Commonwealth Edison Co. v. Montana

Justice Blackmun,

with whom Justice Powell and Justice Stevens join, dissenting.

In Complete Auto Transit, Inc. v. Brady, 430 U. S. 274 (1977), a unanimous Court observed: “A tailored tax, however accomplished, must receive the careful scrutiny of the courts to determine whether it produces a forbidden effect on interstate commerce.” Id., at 288-289, n. 15. In this case, appellants have alleged that Montana’s severance tax on coal is tailored to single out interstate commerce, and that it produces a forbidden effect on that commerce because the tax bears no “relationship to the services provided by the State.” Ibid. The Court today concludes that appellants are not entitled to a trial on this claim. Because I believe that the “careful scrutiny” due a tailored tax makes a trial here necessary, I respectfully dissent.

I

The State of Montana has approximately 25% of all known United States coal reserves, and more than 50% of the Nation’s low-sulfur coal reserves.1 Department of Energy, Demonstrated Reserve Base of Coal in the United States on January 1, 1979, p. 8 (1981); National Coal Assn., Coal Data 1978, p. 1-6 (1980). Approximately 70-75% of Montana’s *639coal lies under land owned by the Federal Government in the State. See Hearings on H. It. 6625, H. R. 6654, and H. R. 7163 before the Subcommittee on Energy and Power of the House Committee on Interstate and Foreign Commerce, 96th Cong., 2d Sess., 22 (1980) (Hearings) (statement of Rep. Vento). The great bulk of the coal mined in Montana — indeed, allegedly as much as 90%, see ante, at 617-618 — is exported to other States pursuant to long-term purchase contracts with out-of-state utilities. See H. R. Rep. No. 96-1527, pt. 1, pp. 3-4 (1980). Those contracts typically provide that the costs of state taxation shall be passed on to the utilities; in turn, fuel adjustment clauses allow the utilities to pass the cost of taxation along to their consumers. Ibid. Because federal environmental legislation has increased the demand for low-sulfur coal, id., at 3, and because the Montana coal fields occupy a “pivotal” geographic position in the midwestern and northwestern energy markets, see J. Krutilla & A. Fisher with R. Rice, Economic and Fiscal Impacts of Coal Development: Northern Great Plains xvi (1978) (Krutilla), Montana has supplied an increasing percentage of the Nation’s coal.2

In 1975, following the Arab oil embargo and the first federal coal conversion legislation, the Montana Legislature,. by 1975 Mont. Laws, ch. 525, increased the State’s severance tax on coal from a flat rate of approximately 34 cents per ton to a maximum rate of 30% of the “contract sales price.” Mont. Code Ann. § 15-35-103 (1979).3 See H. R. Rep. No. 96-1527, pt. 1, p. 3 (1980). The legislative history of this tax is illuminating. The Joint Conference Committees of the Mon*640tana Legislature that recommended this amendment acknowledged : “It is true that this is a higher rate of taxation than that levied by any other American state on the coal industry/’ 4 Statement to Accompany the Report “of the Free Joint Conference Committees on Coal Taxation 1 (1975). The Committees pointed out, however, that the Province of Alberta, Canada, recently had raised sharply its royalty on natural gas, thereby forcing consumers of Alberta gas in Montana and elsewhere to finance involuntarily Alberta’s “universities, hospitals, reduction of other taxes, etc.” Ibid. Stating that “we should . . . look north to Alberta,” the Conference Committees observed: “While coal is not as scarce as natural gas, most of the Montana coal now produced is committed for sale under long-term contracts and will be purchased with this tax added to its price.” Ibid. The Committees noted that although some new coal contracts might shift to Wyoming to take advantage of that State’s lower severance tax, Montana’s severance tax was comparable to that recently enacted by North Dakota.5 Thus, the Com*641mittees had no doubt that the coal industry would grow even with this tax, since “the combined coal reserves of Montana and North Dakota are simply too great a part of the nation’s fossil fuel resources to be ignored because of taxes at these levels.”6 Ibid.

