ON WRIT OF CERTIORARI TO THE SUPREME COURT OF OREGON.
Thomas, J., delivered the opinion of the Court, in which Stevens, O'connor, Scalia, Kennedy, Souter, and Ginsburg, JJ., joined. Rehnquist, C. J., filed a dissenting opinion, in which Blackmun, J., joined.
JUSTICE THOMAS delivered the opinion of the Court.
Two Terms ago, in Chemical Waste Management, Inc. v. Hunt, 504 U.S. (1992), we held that the negative Commerce Clause prohibited Alabama from imposing a higher fee on the disposal in Alabama landfills of hazardous waste from other States than on the disposal of identical waste from Alabama. In reaching that conclusion, however, we left open the possibility that such a differential surcharge might be valid if based on the costs of disposing of waste from other States. Id., at , n. 9 (slip op., at 10, n. 9). Today, we must decide whether Oregon's purportedly cost-based surcharge on the in-state disposal of solid waste generated in other States violates the Commerce Clause.
Like other States, Oregon comprehensively regulates the disposal of solid wastes within its borders.*fn1 Respondent Oregon Department of Environmental Quality oversees the State's regulatory scheme by developing and executing plans for the management, reduction, and recycling of solid wastes. To fund these and related activities, Oregon levies a wide range of fees on landfill operators. See, e. g., Ore. Rev. Stat. §§ 459.235(3), 459.310 (1991). In 1989, the Oregon Legislature imposed an additional fee, called a "surcharge," on "every person who disposes of solid waste generated out-of-state in a disposal site or regional disposal site." § 459.297(1) (effective Jan. 1, 1991). The amount of that surcharge was left to respondent Environmental Quality Commission (Commission) to determine through rulemaking, but the legislature did require that the resulting surcharge "be based on the costs to the State of Oregon and its political subdivisions of disposing of solid waste generated out-of-state which are not otherwise paid for" under specified statutes. § 459.298. At the conclusion of the rulemaking process, the Commission set the surcharge on out-of-state waste at $2.25 per ton. Ore. Admin. Rule 340-97-120(7) (Sept. 1993).
In conjunction with the out-of-state surcharge, the legislature imposed a fee on the in-state disposal of waste generated within Oregon. See Ore. Rev. Stat. §§ 459A.110(1), (5) (1991). The in-state fee, capped by statute at $0.85 per ton (originally $0.50 per ton), is considerably lower than the fee imposed on waste from other States. §§ 459A.110(5) and 459A.115. Subsequently, the legislature conditionally extended the $0.85 per ton fee to out-of-state waste, in addition to the $2.25 per ton surcharge, § 459A.110(6), with the proviso that if the surcharge survived judicial challenge, the $0.85 per ton fee would again be limited to in-state waste. 1991 Ore. Laws, ch. 385, §§ 91-92.*fn2
The anticipated court challenge was not long in coming. Petitioners, Oregon Waste Systems, Inc. (Oregon Waste) and Columbia Resource Company (CRC), joined by Gilliam County, Oregon, sought expedited review of the out-of-state surcharge in the Oregon Court of Appeals. Oregon Waste owns and operates a solid waste landfill in Gilliam County, at which it accepts for final disposal solid waste generated in Oregon and in other States. CRC, pursuant to a 20-year contract with Clark County, in neighboring Washington State, transports solid waste via barge from Clark County to a landfill in Morrow County, Oregon. Petitioners challenged the administrative rule establishing the out-of-state surcharge and its enabling statutes under both state law and the Commerce Clause of the United States Constitution. The Oregon Court of Appeals upheld the statutes and rule. Gilliam County v. Department of Environmental Quality, 114 Ore. App. 369, 837 P.2d 965 (1992).
The State Supreme Court affirmed. Gilliam County v. Department of Environmental Quality of Oregon, 316 Ore. 99, 849 P.2d 500 (1993). As to the Commerce Clause, the court recognized that the Oregon surcharge resembled the Alabama fee invalidated in Chemical Waste Management, Inc. v. Hunt, 504 U.S. (1992), in that both prescribed higher fees for the disposal of waste from other States. Nevertheless, the court viewed the similarity as superficial only. Despite the explicit reference in § 459.297(1) to out-of-state waste's geographic origin, the court reasoned, the Oregon surcharge is not facially discriminatory "because of [its] express nexus to actual costs incurred [by state and local government]." 316 Ore., at 112, 849 P.2d, at 508. That nexus distinguished Chemical Waste, supra, by rendering the surcharge a "compensatory fee," which the court viewed as " prima facie reasonable," that is to say, facially constitutional. Ibid. The court read our case law as invalidating compensatory fees only if they are "'manifestly disproportionate to the services rendered.'" Ibid. (quoting Clark v. Paul Gray, Inc., 306 U.S. 583, 599 (1939)). Because Oregon law restricts the scope of judicial review in expedited proceedings to deciding the facial legality of administrative rules and the statutes underlying them, Ore. Rev. Stat. § 183.400 (1991), the Oregon court deemed itself precluded from deciding the factual question whether the surcharge on out-of-state waste was disproportionate. 316 Ore., at 112, 849 P.2d, at 508.
