Ferrellgas Partners, LP v. Director, Division of Taxation

If a State imposes a fee or tax on interstate commerce, the Commerce Clause requires it to be fairly apportioned among the States where the commerce takes place. Under this Court’s precedent, a levy is fairly apportioned only if it is “internally consistent”; that is, if the levy were hypothetically enacted by every State, a multi-state business must pay no more, in the aggregate, than a business conducted wholly within a single State. There is one exception: if the levy is a regulatory fee that is “locally focused,” internal consistency is not required. In this case, New Jersey imposes an annual levy on every partnership doing any amount of business in the State. The levy is computed based on the number of partners in the partnership, regardless of whether the partners are residents or non-residents, at a rate of $150 per partner. The maximum levy is $250,000. The levy is not apportioned; it is, admittedly, not internally consistent. Nonetheless, New Jersey’s courts sustained the levy, even when imposed on a partnership engaged in interstate business, with partners all over the nation, because they determined that the levy is a locally focused fee. The question presented is: whether a levy that raises revenue for a State’s general fund, and that is not restricted to the in-state activities of the levypayor, may be characterized as a locally focused regulatory fee, and thus be imposed without regard to whether it is internally consistent? (i)