As the Montana Legislature foresaw, the imposition of this severance tax has generated enormous revenues for the State. Montana collected $33.6 million in severance taxes in fiscal year 1978, H. R. Rep. No. 96-1527, pt. 1, p. 3 (1980), and appellants alleged that it would collect not less than $40 million in fiscal year 1979. App. to Juris. Statement 55a. It has been suggested that by the year 2010, Montana will have collected more than $20 billion through the implementation of this tax. Hearings 22 (statement of Rep. Vento).

*642No less remarkable is the increasing percentage of total revenue represented by the severance tax. In 1972, the then-current flat rate severance tax on coal provided only 0.4% of Montana’s total tax revenue; in contrast, in the year following the 1975 amendment, the coal severance tax supplied 11.4% of the State’s total tax revenue. See Griffin & Shelton, Coal Severance Tax Policies in the Rocky Mountain States, 7 Policy Studies J. 29, 33 (1978) (Griffin). Appellants assert that the tax now supplies almost 20% of the State’s total revenue. Tr. of Oral Arg. 31. Indeed, the funds generated by the tax have been so large that, beginning in 1980, at least 50% of the severance tax is to be transferred and dedicated to a permanent trust .fund, the principal of which must “forever remain inviolate” unless appropriated by a vote of three-fourths of the members of each house of the legislature. Mont. Const., Art. IX, § 5. Moreover, in 1979, Montana passed legislation providing property and income tax relief for state residents. 1979 Mont. Laws, ch. 698.

Appellants’ complaint alleged that Montana’s severance tax is ultimately borne by out-of-state consumers, and for the purposes of this appeal that allegation is to be treated as true.7 Appellants further alleged that the tax bears no reasonable relationship to the services or protection provided by the State. The issue here, of course, is whether they are entitled to a trial on that claim, not whether they will succeed on the merits. It should be noted, however, that Montana imposes numerous other taxes upon coal mining.8 In addi*643tion, because 70% to 75%• of the coal-bearing land in Montana is owned by the Federal Government, Montana derives a large amount of coal mining revenue from the United States as well,9 In light of these circumstances, the Interstate and Foreign Commerce Committee of the United States House of Representatives concluded that Montana’s coal severance tax results in revenues “far in excess of the direct and indirect impact costs attributable to the coal production.” H. R. Rep. No. 96-1527, pt. 1, p. 2 (1980). Several commentators have agreed that Montana and other similarly situated Western States have pursued a policy of “OPEC-like revenue maximization,” and that the Montana tax accordingly bears no reasonable relationship to the services and protection afforded by the State. R. Nehring & B. Zycher with J. Wharton, Coal Development and Government Regulation in the Northern Great Plains: A Preliminary Report 148 (1976); Church, at 272. See Krutilla, at 185. These findings, of course, are not dispositive of the issue whether the Montana severance tax is “fairly related” to the services *644provided by the State within the meaning of our prior cases. They do suggest, however, that appellants’ claim is a substantial one. The failure of the Court to acknowledge this stems, it seems to me, from a misreading of our prior cases. It is to those cases that I now turn.

h — t hH

This Court’s Commerce Clause cases have been marked by-tension between two competing concepts: the view that interstate commerce should enjoy a “free trade” immunity from state taxation, see, e. g., Freeman v. Hewit, 329 U. S. 249, 252 (1946), and the view that interstate commerce may be required to “ 'pay its way,’ ” see, e. g., Western Live Stock v. Bureau of Revenue, 303 U. S. 250, 254 (1938). See generally Complete Auto Transit, Inc. v. Brady, 430 U. S., at 278-281, 288-289, n. 15; Simet & Lynn, Interstate Commerce Must Pay Its Way: The Demise of Spector, 31 Nat. Tax J. 53 (1978); Hellerstein, Foreword, State Taxation Under the Commerce Clause: An Historical Perspective, 29 Yand. L. Rev. 335, 335-339 (1976). In Complete Auto Transit, the Court resolved that tension by unanimously reaffirming that interstate commerce is not immune from state taxation. 430 U. S., at 288. But at the same time the Court made clear that not all state taxation of interstate commerce is valid; a state tax will be sustained against Commerce Clause challenge only if “the tax is applied to an activity with a substantial nexus with the taxing State, is fairly apportioned, does not discriminate against interstate commerce, and is fairly related to the services provided by the State.” Id., at 279. See Maryland v. Louisiana, 451 U. S. 725, 754 (1981).