We granted certiorari, 509 U.S. (1993), because the decision below conflicted with a recent decision of the United States Court of Appeals for the Seventh Circuit.*fn3 We now reverse.
The Commerce Clause provides that "the Congress shall have Power . . . to regulate Commerce . . . among the several States." Art. I, § 8, cl. 3. Though phrased as a grant of regulatory power to Congress, the Clause has long been understood to have a "negative" aspect that denies the States the power unjustifiably to discriminate against or burden the interstate flow of articles of commerce. See, e. g., Wyoming v. Oklahoma, 502 U.S. , (1992) (slip op., at 15); Welton v. Missouri, 91 U.S. 275 (1876). The Framers granted Congress plenary authority over interstate commerce in "the conviction that in order to succeed, the new Union would have to avoid the tendencies toward economic Balkanization that had plagued relations among the Colonies and later among the States under the Articles of Confederation." Hughes v. Oklahoma, 441 U.S. 322, 325-326 (1979). See generally The Federalist No. 42 (J. Madison). "This principle that our economic unit is the Nation, which alone has the gamut of powers necessary to control of the economy, . . . has as its corollary that the states are not separable economic units." H. P. Hood & Sons, Inc. v. Du Mond, 336 U.S. 525, 537-538 (1949).
Consistent with these principles, we have held that the first step in analyzing any law subject to judicial scrutiny under the negative Commerce Clause is to determine whether it "regulates evenhandedly with only 'incidental' effects on interstate commerce, or discriminates against interstate commerce." Hughes, supra, at 336. See also Chemical Waste, 504 U.S., at (slip op., at 5). As we use the term here, "discrimination" simply means differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter. If a restriction on commerce is discriminatory, it is virtually per se invalid. 504 U.S., at , n. 6 (slip op., at 9, n. 6). See also Philadelphia v. New Jersey, 437 U.S. 617, 624 (1978). By contrast, nondiscriminatory regulations that have only incidental effects on interstate commerce are valid unless "the burden imposed on such commerce is clearly excessive in relation to the putative local benefits." Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970).
In Chemical Waste, we easily found Alabama's surcharge on hazardous waste from other States to be facially discriminatory because it imposed a higher fee on the disposal of out-of-state waste than on the disposal of identical in-state waste. 504 U.S., at (slip op., at 6). We deem it equally obvious here that Oregon's $2.25 per ton surcharge is discriminatory on its face. The surcharge subjects waste from other States to a fee almost three times greater than the $0.85 per ton charge imposed on solid in-state waste. The statutory determinant for which fee applies to any particular shipment of solid waste to an Oregon landfill is whether or not the waste was "generated out-of-state." Ore. Rev. Stat. § 459.297(1) (1991). It is well-established, however, that a law is discriminatory if it "'taxes a transaction or incident more heavily when it crosses state lines than when it occurs entirely within the State.'" Chemical Waste, supra, at (slip op., at 6) (quoting Armco Inc. v. Hardesty, 467 U.S. 638, 642 (1984)). See also American Trucking Assns., Inc. v. Scheiner, 483 U.S. 266, 286 (1987).*fn4
Respondents argue, and the Oregon Supreme Court held, that the statutory nexus between the surcharge and "the [otherwise uncompensated] costs to the State of Oregon and its political subdivisions of disposing of solid waste generated out-of-state," Ore. Rev. Stat. § 459.298 (1991), necessarily precludes a finding that the surcharge is discriminatory. We find respondents' narrow focus on Oregon's compensatory aim to be foreclosed by our precedents. As we reiterated in Chemical Waste, the purpose of, or justification for, a law has no bearing on whether it is facially discriminatory. See 504 U.S., at (slip op., at 5-6). See also Philadelphia, supra, at 626. Consequently, even if the surcharge merely recoups the costs of disposing of out-of-state waste in Oregon, the fact remains that the differential ...