In a unanimous vote, the Supreme Court vacated the 6th Circuit Court’s decision that the tax incentives violated the US Commerce Clause. The problem, according to some commentators, is that the decision was made on technical grounds. The plaintiffs, according to the Supreme Court, did not have “standing” to take the case to the federal court system.

The case will go back to the state courts, where the plaintiffs will continue to litigate, they say. Few legal experts think they have much chance of winning.


Advocates of tax credits would have preferred the Supreme Court to come out in support of the tax credits and end the controversy because future suits can still be brought challenging the credits. The field of potential plaintiffs has been narrowed considerably, however.

Investors can breath more easily but should still be cautious about how incentives are structured, including brownfield and economic zone incentives. It is safer to choose structures that are less likely to be sued, and to consult attorneys at each step.