The Court today acknowledges and, indeed, holds that a Commerce Clause challenge to a state severance tax must be evaluated under Complete Auto Transit’s four-part test. Ante, at 617. I fully agree. I cannot agree, however, with the Court’s application of that test to the facts of the present case. Appellants concede, and the Court properly concludes, *645that the first two prongs of the test — substantial nexus and fair apportionment — are satisfied here. The Court also correctly observes that Montana’s severance tax is facially neutral. It does not automatically follow, however, that the Montana severance tax does not unduly burden or interfere with interstate commerce. The gravamen of appellants’ complaint is that the severance tax does not satisfy the fourth prong of the Complete Auto Transit test because it is tailored to, and does, force interstate commerce to pay more than its way. Under our established precedents, appellants are entitled to a trial on this claim.

The Court’s conclusion to the contrary rests on the premise that the relevant inquiry under the fourth prong of the Complete Auto Transit test is simply whether the measure of the tax is fixed as a percentage of the value of the coal taken. Ante, at 626. This interpretation emasculates the fourth prong. No trial will ever be necessary on the issue of fair relationship so long as a State is careful to impose a proportional rather than a flat tax rate; thus, the Court’s rule is no less “mechanical” than the approach entertained in Heisler v. Thomas Colliery Co., 260 U. S. 245 (1922), disapproved today, ante, at 617.10 Under the Court’s reasoning, any ad valorem tax will satisfy the fourth prong; indeed, the Court implicitly ratifies Montana’s contention that it is free to tax this coal at 100% or even 1,000% of value, should it *646choose to do so. Tr. of Oral Arg. 21. Likewise, the Court’s analysis indicates that Montana’s severance tax would not run afoul of the Commerce Clause even if it raised sufficient revenue to allow Montana to eliminate all other taxes upon its citizens.11

The Court’s prior cases neither require nor support such a startling result.12 The Court often has noted that “‘[i]t was not the purpose of the commerce clause to relieve those engaged in interstate commerce from their just share of state tax burden even though it increases the cost of doing the business.’ ” Complete Auto Transit, 430 U. S., at 279 (emphasis added), quoting Western Live Stock, 303 U. S., at 254. See Maryland v. Louisiana, 451 U. S., at 754. Accordingly, *647interstate commerce cannot claim any exemption from a state tax that “is fairly related to the services provided by the State.” Complete Auto Transit, 430 U. S., at 279. We have not interpreted this requirement of “fair relation” in a narrow sense; interstate commerce may be required to share equally with intrastate commerce the cost of providing “police and fire protection, the benefit of a trained work force, and ‘the advantages of a civilized society.’ ” Exxon Corp. v. Wisconsin Dept. of Revenue, 447 U. S. 207, 228 (1980), quoting Japan Line, Ltd. v. County of Los Angeles, 441 U. S. 434, 445 (1979). See, e. g., Nippert v. Richmond, 327 U. S. 416, 433 (1946). Moreover, interstate commerce can be required to “pay its own way” in a narrower sense as well: the State may tax interstate commerce for the purpose of recovering those costs attributable to the activity itself. See, e. g., Postal Telegraph-Cable Co. v. Richmond, 249 U. S. 252 (1919).13

