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Polar Tankers, Inc. v. City of Valdez, Alaska, 557 U.S. 1, 129 S.Ct. 2277, 174 L.Ed.2d 1, 2009 A.M.C. 1555, 77 USLW 4481, 09 Cal. Daily Op. Serv. 7339, 2009 Daily Journal D.A.R. 8543, 21 Fla. L. Weekly Fed. S 921

Facts

In 1999, the city of Valdez adopted an ordinance imposing a personal property tax on vessels over 95 feet in length that regularly traveled to the city and engaged in significant business transactions. Polar Tankers, Inc., which operates oil tankers transporting crude oil from Valdez to refineries, challenged the ordinance in state court, arguing that it constituted an unconstitutional duty of tonnage. The Alaska Superior Court initially accepted the Commerce Clause and Due Process Clause claims but rejected the Tonnage Clause claim. The Alaska Supreme Court upheld the tax, leading to the appeal to the U.S. Supreme Court.

In 1999, the city of Valdez adopted an ordinance imposing a personal property tax on vessels over 95 feet in length that regularly traveled to the city and engaged in significant business transactions.

Issue

Did the city's personal property tax on large vessels violate the Tonnage Clause of the Constitution?

Did the city's personal property tax on large vessels violate the Tonnage Clause of the Constitution?

Rule

The Tonnage Clause prohibits states from imposing duties on vessels without the consent of Congress, and this prohibition extends to any tax that functions as a charge for the privilege of entering, trading in, or lying in a port.

The Tonnage Clause prohibits states from imposing duties on vessels without the consent of Congress, and this prohibition extends to any tax that functions as a charge for the privilege of entering, trading in, or lying in a port.

Analysis

The Supreme Court analyzed the Valdez ordinance and determined that it effectively imposed a charge for the privilege of entering the port, as it applied almost exclusively to oil tankers and was closely correlated with cargo capacity. The Court emphasized that the tax was not applied uniformly to other forms of personal property, which further supported its classification as a duty of tonnage. The Court concluded that the tax's revenue-raising purpose did not exempt it from the Tonnage Clause's prohibition.

The Supreme Court analyzed the Valdez ordinance and determined that it effectively imposed a charge for the privilege of entering the port, as it applied almost exclusively to oil tankers and was closely correlated with cargo capacity.

Conclusion

The Supreme Court reversed the Alaska Supreme Court's decision, holding that the Valdez tax violated the Tonnage Clause and remanded the case for further proceedings.

The Supreme Court reversed the Alaska Supreme Court's decision, holding that the Valdez tax violated the Tonnage Clause and remanded the case for further proceedings.

Who won?

Polar Tankers, Inc. prevailed in the case because the Supreme Court found that the city's tax constituted an unconstitutional duty of tonnage, violating the Tonnage Clause.

Polar Tankers, Inc. prevailed in the case because the Supreme Court found that the city's tax constituted an unconstitutional duty of tonnage, violating the Tonnage Clause.

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