Amicus Brief — Japan Line, Ltd. v. County of Los Angeles

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No. 77-1378 } SEP & i978

ODAK ’

FON, JT

Iu the Supreme Court of the United States

OCTOBER TERM, 1978

JAPAN LINE, LTD., ET AL., APPELLANTS

Vv.

COUNTY OF LOS ANGELES, ET AL.

ON APPEAL FROM THE SUPREME COURT OF CALIFORNIA

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

WADE H. MCCREE, JR.,

Solicitor Genera’,

BARBARA ALLEN BABCOCK,

M. CARR FERGUSON,

Assistant Attorneys General,

KENT L. JONES,

Assistant to the Solicitor General,

LEONARD SCHAITMAN,

ERNEST J. BROWN,

Attorneys,

Department of Justice,

Washington, D.C. 20530.

INDEX

Ee TA LATOR ET EA

Statement

Summary of argument

Argument:

The Commerce Clause and the Supremacy

Clause deprive the states of authority to

levy ad valorem taxes on foreign-owned

and foreign-domiciled sea-borne contain-

ers

The “home port” rule ____

Appellants’ containers, like the ships

that carry them, are instruments of

foreign commerce ____

Imposition of the ad valorem tax on

appellants’ ships or on the contain-

ers carried in them is inconsistent

with the exclusive authority of the

federal government to regulate for-

eign commerce -

Imposition of the tax on appellants’

ships or the containers carried in

them interferes with the objectives

of the customs convention on contain-

ers and the comprehensive scheme of

federal regulation of instrumentali-

ties of foreign commerce .

Conclusion

Appendix A

Appendix B Saeko a

ad ee

ul baat

Hines v. Davidowitz, 312 U.S. 52 30

CITATIONS Cases—Continued Page

Cases: Page Leather’s Best, Inc. v. S.S. Mormaclynzx,

Ammex Warehouse Co. v. Department of 451 F.2d 800 12

Alcoholic Beverage Control, 224 F. Lehnhausen v. Lake Shore Auto Paris Co.,

Supp. 546 27 410 U.S. 356 — 31

Bob-Lo -pageag Co. v. . Michigan, 333 McGoldrick vy. weed Oil Cor De, 309 ‘US.

U.S. 9 414 _...... 25, 26, 27, 32

Braniff > Haove ys, Inc. v. . Nebraska ‘State Michelin Tire Corp. v. Wages, 423 U.S.

Board, 347 U.S. 590 16,17 OE Attic ocenad 2 10, 20, 31

Bremen, The v. Zapata Off-Shore Co., 407 Moorman Manufacturing Co. v. Bair, No.

US. 1. sake 22 77-454 (June 15,1978) ==——s—s—=«éQ2«4Y 909

Campbell v. . Hussey, 368 U.S. 297... 22 Morgan v. Parham, 83 US. (16 —

Chy Lung v. Freeman, 92 U.S. 275 - m 21 471 | ce ae 8 10,14

Cooley v. Board of Wardens, 53 U.S. (2 National Cable Television. Association v.

How.) 299 a 5, 8,9 United States, 415 U.S. 336 ___ 15

Department of Revenue V. , Association of Northeast Marine Terminal Co. v. Caputo,

Washington Stevedoring Companies, 432 U.S. 249 - 12

No. 76-1706 (April 26, 1978) —_. 18, 19, Ott v. Mississippi Barge Line, 336 US.

20, 31, 32 RGR OME tie I eels SP a 16

Douglas v. Seacoast Products, Inc., 431 ) Packet Co. v. Keokuk, 95 US. 80. 15

U.S. 265 . Wore a Died 27 Pullman’s Palace Car Co. v. Pennsylvania,

EVCO v. Jones, 409 U.S. 91. 19 141 US. 18 | 16

Exchange, The, 11 U.S. (7 Cranch) 116 15 Railroad Co. v. Maryland, 88. US. (21

Factor v. Laubenheimer, 290 U.S. 276.. 29 Wall.) 456 16

First Federal Savings & Loan Associa- Ray v. Atlantic Rich field Co., No. 16- 930

tion v. Tax Commission, No. 77-334 March 6, 1978) . _ 22, 30-32

(June 15, 1978) ; 29 Raymond Motor Transportation, Ine. v.