*648The Court has never suggested, however, that interstate commerce may be required to pay more than its own way. The Court today fails to recognize that the Commerce Clause does impose limits upon the State’s power to impose even facially neutral and properly apportioned taxes. See ante, at 622-623. In Michigan-Wisconsin Pipe Line Co. v. Calvert, 347 U. S. 157, 163 (1954), Texas argued that no inquiry into the constitutionality of a facially neutral tax on the “taking” of gas was necessary because the State “has afforded great benefits and protection to pipeline companies.” The Calvert Court rejected this argument, holding that “these benefits are relevant here only to show that the essential requirements of due process have been met sufficiently to justify the imposition of any tax on the interstate activity.” Id., at 163-164. The Court held, id., at 164, that when a tax is challenged on Commerce Clause grounds its validity “ ‘depends upon other considerations of constitutional policy having reference to the substantial effects, actual or potential, of the particular tax in suppressing or burdening unduly the commerce,’ ” quoting Nippert v. Richmond, 327 U. S., at 424. Accordingly, while *649the Commerce Clause does not require that interstate commerce be placed in a privileged position, it does require that it not be unduly burdened. In framing its taxing measures to reach interstate commerce, the State must be “at pains to do so in a manner which avoids the evils forbidden by the commerce clause and puts that commerce actually on a plane of equality with local trade in local taxation.” Nippert, 327 U. S., at 434 (emphasis added).

Thus, the Court has been particularly vigilant to review taxes that “single out interstate business,” since “[a]ny tailored tax of this sort creates an increased danger of error in apportionment, of discrimination against interstate commerce, and of a lack of relationship to the services provided by the State.” Complete Auto Transit, 430 U. S., at 288-289, n. 15.14 Moreover, the Court’s vigilance has not been limited to taxes that discriminate upon their face: “Not the tax in a vacuum of words, but its practical consequences for the doing of interstate commerce in applications to concrete facts are our concern.” Nippert, 327 U. S., at 431. See Maryland v. Louisiana, 451 U. S., at 756. This is particularly true when the challenged tax, while facially neutral, falls so heavily upon interstate commerce that its burden “is not likely to be alleviated by those political restraints which are normally exerted on legislation where it affects adversely interests within the state.” McGoldrick v. Berwind-White Co., 309 U. S. 33, 46, n. 2 (1940). Cf. Raymond Motor Transportation, Inc. v. Rice, 434 U. S. 429, 446-447 (1978). In sum, then, when a tax has been “tailored” to reach interstate com*650merce, the Court’s cases suggest that we require a closer “fit” under the fourth prong of the Complete Auto Transit test than when interstate commerce has not been singled out by the challenged tax.

As a number of commentators have noted, state severance taxes upon minerals are particularly susceptible to “tailoring.” “Like a tollgate lying athwart a trade route, a severance or processing tax conditions access to natural resources.” Developments in the Law: Federal Limitations on State Taxation of Interstate Business, 75 Harv. L. Rev. 953, 970 (1962). Thus, to the extent that the taxing jurisdiction approaches a monopoly position in the mineral, and consumption is largely outside the State, such taxes are “[economically and politically analogous to transportation taxes exploiting geographical position.” Brown, The Open Economy: Justice Frankfurter and the Position of the Judiciary, 67 Yale L. J. 219, 232 (1957) (Brown). See also Hellerstein, Constitutional Constraints on State and Local Taxation of Energy Resources, 31 Nat. Tax J. 245, 249-250 (1978); R. Posner, Economic Analysis of Law 510-514 (2d ed. 1977) (Posner). But just as a port State may require that imports pay their own way even though the tax levied increases the cost of goods purchased by inland customers, see Michelin Tire Corp. v. Wages, 423 U. S. 276, 288 (1976),15 so also may a mineral-rich State require that those who consume its resources pay a fair share of the general costs of government, as well as the specific costs attributable to the commerce itself. Thus, the mere fact that the burden of a severance tax is largely shifted forward to out-of-state consumers does not, standing alone, make out a Commerce Clause violation. See Hellerstein, supra, at 249. But the Clause is violated when, as appellants allege is the case here, the State effectively selects “a class of out-of-state *651taxpayers to shoulder a tax burden grossly in excess of any costs imposed directly or indirectly by such taxpayers on the State.” Ibid.

