Common Interpretation

Export and Port Preference Clauses by Erik Jensen

The Export and Port Preference Clauses won’t cause the average person’s heart to flutter, but they were critical to the Constitution’s adoption. Many in the Founding generation were concerned that a strong national government might favor one part of the country over another. Both provisions were responses to that concern.

The Export Clause: A fundamental goal of the Constitutional Convention was to ensure that the national government could raise revenue; requisitioning funds from the states under the Articles of Confederation had failed. Imports and exports were obvious revenue sources, and many delegates, like Alexander Hamilton, thought the government should be able to tax both.

But southern delegates worried that, even if geographically neutral in form, taxes on exports would negatively affect their region, the “staple States,” from which most exports came at the time. And they didn’t hide their fear that export taxation—making agricultural products like cotton more expensive and therefore less attractive—could be used to attack slavery.

Export taxation was a deal-breaker; without restrictions there would have been no Constitution. Taxation could conceivably have been limited to particular exported goods, but no agreement on details of that sort was forthcoming. And a last minute attempt to permit taxation of exports, if approved by a congressional supermajority, failed to receive southern support. That left the Clause as we have it today.

Only thirteen words long, the Export Clause is packed with interpretive questions. By its terms, the prohibition isn’t limited to levies that single out exports or that in fact would burden only part of the country. A national tax is invalid as applied to “articles exported,” period. (“Articles exported” are goods leaving the country; articles moving from one state to another aren’t being exported (or imported).) The Clause is an absolute prohibition.

The language doesn’t seem to apply only to the national government, but the Clause is in the section of the Constitution restricting what Congress can do. (The Supreme Court emphasized that point in 1886 in interpreting the Port Preference Clause.) In any event, the Import-Export Clause of Article I, Section 10, generally limits state taxation of exports as well.

Congress can’t circumvent the prohibition by taxing surrogates for exports; substance controls over form. For example, in United States v. IBM (1996), the Supreme Court held that an excise on premiums paid to foreign insurers was unconstitutional as applied to insurance on exports. And, in United States v. United States Shoe Corp. (1998), the Court held that the harbor maintenance “tax”—an excise on port use measured by cargo value—was in fact a tax and couldn’t be imposed on vessels engaged in exportation.

Not all governmental charges are taxes for these purposes, however—hence the issue in U.S. Shoe. For example, a congressional charge for use of a port isn’t a tax if the charge approximates the value of services provided. A legitimate user fee may therefore be applied to vessels carrying exports. Penalties affecting exportation also aren’t precluded by the Clause.

Courts have crafted rules to determine when a tax falls on “articles exported.” An income tax of general application isn’t covered, even insofar as it reaches income from exports. A tax on goods at the pre-export stage is also permitted, but once goods enter a stream of commerce leading to exportation, the Clause kicks in. A tax on windfall profits from mineral extraction would be permissible, for example, even though some extracted minerals might ultimately be exported. Once headed for export, however, minerals couldn’t be taxed.

Stating these “rules” is easier than applying them, and the few judicial decisions interpreting the Clause aren’t models of clarity. The Clause may be fuzzy, but it’s not a dead letter—as the two recent Supreme Court cases show. In any event, focusing on case law can give a misleading impression of a provision’s significance. The most important effect of the Export Clause should be to deter Congress from enacting potentially problematic levies.

Port Preference Clause: This Clause was intended to constrain the national government’s ability to favor ports in some states over ports in others, to the commercial benefit of the former. This wasn’t a North versus South thing. That potential benefit was most likely if the relevant states were neighbors (like Virginia and Maryland) and their ports competitors.

The particular concern was raised in late August by the Maryland delegation. As Luther Martin explained, “Without such a provision, it would have been in the power of the general government to have compelled all ships sailing into, or out of the Chesapeak, to clear and enter at Norfolk, or some port in Virginia—a regulation which would be extremely injurious to [Maryland’s] commerce.” Martin admitted it might be in the national interest to prefer Norfolk—to make collecting import duties easier—but his delegation wanted to protect its parochial interests.

Maryland got its way, up to a point, but Martin, who became an Anti-Federalist, came to believe the Clause didn’t do enough to protect his state’s prerogatives. Congress might satisfy the Clause’s literal requirements, he hypothesized, by limiting Maryland to one port at an inhospitable point on the Potomac, effectively requiring Baltimore shipping to stop in Virginia.

Whether Martin was right in his interpretation isn’t obvious, and it may not matter. Even without the Clause, it’s hard to imagine Congress considering legislation like his hypothetical today. (Indeed, such a proposal might have been a nonstarter in 1789.)

Besides, Congress can do many things that benefit particular states, but about which the Clause is silent. For example, siting military bases has enormous economic consequences, but no provision requires uniform distribution of such facilities. Furthermore, courts have held that, consistent with the Clause, Congress can “incidentally” benefit ports in one state but not in others—for example, by funding infrastructure like bridges and lighthouses. So interpreted, the Clause seems to have little effect today. That’s particularly so if the term “ports” is limited to its eighteenth-century maritime meaning—not including other transportation hubs, like airports.

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