Gibbons v. Ogden, 22 U.S. (9 Wheat) 1 12 Rice, 434 U.S. 429 - 27

Harvester Co. v. Department of the Trea- Rice v. Santa Fe Elevator Corp., 331 U. s.

sury, 322 U.S. 340 19 BO SiieeaiaptapminperiiieNiaabtidociSmnibieictiiisasssd dy 22

Hays v. Pacifie Mail Steamship Co., 58 Sea-Land Service, Inc. vy. Count) y of Ala-

U.S. (17 How) 595 4, 5-6, 9, 10, 14 meda, 12 Cal. 3d 772, 528 P. 2456 __ 4

Henderson v. Mayor of New York, 92 Southern Pacific Co. v. ‘Arizona, 325 U.S.

U.S. 259 | . 12 761 | itiapsnetios ee tas 9

Cases—Continued

Southern Pacific Co. v. Kentucky, 222 U.S.

63 - miners

Standard Oil Co. v. _ Peck, 342 U. S. 382 -

Transportation Co. Vv. Parkersburg, 107

oF | eee

Western Live Stock v. Bureau of Revenue,

303 U.S. 250 _ _.

Zenith Radio Corp. v. _U nited States, No.

77-539 (June 21, 1978) - |

Constitution, treaties, statutes and regulations:

Constitution of the United States, Article

I, Section 10, Clause 3 -

Chicago Convention on International Civil

Aviation, 61 Stat. 1186, Article 24

Convention Between the United States of

America and Japan, 20 U.S.T. 967

Customs Convention on Containers, 20

U.S.T. 301

Chapter I, Article]

Chapter I, Article l(a). roe

Chapter II, Article 2 -_.................

Chapter II, Article 3 - |

Chapter II, Article 4 _-

Chapter IV, Article 11

General Agreement on Tariffs and Trades,

61 Stat. A3 ‘

Treaty of Friendship, Commerce and

Navigation Between the United States

and Japan, Article XI, 4 U.S.T. 2063

Page

_ 10,14

4, 23

Constitution, treaties, statutes and

regulations—Continued

Page

Federal Aviation Act of 1958, Section

1109(c), as amended, 49 U.S.C. 1509

(ce) . 28

Tariff Act of 1930, : as s added and amend-

ed, 19 U.S.C. 1001 et seq.:

Section 101,19 U.S.C.1202 15

Section 311, 19 U.S.C. 1311 25, 26

Section 322, 19 U.S.C. 1322 13, 15, 24, 28

Section 322(a), 19 U.S.C. 1322(a) 24 ©

Section 434, 19 U.S.C. 1434 28

Section 435, 19 U.S.C. 1435 28

Section 446, 19 U.S.C. 1446 __ 25

Section 484, 19 U.S.C. 1484 24, 28

46 U.S.C. 121 7 30

California Harbors and Navigation Code,

Section 4122 (West. 1978) 20

California Revenue and Taxation Code

(West. 1970):

Section 117 .

= ae 2

Section 405 2

Section 2192 eis 2

19 C.F.R. Part 4 Tee : 28

19 C.F.R. Part 6 “a é 28

19 C.F.R. 10.41a | ra 24, 28, 29

Section 10.41a(a) (1) 13, 24

Section 10.41(a) (3) 13

Section 10.4la(c) | 13, 24, 25

Section 10.4la(d) - 25

Section 10.4la(f) «5s 24

Miscellaneous : Page

Federalist Papers No. 32-34 (The Feder-

alist (B. Wright ed. 1961) ) : 30

Simon, The Law of Shipping Containers,

5 J. Mar. L. Com. 507 (1974) 11

Iu the Supreme Court of the United States

OCTOBER TERM, 1978

No. 77-1378

JAPAN LINE, LTD., ET AL., APPELLANTS

Vv.

