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SUPREME COURT OF THE UNITED STATES
_________________
No. 11–161
_________________
CHRISTINE ARMOUR, et al., PETITIONERS
v. CITY OF INDIANAPOLIS, INDIANA, et al.
on writ of certiorari to the supreme court of
indiana
[June 4, 2012]
Justice Breyer delivered the opinion of the
Court.
For many years, an Indiana statute, the
“Barrett Law,” authorized Indiana’s cities to
impose upon benefited lot owners the cost of sewer improvement
projects. The Law also permitted those lot owners to pay either
immediately in the form of a lump sum or over time in installments.
In 2005, the city of Indianapolis (City) adopted a new as- sessment
and payment method, the “STEP” plan, and it forgave any
Barrett Law installments that lot owners had not yet paid.
A group of lot owners who had already paid their
entire Barrett Law assessment in a lump sum believe that the City
should have provided them with equivalent refunds. And we must
decide whether the City’s refusal to do so un-
constitutionally discriminates against them in violation of the
Equal Protection Clause, Amdt. 14, §1. We hold that the City
had a rational basis for distinguishing between those lot owners
who had already paid their share of project costs and those who had
not. And we conclude that there is no equal protection
violation.
I
A
Beginning in 1889 Indiana’s Barrett Law
permitted cities to pay for public improvements, such as sewage
proj- ects, by “apportion[ing]” the costs of a project
“equally among all abutting lands or lots.” Ind. Code
§36–9–39–15(b)(3) (2011); see
Town
Council of New Harmony v.
Parker, 726 N.E.2d 1217, 1227,
n. 13 (Ind. 2000) (project’s beneficiaries pay its
costs). When a city built a Barrett Law project, the city’s
public works board would create an initial lot-owner assessment by
“dividing the estimated total cost of the sewage works by the
total number of lots.” §36–9–39–16(a).
It might then adjust an individual assessment downward if the lot
would benefit less than would others.
§36–9–39–17(b). Upon completion of the
project, the board would issue a final lot-by-lot assessment.
The Law permitted lot owners to pay the
assessment either in a single lump sum or over time in installment
payments (with interest). The City would collect installment
payments “in the same manner as other taxes.”
§36–9–37–6. The Law authorized 10-, 20-, or
30-year installment plans. §36–9–37–8.5(a).
Until fully paid, an assessment would constitute a lien against the
property, permitting the city to initiate foreclosure proceedings
in case of a default. §§36–9–37–9(b),
–22.
For several decades, Indianapolis used the
Barrett Law system to fund sewer projects. See,
e.g.,
Conley v.
Brummit, 92 Ind. App. 620, 621, 176 N.E.
880, 881 (1931) (in banc). But in 2005, the City adopted a new
system, called the Septic Tank Elimination Program (STEP), which
fi- nanced projects in part through bonds, thereby lowering in-
dividual lot owners’ sewer-connection costs. By that time,
the City had constructed more than 40 Barrett Law projects. App. to
Pet. for Cert. 5a. We are told that installment-paying lot owners
still owed money in respect to 24 of those projects. See Reply
Brief for Petitioners 16–17, n. 3 (citing City’s
Response to Plaintiff’s Brief on Damages, Record in
Cox v.
Indianapolis, No. 1:09–cv–0435 (SD
Ind., Doc. 98–1 (Exh. A)). In respect to 21 of the 24, some
installment payments had not yet fallen due; in respect to the
other 3, those who owed money were in default. Reply Brief for
Petitioners 17, n. 3.
B
This case concerns one of the 24 still-open
Barrett Law projects, namely the Brisbane/Manning Sanitary Sewers
Project. The Brisbane/Manning Project began in 2001. It connected
about 180 homes to the City’s sewage system. Construction was
completed in 2003. The Indianapolis Board of Public Works held an
assessment hearing in June 2004. And in July 2004 the Board sent
the 180 affected homeowners a formal notice of their payment
obligations.
The notice made clear that each homeowner could
pay the entire assessment—$9,278 per property—in a lump
sum or in installments, which would include interest at a 3.5%
annual rate. Under an installment plan, payments would amount to
$77.27 per month for 10 years; $38.66 per month for 20 years; or
$25.77 per month for 30 years. In the event, 38 homeowners chose to
pay up front; 47 chose the 10-year plan; 27 chose the 20-year plan;
and 68 chose the 30-year plan. And in the first year each homeowner
paid the amount due ($9,278 upfront; $927.80 under the 10-year
plan; $463.90 under the 20-year plan, or $309.27 under the 30-year
plan). App. to Pet. for Cert. 48a.
