Exxon Corp. v. Hunt
Headline: Federal law partially blocks New Jersey’s spill tax: Court limits state taxes that fund cleanup costs eligible for Superfund while allowing unrelated state cleanup and preparedness spending.
Holding:
- Bars states from taxing companies to finance cleanup costs eligible for Superfund funding.
- Allows states to keep taxes for non-Superfund purposes like oil spills, administration, and research.
- Requires the National Contingency Plan to decide which expenditures are federally eligible.
Summary
Background
In 1977 New Jersey created a Spill Fund, financed by an excise tax on petroleum and chemical facilities, to prevent and clean up hazardous releases and to compensate certain third parties. In 1980 Congress passed CERCLA (Superfund), which also taxes some chemicals and finances federal cleanup and certain claims. Corporations that paid New Jersey’s Spill Act tax sued, arguing the federal statute forbids the State from taxing to finance funds that pay costs Superfund could cover.
Reasoning
The Court analyzed §114(c) of CERCLA, focusing on whether the phrase “which may be compensated under this subchapter” covers expenses merely eligible for Superfund or only expenses actually paid by Superfund. The Court rejected a narrow reading and the Solicitor General’s alternate parsing. It held that eligibility under Superfund is measured by the National Contingency Plan (NCP) and that a required 10% state cost share is not eligible for Superfund reimbursement. Using that test, the Court found a partial overlap between the Spill Fund and Superfund.
Real world impact
The Court affirmed the New Jersey courts as to Fund uses that are not Superfund-eligible (for example, oil-spill coverage, administration, equipment, and research) but reversed where the Spill Act permits taxation to support expenditures that CERCLA and the NCP make eligible for Superfund (beyond the 10% state share). The case is remanded so New Jersey courts can apply this ruling and decide severability and refunds.
Dissents or concurrances
Justice Stevens dissented, arguing the phrase “the purpose” should be read narrowly so the State’s multiple legitimate uses save the tax in full, and he would have affirmed the New Jersey Supreme Court’s broader validation of the Spill Fund.
Opinions in this case:
Ask about this case
Ask questions about the entire case, including all opinions (majority, concurrences, dissents).
What was the Court's main decision and reasoning?
How did the dissenting opinions differ from the majority?
What are the practical implications of this ruling?