COUNTY OF LOS ANGELES, ET AL.

ON APPEAL FROM THE SUPREME COURT OF CALIFORNIA

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

This brief is submitted in response to the Court’s

invitation of June 12, 1978.

QUESTION PRESENTED

Whether freight containers owned by Japanese

shipping companies, carried in Japanese vessels en-

gaged in commerce between the United States and

Japan with their home port in Japan, intermittently

in the United States to unload and load freight car-

ried in foreign commerce, may be subject to personal

(1)

property taxes imposed by municipalities in the State

of California.

STATEMENT

Appellants are Japanese shipping corporations,

which have their principal places of business and com-

mercial domiciles in Japan. They operate vessels used

exclusively in foreign commerce. The vessels are

registered in Japan and have their home ports in

Japan. These vessels are designed and constructed

to accommodate large shipping containers, and all

cargo is brought onto the vessel, stored during transit,

and removed at destination in these containers. The

containers, which are owned by appellants, have their

home port in Japan and are used constantly and

exclusively for the transportation of cargo for hire

in foreign commerce. Each container is in constant

transit save for repair time and time awaiting the

loading of cargo. All of the containers owned by

appellants are subject to property tax in Japan and

are in fact taxed in Japan (J.S. App. 2a-3a, 17a-18a).

A number of appellants’ containers were present in

the County of Los Angeles and the City of Los An-

geles on the dates used by appellees for tax computa-

tion purposes.’ None of these containers had been

1 Property present in California on March 1 of any year

is subject to tax in the State. See California Revenue and

Taxation Code, Sections 117, 405, and 2192 (West. 1970). This

roughly apportions the property tax for mobile goods such as

containers. Although no container is present in California con-

sistently, some containers are there at any time. For example,

if each container is present in California for approximately

in California for as much as six months during the

twelve months immediately preceding those dates. The

average stay of the containers in California was less

than three weeks (J.S. App. 2a-3a, 15a-16a, 18a).

The fair market values of the containers present in

the County and City of Los Angeles on the critical

date of the years in question ranged from a low of

$553,200 in the case of Showa Shipping Co. in 1971

to a high of $1,768,280 in the case of Kawasaki

Kisen Kaisha, Ltd., in 1972. The County of Los

Angeles and the City of Los Angeles levied the state

property tax with respect to the assessed value of

these containers.* The taxes for 1970 through 1972

were: Japan Line, Ltd., $100,632.85; Kawasaki Kisen

Kaisha, Ltd., $117,616.44; Mitsui O.S.K. Lines, Ltd.,

$111,255.25; Nippon Yusen Kaisha, $110,175.04;

Showa Shipping Co., $50,640.69; Yamashita-Shinni-

hon Steamship Co., Ltd., $69,416.39. Appellants paid

the taxes under protest and filed a suit for refund in

state court (J.S. App. 15a-17a).

three weeks each year, the number of containers present in

California on any arbitrarily selected date is approximately

3/52 of the total number of containers that enter California

at any time during the year. The number of containers physi-

cally present in Los Angeles County on March 1 of 1970, 1971,

and 1972, was representative of the number of containers

present in Los Angeles County on other dates throughout the

tax year.

* The property tax rate applied to the containers during

the years involved in this case was approximately 11% of

assessed value, and the assessed value of the property ordi-

narily is 25% of fair market value. See J.S. App. 16a.

The superior court held that the containers in

question were instrumentalities of foreign commerce

and therefore, under the “home port” rule of Hays

v. Pacific Mail Steamship Co., 58 U.S. (17 How.) 596

(1855), were immune from property taxation ex-

cept in Japan (J.S. App. 26a-27a). The court also

held (id. at 27a-28a) that imposition of the property

tax by the County and the City was inconsistent with

the provisions of the Treaty of Friendship, Commerce

and Navigation Between the United States and Japan

(4 U.S.T. 2063).

