New Energy Co. of Indiana v. Limbach

In New Energy Co. of Indiana v. Limbach (1988) 486 U.S. 269, the Supreme Court invalidated an Ohio law providing a tax credit against the Ohio motor fuel sales tax for ethanol produced in Ohio or in a state granting similar tax advantages to ethanol produced in Ohio. New Energy Company manufactured ethanol in Indiana, a state that provided no such tax relief. Ohio defended its statute on the ground, among others, that it simply encouraged other states to provide ethanol credits for motor fuel taxes, and therefore did not burden but actually promoted interstate commerce in an environmentally sound product. The Supreme Court rejected this justification, quoting its earlier declaration that a state " 'may not use the threat of economic isolation as a weapon to force sister States to enter into even a desirable reciprocity agreement.' " ( Id. at p. 274.)