## Facts

- Camps Newfound/Owatonna, Inc., a Maine nonprofit, operated two summer camps in Harrison, Maine, serving primarily out-of-state campers and charging about $400 per week.
- The camps paid substantial local real and personal property taxes and sought a refund and an ongoing exemption.
- Maine provided a general property-tax exemption for charitable institutions incorporated in Maine.
- Maine also provided a narrower benefit for charities operated principally for nonresidents only if weekly charges did not exceed $30 per person.
- Because the camps principally served nonresidents and charged well above $30 per week, they were denied both the general exemption and the limited nonresident-oriented benefit.
- The camps challenged the scheme under the dormant Commerce Clause (and asserted other claims not necessary to the federal disposition).

## Issues

1. Whether the dormant Commerce Clause applies to a nonprofit camp’s tuition-based operations and related economic activity.
2. Whether Maine’s charitable property-tax exemption scheme discriminates against interstate commerce by conditioning tax benefits on serving Maine residents (or on a low-fee cap applied to nonresident-serving charities).
3. If the scheme is discriminatory, whether Maine showed a legitimate local purpose that could not be served by reasonable nondiscriminatory alternatives.

## Decision

- The Supreme Court reversed the state court and held the exemption scheme unconstitutional under the dormant Commerce Clause.
- The Court treated the camp’s operations as commercial for Commerce Clause purposes, given its tuition charges and participation in interstate markets for goods and services.
- The Court held the statute was facially discriminatory because it granted greater tax benefits to charities serving Maine residents while withholding comparable benefits from charities serving primarily nonresidents.
- Applying the rule that discriminatory measures are generally invalid absent a sufficient justification and lack of nondiscriminatory alternatives, the Court found Maine’s asserted interests inadequate.
- The Court ruled that discriminatory exemptions can violate the Commerce Clause in the same manner as discriminatory taxes when they impose a comparative disadvantage on interstate activity.

## Legal Principles

- The dormant Commerce Clause restrains state action that discriminates against interstate commerce even without federal legislation.
- Commerce Clause analysis can apply to nonprofit entities when their activities involve economic transactions and participation in interstate markets.
- A state tax exemption that selectively favors in-state economic interests or in-state beneficiaries over out-of-state ones is treated as discriminatory and is generally invalid.
- Once discrimination is shown, the state must prove the measure serves a legitimate local purpose that cannot be achieved through reasonable nondiscriminatory alternatives.
- A state may not advance resident interests by burdening out-of-state consumers or entities engaged in interstate activity through differential tax treatment.

## Conclusion

The Court invalidated Maine’s charitable property-tax exemption structure because it conditioned meaningful tax benefits on serving state residents and imposed a comparative disadvantage on charities serving predominantly nonresidents, a form of discrimination barred by the dormant Commerce Clause.


Camps Newfound/Owatonna, Inc. v. Town of Harrison, 520 U.S. 564 (1997)