The court of appeal, following the decision in Sea-

Land Service, Inc. v. County of Alameda, 12 Cal. 3d

772, 528 P.2d 56 (1974), a case involving a domestic

carrier, rejected the “home port” rule as anachro-

nistic and held that instrumentalities of foreign com-

merce are subject to apportioned property taxation

(J.S. Supp. SA 5). The court also rejected the con-

tention that property taxes on sea-borne containers

temporarily off-loaded by vessels in foreign commerce

constitute a duty of tonnage that is prohibited by

Article I, Section 10, cl. 3 of the Constitution (J.S.

Supp. SA 4-SA 6). Finally, the court concluded that

the treaty provisions invoked by appellants have no

application to state or local property taxation of

*'The superior court relied principally on Article XI of the

Treaty, which provides that nationals of the contracting

parties are not to be assessed taxes “within the territories

of such other Party, [that are] more burdensome than those

borne by nationals and companies of such other Party.” 4

U.S.T. at 2072.

instruments of foreign commerce (J.S. Supp. SA

6-SA 9). The court of appeal therefore reversed the

judgment of the superior court (J.S. Supp. SA 9).

The Supreme Court of California affirmed the

decision with some expansion and editorial emenda-

tions as its own opinion (J.S. App. la-13a).

SUMMARY OF ARGUMENT

The question in this case is whether the State of

California or its cities and counties constitutionally

may impose an annual ad valorem property tax on

cargo containers owned by Japanese shipping lines,

based and taxed in Japan, carried on Japanese ships

engaged in commerce between Japan and the United

States, and briefly in California for the sole purpose

of discharging and loading cargo carried in foreign

commerce by those ships.

In the view of the United States, they may not.

This Court has long recognized that the Commerce

Clause commits to the exclusive authority of the na-

tional government the regulation of those aspects of

interstate and foreign commerce that, by their na-

ture, require uniform national treatment. See, e..,

Cooley v. Board of Wardens, 53 U.S. (12 How.) 299

319 (1851). We believe that foreign-owned snd

foreign-domiciled instrumentalities of foreign com-

merce should be accorded uniform tax treatment. The

necessary uniformity is supplied by this Court’s deci-

sion that only the “home port” may impose ad

valorem property taxes on sea-going ships. Hays v.

Pacific Mail Séeamship Co., 58 U.S. (17 How.) 596

(1855). ° :

The “liome port” rule should apply to containers

as well as to ships. The development of the container

and the container-ship is one ofthe major advances

in the technology of transportation, and the container

has assumed a character as an instrument of com-

merce identical to the ship itself. It completes the

voyage in foreign commerce not at the water’s edge

but only when it discharges the cargo that it carries.

The United States recognizes the status of the con-

tainer as comparable to that of a ship by adhering

to the Customs Convention on Containers, 20 U.S.T.

301, whereby containers are admitted into the sig-

natory nations for limited periods free of custom

duties and restrictions. Neither the courts below nor

the appellees have regarded the containers as dif-

ferent from the ships that carry them. Indeed, the

California State Board of Equalization has proposed,

as a result of the decision of the Supreme Court of

California in this case, to impose its property tax on

foreign aircraft arriving in California and operating

solely in foreign commerce (App., infra, la-lla).

It is true that this Court recently has permitted

non-domiciliary states to impose ad valorem property

taxes on railroad rolling stock, vessels on inland

waterways, anc aircraft of domestic airlines, when

the taxes were apportioned to reflect the extent to

which the property was present in the taxing state.

But in each case the Court observed that its decision

did not relate to ocean-going vessels. The Court’s

recent decisions not only leave unquestioned Hays and

other decisions regarding the taxation of sea-going

vessels but also hold that a system that permits

imposition of apportioned property taxes by non-

domiciliary states is not consistent with taxation

of the full value of the property by domiciliary states.