The next year, however, the City decided to
abandon the Barrett Law method of financing. It thought that the
Barrett Law’s lot-by-lot payments had become too burdensome
for many homeowners to pay, discouraging changes from less healthy
septic tanks to healthier sewer systems. See
id., at
4a–5a. (For example, homes helped by the Brisbane/Manning
Project, at a cost of more than $9,000 each, were then valued at
$120,000 to $270,000. App. 67.) The City’s new STEP method of
financing would charge each connecting lot owner a flat $2,500 fee
and make up the difference by floating bonds eventually paid for by
all lot owners citywide. See App. to Pet. for Cert. 5a,
n. 5.
On October 31, 2005, the City enacted an
ordinance implementing its decision. In December, the City’s
Board of Public Works enacted a further resolution, Resolution 101,
which, as part of the transition, would “forgive
all
assessment amounts . . . established pursuant to the
Barrett Law Funding for Municipal Sewer programs
due and
owing from the date of November 1, 2005 forward.” App. 72
(emphasis added). In its preamble, the Resolution said that the
Barrett Law “may present financial hardships on many middle
to lower income participants who most need sanitary sewer service
in lieu of failing septic systems”; it pointed out that the
City was transitioning to the new STEP method of financing; and it
said that the STEP method was based upon a financial model that had
“considered the current assessments being made by
participants in active Barrett Law projects” as well as
future projects.
Id., at 71–72. The upshot was that
those who still owed Barrett Law assessments would not have to make
further payments but those who had already paid their assessments
would not receive refunds. This meant that homeowners who had paid
the full $9,278 Brisbane/ Manning Project assessment in a lump sum
the preced- ing year would receive no refund, while homeowners who
had elected to pay the assessment in installments, and had paid a
total of $309.27, $463.90, or $927.80, would be under no obligation
to make further payments.
In February 2006, the 38 homeowners who had paid
the full Brisbane/Manning Project assessment asked the City for a
partial refund (in an amount equal to the smallest forgiven
Brisbane/Manning installment debt, apparently $8,062). The City
denied the request in part because “[r]efunding payments made
in your project area, or any portion of the payments, would
establish a precedent of unfair and inequitable treatment to all
other property owners who have also paid Barrett Law assessments
. . . and while [the November 1, 2005, cutoff date] might
seem arbitrary to you, it is essential for the City to establish
this date and move forward with the new funding approach.”
Id., at 50–51.
C
Thirty-one of the thirty-eight
Brisbane/Manning Project lump-sum homeowners brought this lawsuit
in Indiana state court seeking a refund of about $8,000 each. They
claimed in relevant part that the City’s refusal to provide
them with refunds at the same time that the City forgave the
outstanding Project debts of other Brisbane/Manning homeowners
violated the Federal Constitution’s Equal Pro- tection
Clause, Amdt. 14, §1; see also Rev. Stat. §1979, 42
U. S. C. §1983. The trial court granted summary
judgment in their favor. The State Court of Appeals affirmed that
judgment. 918 N.E.2d 401 (2009). But the Indiana Supreme Court
reversed. 946 N.E.2d 553 (2011). In its view, the City’s
distinction between those who had already paid their Barrett Law
assessments and those who had not was “rationally related to
its legitimate interests in reducing its administrative costs,
providing relief for property owners experiencing financial
hardship, establishing a clear transition from [the] Barrett Law to
STEP, and preserving its limited resources.” App. to Pet. for
Cert. 19a. We granted certiorari to consider the equal protection
question. And we now affirm the Indiana Supreme Court.
II
A
As long as the City’s distinction has a
rational basis, that distinction does not violate the Equal
Protection Clause. This Court has long held that “a
classification neither involving fundamental rights nor proceeding
along suspect lines . . . cannot run afoul of the Equal
Protection Clause if there is a rational relationship between the
dis- parity of treatment and some legitimate governmental
purpose.”
Heller v.
Doe,
509 U.S.
312, 319–320 (1993); cf.
Gulf, C. & S. F. R.
Co. v.
Ellis,
165 U.S.
150, 155, 165–166 (1897). We have made clear in analogous
contexts that, where “ordinary commercial transactions”
are at issue, ra- tional basis review requires deference to
reasonable under- lying legislative judgments.
United States
v.
Carolene Products Co.,
304 U.S.
144, 152 (1938) (due process); see also
New Orleans v.