Ill

It is true that a trial in this case would require “complex factual inquiries” into whether economic conditions are such that Montana is in fact able to export the burden of its severance tax, ante, at 619, n. 8.16 I do not believe, however, that this threshold inquiry is beyond judicial competence.17 If the trial court were to determine that the tax is exported, it would then have to determine whether the tax is “fairly related,” within the meaning of Complete Auto Transit. The Court to the contrary, this would not require the trial court “to second-guess legislative decisions about the amount or disposition of tax revenues.” Ante, at 627, n. 16. If the tax is in fact a legitimate general revenue measure identical or roughly comparable to taxes imposed upon similar industries, a court’s inquiry is at an end; on the other hand, if the tax *652singles out this particular interstate activity and charges it with a grossly disproportionate share of the general costs of government,18 the court must determine whether there is some reasonable basis for the legislative judgment that the tax is necessary to compensate the State for the particular costs imposed by the activity.

. To be sure, the task is likely to prove to be a formidable one ; but its difficulty does not excuse our failure to undertake it. This case poses extremely grave issues that threaten both to “polarize the Nation,” see H. R. Rep. No. 96-1527, pt. 1, p. 2 (1980), and to reawaken “the tendencies toward economic Balkanization” that the Commerce Clause was designed to remedy. See Hughes v. Oklahoma, 441 U. S. 322, 325-326 (1979). It is no answer to say that the matter is better left to Congress: 19

“While the Constitution vests in Congress the power to regulate commerce among -the states, it does not say what the states may or may not do in the absence of congressional action .... Perhaps even more than by interpretation of its written word, this Court has ad-*653vaneed the solidarity and prosperity of this Nation by the meaning it has given to these great silences of the Constitution.” H. P. Hood & Sons, Inc. v. Du Mond, 336 U. S. 525, 534-535 (1949).

I would not lightly abandon that role.20 Because I believe that appellants are entitled to an opportunity to prove that, in Holmes’ words, Montana’s severance tax “embodies what the Commerce Clause was meant to end,” I dissent.21

Montana and Wyoming together contain 40% of all United States coal reserves and 68% of all reserves of low-sulfur coal. H. R. Rep. No. 96-1527, pt. 1, p. 3 (1980).

Together with Wyoming, Montana supplied 10% of the United States’ demand for coal in 1977; it is estimated that Montana and Wyoming will supply 33% of the Nation’s coal by 1990. Hearings 22 (statement of Rep. Vento).

The pre-1975 rate was 12, 22, 34, or 40 cents per ton depending on the Btu content of the coal mined. Krutilla, at 50. Appellants state that coal taxed at 34 cents per ton prior to the 1975 amendment is now typically taxed at the effective rate of $2.08 per ton. Brief for Appellants 7-8.

In fact, the study of coal production taxes commissioned by the Montana Legislature in 1974, see ante, at 612-613, found that while other States may have imposed a higher overall tax burden on coal, “no coal state had, through 1973, higher severance and property taxes than Montana.” Subcommittee on Fossil Fuel Taxation, Interim Study on Fossil Fuel Taxation 14 (1974). Thus, even prior to the 1975 amendment, “Montana and its local governments tax[ed] the production of fossil fuels at a higher level than any competitive state . . . .” (Emphasis in original.) Ibid.

