Polar Tankers v. City of Valdez

The Supreme Court has agreed to decide whether a municipal tax that falls exclusively on large vessels in an Alaska city’s harbor violates the Tonnage Clause, Commerce Clause or Due Process Clause of the U.S. Constitution.

In 2000, the City of Valdez, Alaska, adopted a personal property tax on vessels 95 feet or longer that docked at the city’s port. Several tanker owners filed a suit to challenge the validity of the tax. In 2004, the Alaska Superior Court held that the tax violated the Tonnage Clause of the U.S. Constitution without addressing the Due Process and Commerce Clauses. In 2005, after the city’s motion, the court reconsidered and vacated its 2004 decision and ruled, without addressing the Tonnage Clause issue, that the tax’s apportionment method violated the Due Process and Commerce Clauses of the U.S. Constitution. In 2006, the court issued its final judgment, which held that the tax did not violate the Tonnage Clause but that its apportionment formula, as applied to Polar Tankers and SeaRiver, violated the Due Process and Commerce Clauses.

In their appeals to the Alaska Supreme Court, the city challenged the Due Process and Commerce Clause rulings and Polar Tankers challenged the Tonnage Clause ruling. SeaRiver dropped its appeal following the superior court’s final judgment.

In April 2008, the state Supreme Court held that the property tax did not violate the Due Process, Commerce or Tonnage Clauses.

On Dec. 12, 2008, the Supreme Court accepted the case for review.

Question presented: Whether a municipal tax that falls exclusively on large vessels in the city’s harbor violates the Tonnage Clause, Commerce Clause, or Due Process Clause.

The Supreme Court ruled today that a municipal tax that falls exclusively on large vessels in an Alaska city’s harbor violates the Tonnage Clause, Commerce Clause or Due Process Clause of the U.S. Constitution.

In 2000, the City of Valdez, Alaska, adopted a personal property tax on vessels 95 feet or longer that docked at the city’s port. Several tanker owners filed a suit to challenge the validity of the tax. In 2004, the Alaska Superior Court held that the tax violated the Tonnage Clause of the U.S. Constitution without addressing the Due Process and Commerce Clauses. In 2005, after the city’s motion, the court reconsidered and vacated its 2004 decision and ruled, without addressing the Tonnage Clause issue, that the tax’s apportionment method violated the Due Process and Commerce Clauses of the U.S. Constitution. In 2006, the court issued its final judgment, which held that the tax did not violate the Tonnage Clause but that its apportionment formula, as applied to Polar Tankers and SeaRiver, violated the Due Process and Commerce Clauses.

In their appeals to the Alaska Supreme Court, the city challenged the Due Process and Commerce Clause rulings and Polar Tankers challenged the Tonnage Clause ruling. SeaRiver dropped its appeal following the superior court’s final judgment.

In April 2008, the state Supreme Court held that the property tax did not violate the Due Process, Commerce or Tonnage Clauses.

On June 15, 2009, the Supreme Court reversed and remanded the lower court decision in a 7-2 opinion by Justice Stephen G. Breyer.

Justices Antonin Scalia, Anthony Kennedy, Ruth Bader Ginsbug and Samuel A. Alito joined the majority opinion with respect to Parts I, II–A, and II–B–1; and Scalia, Kennedy and Ginsburg joined joined with respect to Part II–B–2. Chief Justice John G. Roberts Jr. filed an opinion concurring in part and concurring in the judgment, in which Justice Clarence Thomas joined. Alito filed an opinion concurring in part and concurring in the judgment.

Meanwhile, Justice John Paul Stevens filed a dissenting opinion, in which Justice David H. Souter joined.

Question presented: Whether a municipal tax that falls exclusively on large vessels in the city’s harbor violates the Tonnage Clause, Commerce Clause, or Due Process Clause.