Dukes,
427 U.S.
297, 303 (1976)
(per curiam) (equal protection). And we
have repeatedly pointed out that “[l]egislatures have
especially broad latitude in creating classifications and
distinctions in tax statutes.”
Regan v.
Taxation
With Representation of Wash.,
461 U.S.
540, 547 (1983); see also
Fitzgerald v.
Racing Assn.
of Central Iowa,
539 U.S.
103, 107–108 (2003);
Nordlinger v.
Hahn,
505 U.S.
1, 11 (1992);
Lehnhausen v.
Lake Shore Auto Parts
Co.,
410 U.S.
356, 359 (1973);
Madden v.
Kentucky,
309 U.S.
83, 87–88 (1940);
Citizens’ Telephone Co. of
Grand Rapids v.
Fuller,
229 U.S.
322, 329 (1913).
Indianapolis’ classification involves
neither a “fundamental right” nor a
“suspect” classification. Its subject matter is local,
economic, social, and commercial. It is a tax classification. And
no one here claims that Indianapolis has discriminated against
out-of-state commerce or new residents. Cf.
Hooper v.
Bernalillo County Assessor,
472 U.S.
612 (1985);
Williams v.
Vermont,
472 U.S.
14 (1985);
Metropolitan Life Ins. Co. v.
Ward,
470 U.S.
869 (1985);
Zobel v.
Williams,
457 U.S.
55 (1982). Hence, this case falls directly within the scope of
our precedents holding such a law constitutionally valid if
“there is a plausible policy reason for the classification,
the legislative facts on which the classification is apparently
based rationally may have been considered to be true by the
governmental decisionmaker, and the relationship of the
classification to its goal is not so attenuated as to render the
distinction arbitrary or irrational.”
Nordlinger,
supra, at 11 (citations omitted). And it falls within the
scope of our precedents holding that there is such a plausible
reason if “there is any reasonably conceivable state of facts
that could provide a rational basis for the classification.”
FCC v.
Beach Communications, Inc.,
508 U.S.
307, 313 (1993); see also
Lindsley v.
Natural
Carbonic Gas Co.,
220 U.S.
61, 78 (1911).
Moreover, analogous precedent warns us that we
are not to “pronounc[e]” this classification
“unconstitutional unless in the light of the facts made known
or generally assumed it is of such a character as to preclude the
assumption that it rests upon some rational basis within the
knowledge and experience of the legislators.”
Carolene
Products Co.,
supra, at 152 (due process claim).
Further, because the classification is presumed constitutional, the
“ ‘ burden is on the one attacking the
legislative arrangement to negative every conceivable basis which
might support it.’ ”
Heller,
supra,
at 320 (quoting
Lehnhausen,
supra, at 364).
B
In our view, Indianapolis’
classification has a rational basis. Ordinarily, administrative
considerations can jus- tify a tax-related distinction. See,
e.g., Carmichael v.
Southern Coal & Coke
Co.,
301 U.S.
495, 511–512 (1937) (tax exemption for businesses with
fewer than eight employees rational in light of the
“[a]dministrative convenience and expense” involved);
see also
Lehnhausen,
supra, at 365 (comparing
administrative cost of taxing corporations versus individuals);
Madden,
supra, at 90 (comparing administrative cost
of taxing deposits in local banks versus those elsewhere). And the
City’s decision to stop collecting outstanding Barrett Law
debts finds rational support in related administrative
concerns.
The City had decided to switch to the STEP
system. After that change, to continue Barrett Law unpaid-debt
collection could have proved complex and expensive. It would have
meant maintaining an administrative system that for years to come
would have had to collect debts arising out of 20-plus different
construction projects built over the course of a decade, involving
monthly payments as low as $25 per household, with the possible
need to maintain credibility by tracking down defaulting debtors
and bringing legal action. The City, for example, would have had to
maintain its Barrett Law operation within the City
Controller’s Office, keep files on old, small,
installment-plan debts, and (a City official says) possibly spend
hundreds of thousands of dollars keeping computerized debt-tracking
systems current. See Brief for International City/County Management
Association et al. as
Amici Curiae 13, n. 12
(citing Affidavit of Charles White ¶13, Record in
Cox,
Doc. No. 57–3). Unlike the collection system prior to
abandonment, the City would not have added any new Barrett Law
installment-plan debtors. And that fact means that it would have
had to spread the fixed administrative costs of collection over an
ever-declining number of debtors, thereby continuously increasing
the per-debtor cost of collection.