Because foreign nations have the power and right

recognized by the custom of nations to tax the full

value of the ships and containers of their nations, no

system of apportionment can prevent multiple taxa-

tion. Any rule allowing property taxes to be col-

lected by non-domiciliary jurisdictions would lead

to multiple tax burdens and thus disadvantage one

form of commerce solely because it is foreign.

This Court has not been reluctant to hold inopera-

tive state statutes having impact upon foreign na-

tionals-or foreign commerce where it has perceived

friction with federal policy or federal interests. We

are informed by the Department of State that six

foreign nations have expressed concern about Cali-

fornia’s tax on containers. See App., infra, 15a.

Even more have raised questions about the State’s

proposal to impose its property tax on foreign air-

planes. Jbid. Jf these expressions of concern are

followed by action by nations feeling themselves dis-

advantaged, as we must anticipate they may be, the

responsive action will affect not only California but

also the United States.

Moreover, the action of California and the appellees

in this case lessens the effectiveness of the Customs

Convention on Containers in aiding foreign commerce

and interferes with the comprehensive scheme of fed-

eral regulation of instrumentalities of foreign com-

merce. The state tax thus constitutes an obstacle to

the realization of the foreign policy of the United

States. It intrudes, as the voice of one of 50 states,

into an area where the United States has spoken and

should continue to speak with one voice.

ARGUMENT

THE COMMERCE CLAUSE AND THE SUPREMACY

CLAUSE DEPRIVE THE STATES OF AUTHORITY

TO LEVY AD VALOREM TAXES ON FOREIGN-

OWNED AND FOREIGN-DOMICILED SEA-BORNE

CONTAINERS.

A. The “Home Port” Rule

In Cooley v. Board of Wardens, 53 U.S. (12 How.)

299 (1851), this Court for the first time dealt ex-

plicitly with the question (53 U.S. (12 How.) at 318)

“whether the grant of the commercial power to Con-

gress, did per se deprive the states of all power” to

deal with foreign and with interstate commerce. The

Court’s response demonstrated the difficulties of giv-

ing an unvarying answer (id. at 319):

Either absolutely to affirm, or deny that the

nature of this power requires exclusive legisla-

tion by Congress, is to lose sight of the nature of

the subjects of this power, and to assert concern-

ing all of them, what is really applicable but to

a part. Whatever subjects of this power are in

their nature national, or admit only of one uni-

form system, or plan of regulation, may justly

be said to be of such a nature as to require

exclusive legislation by Congress. * * *

The Cooley formulation has at times been phrased

somewhat differently (see Southern Pacific Co. v.

Arizona, 325 U.S. 761, 775-776 (1945) ), but in every

case where the impact of a state statute on interstate

or foreign commerce has drawn into question the

constitutional validity of the statute, the Court has

appraised the federal interest and the degree of state

interference before giving a constitutional answer.*

Soon after the decision in Cooley, this Court held in

Hays v. Pacific Mail Steamship Co., supra, that Cali-

fornia could not impose its property tax on an ocean-

going vessel that was engaged in interstate and in-

ternational commerce and that stopped in California

ports to unload and load mail, passengers, and freight,

and for repairs and refitting. The Court observed

that the vessel was owned and registered in another

state and that, while engaged in interstate and for-

eign trade, the vessel could not be regarded as “abid-

ing within [the] limits [of California] so as to be-

*In Bob-Lo Excursion Co. v. Michigan, 333 U.S. 28 (1948),

for example, the Court found that an equal-accommodation

statute of the State of Michigan could be anplied to a vessel

transporting passengers between Detroit and a nearby amuse-

ment park on Canadian soil. This was because, in the unusual

circumstances of the case, there was “nothing out of harmony,

much less inconsistent, with our federal policy in the regula-

tion of commerce between the two countries; nor, so far as we

are advised, with Canadian law and policy.” Jd. at 37. The

Court was nevertheless careful to recognize that “we must

be watchful of state intrusion into intercourse between this

country and one of its neighbors.” Jd. at 35.

come incorporated with the other personal property

of the state * * *.” Id. at 599. Although California

could impose “municipal and sanitary reguiations

* * * not inconsistent with the constitution and laws

of the general government” (ibid.), the Court held

that only the home port could impose a property tax.

