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Law School Case Brief

Camps Newfound/Owatonna v. Town of Harrison - 520 U.S. 564, 117 S. Ct. 1590 (1997)

Rule:

State laws discriminating against interstate commerce on their face are virtually per se invalid. It is not necessary to look beyond the text of Me. Rev. Stat. Ann. tit. 36, § 652(1)(A) (Supp. 1996) to determine that it discriminates against interstate commerce. The Maine law 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. As a practical matter, the statute encourages affected entities to limit their out-of-state clientele, and penalizes the principally nonresident customers of businesses catering to a primarily interstate market. If such a policy were implemented by a statutory prohibition against providing camp services to nonresidents, the statute would almost certainly be invalid. 

Facts:

Petitioner, a nonprofit corporation, sought certiorari to review a judgment from the Supreme Judicial Court of Maine, which reversed a trial court's judgment in its favor on its suit against respondents, a town and others, to enjoin the collection of taxes on its camp for nonresident students, and which held that Me. Rev. Stat. Ann. tit. 36, § 652(1)(A) (Supp. 1996 did not violate the Commerce Clause by excluding it from the charitable exemption. A Maine statute provided a general exemption from real estate and personal property taxes for benevolent and charitable institutions incorporated in the state. However, with respect to institutions that were conducted or operated principally for the benefit of persons who were not residents of Maine, a charity could qualify for only a more limited tax benefit, and then only if the weekly charge for services provided did not exceed $30 per person. A Maine nonprofit corporation operated a summer camp for the benefit of children of a particular religious group. Because about 95 percent of the campers were not residents of Maine, the corporation could not qualify for the full tax exemption, and because the weekly tuition for the campers was approximately $400 per person, the corporation was not eligible for any tax exemption at all. 

Issue:

Did the state property tax violate the Commerce Clause when its exemption for property owned by charitable institutions excluded organizations operated principally for the benefit of nonresidents?

Answer:

Yes

Conclusion:

On certiorari, the United States Supreme Court reversed the state supreme court, and held as follows: Although the camp's goods and services were consumed locally, interstate commerce was affected because the attendance by the students necessitated transportation across state lines. The corporation's status as a nonprofit entity did not preclude the application of the Commerce Clause. Real estate taxes could not discriminate against interstate commerce any more than any other type of tax. Because the statute expressly distinguished between entities that served principally instate clientele and those that served principally out of state clientele, the statute was facially invalid under the Commerce Clause.

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