North Dakota taxes lignite at a flat rate that is estimated to equal about 20% of value. See H. R. Rep. No. 96-1527, pt. 1, p. 3 (1980). Apparently inspired by these examples, Wyoming increased its state severance and local ad valorem taxes to a combined total of approximately 17%% of value. Wyo. Stat. Ann. §§ 39-2-202, 39-2-402, 39-6-302 (a)(f), and 39-6-303 (a) (1977 and Supp. 1980). See H. R. Rep. No. 96-1527, pt. 1, p. 3 (1980). With the possible exception of North Dakota’s tax on lignite, the severance taxes imposed by Montana and Wyoming are higher than the taxes imposed on energy reserves by any other State. Ibid.

Significantly, however, other Western States have considered or are considering raising their taxes on coal production. Ibid. One study con-*641eluded that “‘[t]ax leadership’ in the western states appears to be an emerging reality,” and that informal cartel arrangements may arise among these States. Church, Conflicting Federal, State and Local Interest Trends in State and Local Energy Taxation: Coal and Copper — A Case in Point, 31 Nat. Tax J. 269, 278 (1978) (Church). Indeed, the 1974 Montana Subcommittee on Fossil Fuel Taxation, see n. 4, supra, was directed by the Montana Legislature “to investigate the feasibility and value of multi-state taxation of coal with the Dakotas and Wyoming, and to contract and cooperate joining with these other states to achieve that end . . . .” House Resolution No. 45, 1974 Mont. Laws, p. 1620. The Subcommittee recommended that the Executive pursue this goal. Subcommittee on Fossil Fuel Taxation, supra, at 2.

One of the principal sponsors of the severance tax bill explained to the Montana Legislature:

“Most of Montana’s coal is shipped out of state to power plants and utility companies in the Midwest. In reviewing the [long-term] contracts between the coal companies and the utility companies who purchase the coal, all of the contracts that were shown to our Legislative Committee contain an escalation clause for taxes. In other words, the local companies simply add the additional taxes to their bill, and the entire cost is passed on to the purchasers in the Midwest or elsewhere. Because most of the purchasers are regulated Utility companies, it is reasonable to assume these companies will, in turn, pass on their extra costs to their customers.” Towe, Explanation of Reasons for Montana’s Coal Tax 4, cited in Brief for Appellants 34.

The Montana Supreme Court observed that under Montana law, facts well pleaded in the complaint must be accepted as true on review of a judgment of dismissal; it therefore necessarily held that appellants could not prevail “under any view of the alleged facts.” —Mont. —, —, 615 P. 2d 847, 849 (1980). See also Tr. of Oral Arg. 17-18.

In addition to the severance tax on coal, Montana imposes a gross proceeds tax, Mont. Code Ann. § 15-6-132 (1979), a resource indemnity trust tax, § 15-38-104, a property tax on mining equipment, § 15-6-138 *643(b), and a corporation license tax, §15-31-101. See Krutilla, at 50-54. Furthermore, all costs of reclamation must be borne by the coal companies under both federal and state law, and Montana requires each company to purchase a reclamation bond prior to the commencement of mining operations. § 82-4-338.

By federal statute, 50% of the “sales, bonuses, royalties, and rentals” of federal public lands are payable to the State within which the leased land lies “to be used by such State and its subdivisions, as the legislature of the State may direct giving priority to those subdivisions of the State socially or economically impacted by development of minerals leased under this chapter, for (i) planning, (ii) construction and maintenance of public facilities, and (iii) provision of public service . . . .” Mineral Lands Leasing Act of 1920, § 35, 41 Stat. 450, as amended, 30 U. S. C. § 191. An additional 40% of this federal revenue from mineral leases is indirectly returned to the States through a reclamation fund. Ibid. Moreover, § 601 of the Powerplant and Industrial Fuel Use Act of 1978, Pub. L. 95-620, 92 Stat. 3323, 42 U. S. C. § 8401 (1976 ed., Supp. Ill), authorizes federal grants to areas affected by increased coal production.