Consistent with these facts, the Director of the
City’s Department of Public Works later explained that the
City decided to forgive outstanding debt in part because
“[t]he administrative costs to service and process remaining
balances on Barrett Law accounts long past the transition to the
STEP program would not benefit the taxpayers” and would
defeat the purpose of the transition. App. 76. The four other
members of the City’s Board of Public Works have said the
same. See Affidavit of Gregory Taylor ¶6, Record in
Cox, Doc. No. 57–5; Affidavit of Kipper Tew ¶6,
ibid. Doc. No. 57–6; Affidavit of Susan Schalk
¶6,
ibid. Doc. No. 57–7; Affidavit of Roger Brown
¶6,
ibid. Doc. No. 57–8
.
The rationality of the City’s distinction
draws further support from the nature of the line-drawing choices
that confronted it. To have added refunds to forgiveness would have
meant adding yet further administrative costs, namely the cost of
processing refunds. At the same time, to have tried to limit the
City’s costs and lost revenues by limiting forgiveness (or
refund) rules to Brisbane/Manning homeowners alone would have led
those involved in other Barrett Law projects to have justifiably
complained about unfairness. Yet to have granted refunds (as well
as pro- viding forgiveness) to all those involved in all Barrett
Law projects (there were more than 40 projects) or in all open
projects (there were more than 20) would have involved even greater
administrative burden. The City could not just “cut
. . . checks,”
post, at 4 (Roberts,
C. J., dissenting), without taking funding from other programs
or finding additional revenue. If, instead, the City had tried to
keep the amount of revenue it lost constant (a rational goal) but
spread it evenly among the apparently thousands of homeowners
involved in any of the Barrett Laws projects, the result would have
been yet smaller individual payments, even more likely to have been
too small to justify the administrative expense.
Finally, the rationality of the distinction
draws support from the fact that the line that the City
drew—distinguishing past payments from future
obligations—is a line well known to the law. Sometimes such a
line takes the form of an amnesty program, involving, say, mortgage
payments, taxes, or parking tickets.
E.g., 26
U. S. C. §108(a)(1)(E) (2006 ed., Supp. IV) (federal
income tax provision allowing homeowners to omit from gross income
newly forgiven home mortgage debt);
United States v.
Martin, metricconverter523 F.3d 281, 284 (CA4 2008) (tax
amnesty program whereby State newly forgave penalties and
liabilities if taxpayer satisfied debt);
Horn v.
Chicago, metricconverter860 F.2d 700, 704, n. 9 (CA7
1988) (city parking ticket amnesty program whereby outstanding
tickets could be newly set- tled for a fraction of amount
specified). This kind of line is consistent with the distinction
that the law often makes between actions previously taken and those
yet to come.
C
Petitioners’ contrary arguments are not
sufficient to change our conclusion. Petitioners point out that the
Indiana Supreme Court also listed a different consideration, namely
“financial hardship,” as one of the factors supporting
rationality. App. to Pet. for Cert. 19a. They refer to the
City’s resolution that said that the Barrett Law “may
present financial hardships on many middle to lower income
participants who most need sanitary sewer service in lieu of
failing septic systems.” App. 71. And they argue that the tax
distinction before us would not necessarily favor low-income
homeowners.
We need not consider this argument, however, for
the administrative considerations we have mentioned are sufficient
to show a rational basis for the City’s distinction. The
Indiana Supreme Court wrote that the City’s classification
was “rationally related” in part “to its
legitimate interests
in reducing its administrative
costs.” App. to Pet. for Cert. 19a (emphasis added). The
record of the City’s proceedings is consistent with that
determination. See App. 72 (when developing transition, the City
“considered the current assessments being made by
participants in active Barrett Law projects”). In any event,
a legislature need not “actually articulate at any time the
purpose or rationale supporting its classification.”
Nordlinger, 505 U. S., at 15; see also
Fitzgerald, 539 U. S., at 108 (similar). Rather, the
“burden is on the one attacking the legislative arrangement
to negative every conceivable basis which might support it.”
Madden, 309 U. S., at 88; see
Heller, 509
U. S., at 320 (same);
Lehnhausen, 410 U. S., at
364 (same); see also
Allied Stores of Ohio, Inc. v.
Bowers,
358 U.S.
522, 530 (1959) (upholding state tax classification resting
“upon a state of facts that reasonably can be
conceived” as creating a rational distinction). Petitioners
have not “negative[d]” the Indiana Supreme
Court’s first listed justification, namely the administrative
concerns we have discussed.
Petitioners go on to propose various other
forgiveness systems that would have included refunds for at least
some of those who had already paid in full. They argue that those
systems are superior to the system that the City chose. We have
discussed those, and other possible, systems earlier.