Accord, Southern Pacific Co. v. Kentucky, 222 U.S.

63 (1911); Morgan v. Parham, 83 U.S. (16 Wall.)

471, 477 (1872).

Although, as we discuss at pages 15-17, infra,

this Court has held, with respect to various forms of

domestic commerce, that the states may levy “ap-

portioned” property taxes—that is, taxes fairly re-

flecting the extent to which particular transient prop-

erty actually is present in a state—it has been care-

ful in each case to exclude sea-borne transport from

its holding. We believe that Hays continues to state a

sound principle which rests on the uniform practice of

nations and protects the federal interests in the reg-

ulation of sea-borne commerce, particularly in com-

merce with foreign nations, and in speaking with one

voice in matters affecting our foreign relations. See

Michelin Tire Corp. v. Wages, 423 U.S. 276, 285

(1976). As we shall indicate, the imposition of the

tax by appellees entails substantial intrusion on these

interests. We turn first, however, to consider the

specific property involved, appellants’ containers.

B. Appellants’ Containers, Like The Ships That Carry

Them, Are Instruments Of Foreign Commerce

In the technology of sea-borne transportation in

recent decades, the container and the container-ship

stand out as among the most significant develop-

ments:

One of the most important technological devel-

opments in the transportation of goods by sea

since steam replaced sail is the recent advent of

the “container revolution”. This radically novel

concept of transferring, handling, stowing, dis-

charging and delivering hundreds of packages

simultaneously and mechanically by means of

large reusable permanent metal containers, con-

tainerships, special container handling equip-

ment and container terminals is so efficient a

labor-saving device that it has already, to a large

extent, altered conventional methods of shipping

large numbers of packages individually. In

short, containerization has rendered shipping “a

whole new ball-game’”’.

Simon, The Law of Shipping Containers, 5 J. Mar. L.

Com. 507 (1974). Containers of the type involved

in this litigation are not merely packages to contain

goods, but are “a permanent, reusable article of trans-

port equipment * * *.” Jd. at 513. A container is

(ibid. )

durably made of metal, and equipped with doors

for easy access to the goods and for repeated

use. It is designed to facilitate the handling,

loading, stowage aboard ship, carriage, discharge

from ship, movement, and transfer of large

numbers of packages simultaneously by mechani-

cal means to minimize the cost and risks of man-

ually processing each package individually. It

functions primarily as ship’s gear for cargo han-

dling, and is usually provided by the carrier.

As this Court put it, “the container is a modern sub-

stitute for the hold of the vessel.” Northeast Marine

Terminal Co. v. Caputo, 432 U.S. 249, 270 (1977).

The Court held in Caputo that loading and unloading

a container is the same thing as loading and unload-

ing the ship itself, thus establishing that a container

is “functionally a part of the ship * * *.” Leather’s

Best, Inc. v. S. S. Mormaclynx, 451 F.2d 800, 815

(2d Cir. 1971).

The container, just as the ship, is continuously

engaged in foreign commerce from the time its cargo

is loaded and movement starts until its cargo is dis-

charged at destination. As the superior court ob-

served (J.S. App. 26a), the containers involved in

this case “only come into this country for the pur-

pose of bringing in cargoes or shipping them out in

foreign commerce. There is no interstate or intra-

state use.” And the Supreme Court of California

acknowledged (id. at 2a) that “[t]hey are used

exclusively for the transportation of cargo for hire in

foreign commerce.” °

’>This Court recognized as early as 1824, in the seminal

opinion of Chief Justice Marshall in Gibbons v. Ogden, 22 U.S.

