The Court re-affirmed Carolene Products and once again applied the rational basis standard of review to an equal protection claim involving economic regulation in Armour v. City of Indianapolis (2012). In this case, a city that had levied assessments upon property owners for sewer assessments relieved persons who were making installment payments from making additional payments after the city switched to an alternative system of financing sewers. The city, however, refused to provide any refund to persons who had already paid in full by making lump sum payments. In a six to three decision, the Court held that the city did not violate the equal protection clause in its disparate treatment of the two classes of property owners. Since the classification involved “ordinary commercial transactions” rather than any “fundamental right” or “suspect” classification, the Court concluded that “rational basis review requires deference to reasonable underlying legislative judgments.” The Court found that administrative convenience provided the city with a rational basis for the classification because the costs of processing refunds would have been substantial. The Court observed that “ordinarily, administrative considerations can justify a tax-related distinction.”
In a dissent joined by Justices Scalia and Alito, Chief Justice Roberts contended that refunds would not impose a substantial burden on the city and that “the equal protection violation is plain” because the city charged “some homeowners 30 times what it charged their neighbors for the same hook-ups” (emphasis in original). The dissent contended that the Court’s decision was inconsistent with Allegheny Pittsburgh Coal Co. v. Commission of Webster City (1989), in which the Court held that a county violated the equal protection clause by assessing property taxes primarily on the basis of purchase prices, without subsequent adjustments to reflect increases in market value. This practice had created substantial disparities in the valuation of property that had similar market value. The Court’s majority opinion distinguished Allegheny on the ground that the disparate assessments were not rational because they “clearly and dramatically violated” state laws requiring equal valuation.