This is a marked departure from the Court’s prior cases. Rather than suggesting such a mechanical test, those cases imply that a tax will be struck down under the fourth prong of the Complete Auto Transit test if the plaintiff establishes a factual record that the tax is not fairly related to the services and protection provided by the State. See, e. g., Washington Revenue Dept. v. Association of Wash. Stevedoring Cos., 435 U. S. 734, 750-751 (1978); id., at 764 (Powell,.J., concurring in part and concurring in result). See Merrion v. Jicaritta Apache Tribe, 617 F. 2d 537, 545, n. 4 (CA10) (en banc), cert. granted, 449 U. S. 820 (1980). Even the trial court in the present case recognized that if it reached this question it “would necessarily have to deny the motion to dismiss and proceed to a factual determination.” App. 37a.

As the example of Alaska illustrates, this prospect is not a fanciful one. Ninety percent of Alaska’s revenue derives from petroleum taxes and royalties; because of the massive sums that have been so raised, that State’s income tax has been eliminated. See N. Y. Times, June 5, 1981, section 1, p. A10, col. 1. As noted above, Montana’s severance tax already allegedly accounts for 20% of its total tax revenue, and the State has enacted property and income tax relief.

The Court apparently derives its interpretation of the fourth prong of the Complete Auto Transit test primarily from Wisconsin v. J. C. Penney Co., 311 U. S. 435 (1940), and General Motors Corp. v. Washington, 377 U. S. 436 (1964). Ante, at 624r-626. In neither of those cases, however, did the Court consider the question presented here. J. C. Penney involved a Fourteenth Amendment challenge brought by a foreign corporation to a Wisconsin tax imposed on domestic and foreign corporations “for the privilege of declaring . . . dividends” out of income from property located and business transacted in Wisconsin. The corporation argued that because the income from the Wisconsin transactions had been transferred to New York, Wisconsin had “no jurisdiction to tax” those amounts. 311 U. S., at 436. The Court rejected that argument, holding that “[t]he fact that a tax is contingent upon events brought to pass without a state does not destroy the nexus between such a tax and transactions within a state for which the tax is an exaction.” Id., at 445. In General Motors, the question before the Court was the validity of an unapportioned tax on the gross receipts of a corporation in interstate commerce. The Court concluded that there was a sufficient nexus to uphold the tax. 377 U. S., at 448. See id., at 449-450 (BrenNAN, J., dissenting).

In Postal Telegraph-Cable Co., a telegraph company engaged in interstate commerce challenged both an annual license tax and an annual tax of $2 for each telegraph pole that the company maintained in the city of Richmond, Va. The Court sustained the validity of the license tax on the ground that it was simply a nondiscriminatory “exercise of the police power ... for revenue purposes.” 249 U. S., at 257. In contrast, the pole tax was subjected to stricter scrutiny; the Court stated that while interstate commerce must pay its way, the authority remains in the courts, “on proper application, to determine whether, under the conditions prevailing in a given case, the charge made is reasonably proportionate to the service to be rendered and the liabilities involved, or whether it is a disguised attempt to impose a burden on interstate commerce.” Id., at 260.

The Court has continued to scrutinize carefully taxes on interstate commerce that are designed to reimburse the State for the particular costs imposed by that commerce. See, e. g„ Evansville-Vanderburgh Airport Authority Dist. v. Delta Airlines, Inc., 405 U. S. 707 (1972); Clark v. Paul Gray, Inc., 306 U. S. 583 (1939); Ingels v. Morf, 300 U. S. 290 (1937). In analyzing such taxes, it has required that there be factual evidence in the record that “the fees charged do not appear to be manifestly disproportionate to the services rendered.” Clark, 306 U. S., at 599. The Court concludes that this test has no bearing here because the Montana Supreme Court held that the coal severance tax was “ ‘imposed for the *648general support of the government.’ ” Ante, at 621. In fact, however, the matter is not nearly so clear as the Court suggests. The Montana court also implied that the tax was designed at least in part to compensate the State for the special costs attributable to coal mining,-Mont., at-, -, 615 P. 2d, at 850, 855, as have appellees here. Brief for Appellees 1-3, 26-27.

