PAGES PGT OPIN 566 CAMPS NEWFOUND OWATONNA INC v TOWN OF HARRISON Syllabus nonprofit basis camps such as petitioner s purchase goods and services in competitive markets offer their facilities to a variety of patrons and derive revenues from a variety of local and out of state sources Any categorical distinction on the basis of profit is therefore wholly illusory Pp 583 588 e The Town s arguments that the exemption statute should be viewed as either a legitimate discriminatory subsidy of those charities that focus on local concerns see e g West Lynn Creamery Inc v Healy 512 U S 186 199 or alternatively as a governmental purchase of charitable services falling within the narrow exception to the dormant Commerce Clause for States in their role as market participants see e g Hughes v Alexandria Scrap Corp 426 U S 794 Reeves Inc v Stake 447 U S 429 are unpersuasive Although tax exemptions and subsidies serve similar ends they differ in important and relevant respects that preclude approval of the statute at issue See e g West Lynn 512 U S at 269 278 Scalia J concurring in judgment As for the market participant argument the Court has already rejected the Town s position in New Energy Co of Ind v
View Full Document
Unlocking...