Polar Tankers, Inc. v. City of Valdez

PETITIONER:Polar Tankers, Inc.
RESPONDENT:City of Valdez, Alaska
LOCATION:Port of Valdez

DOCKET NO.: 08-310
DECIDED BY: Roberts Court (2006-2009)
LOWER COURT: Alaska Supreme Court

CITATION: 557 US (2009)
GRANTED: Dec 12, 2008
ARGUED: Apr 01, 2009
DECIDED: Jun 15, 2009

Charles A. Rothfeld – argued the cause for the petitioner
Theodore B. Olson – argued the cause for the respondent

Facts of the case

In 1999, the city of Valdez, Alaska imposed a property tax on large vessels that used its port. Vessels subject to taxation elsewhere were held to an apportionment formula based on the number of days spent there. In response, Polar Tankers Inc. filed suit in an Alaska trial court arguing that the apportionment provision was unconstitutional. The trial court in part agreed, ruling that the apportionment method violated the Due Process and Commerce Clauses, but did not violate the Tonnage Clause of the Constitution.

On appeal, the Supreme Court of Alaska reversed in part. The court held that the tax apportionment formula used by the city of Alaska was fair and non-duplicative. Therefore, it did not violate the Due Process, Commerce, or Tonnage Clauses in the Constitution.


1) Does a municipal property tax that falls exclusively on large vessels and uses an apportionment method for out of state vessels violate the Due Process Clause of the Constitution?

2) Does it violate the Commerce Clause of the Constitution?

3) Does it violate the Tonnage Clause of the Constitution?

Media for Polar Tankers, Inc. v. City of Valdez

Audio Transcription for Oral Argument – April 01, 2009 in Polar Tankers, Inc. v. City of Valdez

Audio Transcription for Opinion Announcement – June 15, 2009 in Polar Tankers, Inc. v. City of Valdez

John G. Roberts, Jr.:

Justice Breyer has the opinion of the Court today in two cases.

Stephen G. Breyer:

The first case is called Polar Tankers versus City of Valdez, Alaska, and that city enacted an ordinance that imposed the personal property tax on the value of large ships that go back and forth to the city.

Polar Tankers owns tanks — oh that’s logical, it owns tankers that transport crude oil from the Alaska Pipeline terminus that ends at Valdez to refineries in other States.

Polar filed this lawsuit in the state court and it said that what that tax is doing is it’s imposing a fee on our ships for the privilege of entering the port.

And for that reason, it violates, say, clause of the Constitution that not too many people had heard of which is Article I, Section 10, Clause 3, which forbids a State without the Consent of Congress to lay any Duty of Tonnage.

We agree with Polar Tankers.

It does violate this tax.

It does violate the Tonnage Clause.

Over the course of many years, the Court has consistently interpreted the language I just read to you in light of its basic purpose and that is it seeks to limit the coastal State’s ability to obtain tax advantages based on their favorable geographic position.

Say by charging a very high landing fee to ships and it seeks to prevent States from indirectly imposing otherwise forbidden taxes on imports and exports say by taxing the ship and not taxing the cargo.

So interpreting the Clause in light of this purpose, this Court, many years ago, unanimously concluded “a prohibition against tonnage duties has been deemed to embrace all taxes and duties regardless of their name or form and even though not measured by the tonnage of the vessel which operate to impose a charge for the privilege of entering trading in or lying in a port.

In our view, the tax challenge here is a charge for the privilege of entering, trading in or lying in a port.

The tax applies exclusively or almost exclusively to oil tankers.

And oil tankers can be subject to the tax just based on coming once into the port.

And the tax on the value of such vessels is closely correlated with its cargo capacity because the imposition of the tax depends on a fact that related the tonnage and the tonnage based tax is not for services provided to the vessel.

It’s unconstitutional.

Now, the city defends its tax in a part of the opinion that only has four votes on it and we talked about that.

It appoints to language from earlier decisions that says taxes levied upon ships, as property, based on the valuation of the same as property are not within the Tonnage Clause prohibition, but — and they say that’s what we have.

This Court later made clear that this exception comes into play only where their taxes property in the same manner as other personal property in the state.

And we think that means, in order to fund services by taxing ships, the ship must also impose similar taxes upon other businesses likely with the connection to the State, which will be a kind of check on a tax that say it’s designed to soak the ship.

Here we can find few perhaps no other businesses on which the city imposes this tax.

The State does impose a somewhat similar tax on other oil-related businesses, but in the opinion, we explained why that fact doesn’t really matter and doesn’t save the tax.

It’s really basically because it doesn’t stop the State by putting it more colorfully than the opinion from soaking the ship.

For these reasons and those set forth more fully in our opinion, we hold that Tonnage Clause applies, the tax is invalid, we reversed the judgment of the Alaska Supreme Court to the contrary.

The Chief Justice has filed an opinion concurring in part and concurring in the judgment which Justice Thomas has joined.

Justice Alito has filed an opinion concurring in part and concurring in the judgment.

Justice Stevens has filed a dissenting opinion which Justice Souter has joined.

That’s the first case and you now know more about the Tonnage Clause than many.