Indeed, the stated objectives of the 1975 amendment were to: “(a) preserve or modestly increase revenues going to the general fund, (b) to respond to current social impacts attributable to coal development, and (c) to invest in the future, when new energy technologies reduce our dependence on coal and mining activity may decline.” Statement to Accompany the Report of the Free Joint Conference Committees on Coal Taxation 1 (1975). Since the tax was designed only to “preserve or modestly increase” general revenues, it is appropriate for a court to inquire here whether the “surplus” revenue Montana has received from this severance tax is “manifestly disproportionate” to the present or future costs attributable to coal development.

Complete Auto Transit gave several examples of “tailored” taxes: property taxes designed to differentiate between property used in transportation and other types of property; an income tax using different rates for different types of business; and a tax on the “privilege of doing business in corporate form” that changed with the nature of the corporate activity involved. 430 U. S., at 288, n. 15. A severance tax using different rates for different minerals is, of course, directly analogous to these examples.

See also Washington Revenue Dept. v. Association of Wash. Stevedoring Cos., 435 U. S. 734, 754-755 (1978); id., at 764 (Powell, J., concurring in part and concurring in result).

The degree to which a tax may be “exported” turns on such factors as the taxing jurisdiction’s relative dominance of the market, the elasticity of demand for the product, and the availability of adequate substitutes. See, e. g., McLure, Economic Constraints on State and Local Taxation of Energy Resources, 31 Nat. Tax J. 257, 257-259 (1978); Posner, at 510-512. Commentators are in disagreement over the likelihood that coal severance taxes are in fact exported. Compare, e. g., McLure, at 259, and Gillis & Peprah, Severance Taxes on Coal and Uranium in the Sunbelt, Tex. Bus. Rev. 302, 308 (1980), with Church, at 277, and Griffin, at 33. It is clear, however, that that likelihood increases to the extent that the taxing States form a cartel arrangement. Gillis, at 308. See n. 5, supra. Whether the tax is in fact exported here is, of course, an issue for trial.

There is no basis for the conclusion that the issues presented would be more difficult than those routinely dealt with in complex civil litigation. See, e. g., Milwaukee v. Illinois, 451 U. S. 304, 349 (1981) (dissenting opinion). “The complexity of a properly presented federal question is hardly a suitable basis for denying federal courts the power to adjudicate.” Id., at 349, n. 25.

See n. 13, supra. Cf. Maryland v. Louisiana, 451 U. S. 725, 755, n. 27 (1981) (reciting argument of United States that use of 75% of proceeds of Louisiana’s “First-Use Tax” to service general debt, and only 25% to alleviate alleged environmental damage from pipeline activities, suggests that tax was not fairly apportioned to value of activities occurring within the State).

As the Court notes, the issue has not escaped congressional attention. Ante, at 628, n. 18. No bill, however, has yet been passed, and this Court is not disabled to act in the interim; to the contrary, strong policy and institutional considerations suggest that it is appropriate that the Court consider this issue. See Brown, at 222. Indeed, whereas Montana argues that the question presented here is one better left to Congress, in 1980 hearings before the Senate Committee on Energy and Natural Resources, the then Governor of Montana took the position that the reasonableness of this tax was “a question most properly left to the court,” not a congressional committee. See Hearing on S. 2695 before the Senate Committee on Energy and Natural Resources, 96th Cong., 2d Sess., 237 (1980).

Justice Holmes’ words are relevant:

“I do not think the United States would come to an end if we lost our power to declare an Act of Congress void. I do think the Union would be imperiled if we could not make that declaration as to the laws of the several States. For one in my place sees how often a local policy prevails with those who are not trained to national views and how often action is taken that embodies what the Commerce Clause was meant to end.” O. Holmes, Law and the Court, in Collected Legal Papers 291, 295-296 (reprint, 1952).

1 agree with the Court that appellants’ Supremacy Clause claims are without merit.