The Law School Authority

New Energy Co. of Indiana v. Limbach Case Brief

Summary of New Energy Co. of Indiana v. Limbach 486 U. S. 269 (1988)


Facts: Appellant, Energy, manufactures ethanol is Indiana for sale in several states. Ohio statute denies a tax set-off for ethanol that is produced in a state that does not grant a tax credit, exemption, or refund to ethanol from Ohio. Indiana repealed its tax exemption for ethanol producers, and thereby Energy became ineligible for Ohio tax credit.

Issue: Whether a State provision, awarding a tax credit against st. sales tax for sale of ethanol only if the ethanol is produced within that st., discriminates against the I C Cl. A1S8C3?

Holding: Yes

Procedure: New Energy sought declaratory and injunctive relief in st. ct. OS. Ct. 1st held discriminatory violation of I. C. Cl. Then reversed itself “provision was not protectionist or unreasonably burdensome.” S. Ct.  Reversed.

Rule: Congress shall have the power to regulate Commerce with Foreign Nations, and among the several states, and with the Indian Tribes.

Ct. Rationale: Out of state production is placed at a substantial commercial disadvantage through discriminatory tax provision.  Ohio’s enactment of a reciprocity provision which promises to remove the economic barrier placed upon out of state producers, if their home state enacts tax credits is discriminatory.  Where discrimination is patent, neither widespread advantage to in state interest nor a widespread disadvantage to out of state competitors need be shown.  The Ohio provision is retaliatory and seeks to promote favorable treatment for ethanol produced in Ohio.

PL A : The Ohio provision discriminates against out of state manufacturers of ethanol, whose home states do not offer a tax credit, and who sell ethanol within Ohio.

Def A: The availability of the tax credit to some out of state manufacturers shows that the Ohio provision promotes, rather than discriminates, by encouraging other States to enact similar tax credits to spur ethanol sales.

reciprocity (ris-e-pros-it-y)- a mutual exchange or interchange of favors, products, etc.

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