Supra,
at 8–9
. Each has advantages and disadvantages. But
even if petitioners have found a superior system, the Constitution
does not require the City to draw the perfect line nor even to draw
a line superior to some other line it might have drawn. It requires
only that the line actually drawn be a rational line. And for the
reasons we have set forth in Part II–B,
supra, we
believe that the line the City drew here is rational.
Petitioners further argue that administrative
considerations alone should not justify a tax distinction, lest a
city arbitrarily allocate taxes among a few citizens while
forgiving many similarly situated citizens on the ground that it is
cheaper and easier to collect taxes from a few people than from
many. Brief for Petitioners 45. Petitioners are right that
administrative considerations could not justify such an unfair
system. But that is not because administrative considerations can
never justify tax differences (any more than they can
always do so). The question is whether reducing those
expenses, in the particular circumstances, provides a rational
basis justifying the tax difference in question.
In this case, “in the light of the facts
made known or generally assumed,”
Carolene Products
Co., 304 U. S., at 152, it is reasonable to believe that
to graft a refund system onto the City’s forgiveness decision
could have (for example) imposed an administrative burden of both
collecting and paying out small sums (say, $25 per month) for
years. As we have said,
supra, at 7–9, it is rational
for the City to draw a line that avoids that burden. Petitioners,
who are the ones “attacking the legislative
arrangement,” have the burden of showing that the
circumstances are otherwise,
i.e., that the administrative
burden is too insubstantial to justify the classification. That
they have not done.
Finally, petitioners point to precedent that in
their view makes it more difficult than we have said for the City
to show a “rational basis.” With but one exception,
however, the cases to which they refer involve discrimination based
on residence or length of residence.
E.g., Hooper v.
Bernalillo County Assessor,
472 U.S.
612 (state tax preference distinguishing between long-term and
short-term resident veterans);
Williams v.
Vermont,
472 U.S.
14 (state use tax that burdened out-of-state car buyers who
moved in-state);
Metropolitan Life Ins. Co. v.
Ward,
470 U.S.
869 (state law that taxed out-of-state insurance companies at a
higher rate than in-state companies);
Zobel v.
Williams,
457 U.S.
55 (state dividend distribution system that favored long-term
residents). But those circumstances are not present here.
The exception consists of
Allegheny
Pittsburgh Coal Co. v.
Commission of Webster Cty.,
488 U.S.
336 (1989). The Court there took into account a state
constitution and related laws that required equal valuation of
equally valuable property.
Id., at 345. It considered the
constitutionality of a county tax assessor’s practice (over a
period of many years) of determining property values as of the time
of the property’s last sale; that practice meant highly
unequal valuations for two identical properties that were sold
years or decades apart.
Id., at 341. The Court first found
that the assessor’s practice was not rationally re- lated to
the county’s avowed purpose of assessing properties equally
at true current value because of the intentional systemic
discrepancies the practice created.
Id., at 343–344.
The Court then noted that, in light of the state constitution and
related laws requiring equal valuation, there could be no other
rational basis for the practice.
Id., at 344–345.
Therefore, the Court held, the assessor’s discriminatory
policy violated the Federal Constitution’s insistence upon
“equal protection of the law.”
Id., at 346.
Petitioners argue that the City’s refusal
to add refunds to its forgiveness decision is similar, for it
constitutes a refusal to apply “equally” an Indiana
state law that says that the costs of a Barrett Law project shall
be equally “apportioned.” Ind. Code
§36–9–39–15(b)(3). In other words,
petitioners say that even if the City’s decision might
otherwise be related to a rational purpose, state law (as in
Allegheny) makes this the rare case where the facts preclude
any rational basis for the City’s decision other than to
comply with the state mandate of equality.
Allegheny, however, involved a clear
state law requirement clearly and dramatically violated. Indeed, we
have described
Allegheny as “the rare case where the
facts precluded” any alternative reading of state law and
thus any alternative rational basis.
Nordlinger, 505
U. S., at 16. Here, the City followed state law by
apportioning the cost of its Barrett Law projects equally. State
law says nothing about forgiveness, how to design a forgiveness
program, or whether or when rational distinctions in doing so are
permitted. To adopt petitioners’ view would risk transforming
ordinary violations of ordinary state tax law into violations of
the Federal Constitution.
* * *
For these reasons, we conclude that the City
has not violated the Federal Equal Protection Clause. And the
Indiana Supreme Court’s similar determination is
Affirmed.