(9 Wheat.) 1, 195, that foreign commerce “does not stop at

the jurisdictional lines of the several States” but proceeds

within the states until the movement in commerce is completed.

See also Henderson V. Mayor of New York, 92 U.S. 259, 271

(1875).

The United States, in common with many other

nations, recognizes containers as instruments of for-

eign commerce integral to the ships that carry them.

Chapter II, Article 2 of the Customs Convention on

Containers, 20 U.S.T. 301, 304, provides for the “tem-

porary admission [of sea-borne containers] free of

import duties and import taxes and free of import

prohibitions and restrictions” when they are imported

for use solely in foreign commerce and subject to

reexportation. Similarly, 19 C.F.R. 10.4la(a)(3)°

designates sea-borne containers as “instrumentalities

of international traffic” within the meaning of 19

U.S.C. 1322. Pursuant to these regulations and Sec-

tion 1322, containers may be bonded and “released

without entry or the payment of duty” so long as they

are used exclusively in foreign commerce and subject

to reexportation. 19 C.F.R. 10.4la(a)(1), (ec). Ina

number of bilateral income tax conventions, including

the Convention Between the United States of America

and Japan, 23 U.S.T. 967, 987, 1084, and 1093, the

United States further associates containers with the

ships that carry them by providing that the income

from the use of containers and related equipment in

international traffic shall be treated in the same fash-

°19 C.F.R. 10.41(a) (3) provides:

As used in this section, “instruments of international

traffic includes the normal accessories and equipment

coy ene with any such instrument which is a “container”

as defined in Article 1 of the Customs Convention

Containers. at

ion as income from the ships in connection with which

they are used.

Neither the court below nor appellees have sought

to treat the appellants’ containers as other than in-

strumentalities of foreign commerce or to differenti-

ate them in any fashion from the ships that were de-

signed and constructed to carry them. Indeed, after

the decision of the Supreme Court of California in

this case, the California State Board of Equalization

gave notice of public hearing on its proposal to amend

the California Administrative Code to make foreign

aircraft operated solely in foreign commerce sub-

ject to property taxation in California. App., infra,

la-lla. The notice of public hearing was cancelled,

subject to possible rescheduling, only after this Court

set the present case for oral argument (id. at 12a-

13a).

For these reasons, we believe that the question of

the states’ constitutional power to tax appellants’ con-

tainers is not distinct from the question of their

power to tax the vessels on which the containers

are carried.

C. Imposition Of The Ad Valorem Tax On Appellants’

Ships Or On The Containers Carried In Them Is

Inconsistent With The Exclusive Authority Of The

Federal Government To Regulate Foreign Commerce

As we have noted, this Court held in Hays v.

Pacific Mail Steamship Co., supra, in Morgan v.

Parham, supra. and in Southern Pacifie Co. v. Ken-

tucky, supra, that only the home port, or the juris-

diction in which it is located, may impose a property

tax on ocean-going ships. Other ports in which those

ships may be found from time to time may not con-

stitutionally impose a general property tax on the

vessels. Those decisions, expressing the mandate of the

Constitution, express as well the custom of nations.

We are informed by the Department of State that

after inquiry of its posts abroad, it determined that

only one nation, Afghanistan, imposes property taxes

on foreign containers or other instruments of foreign

commerce entering its jurisdiction (App., infra, 14a).

All other nations have adhered to the international

custom of allowing containers, as well as vessels

and other instruments of foreign commerce, to be

introduced for the exclusive purpose of conducting

such commerce free of all customs duties and gen-

eral taxes, including property taxes.’ Cf. 19 U.S.C.

1322; 19 U.S.C. 1202 (General Note 5(e)). Al-

though positive law may override international cus-

toms that bear on ships and instruments of com-

merce of other nations, see The Exchange, 11 U.S.

(7 Cranch) 116, 136, 144 (1812), such law can be

enacted only at the national level if the nation is to

speak with one voice in matters of foreign commerce.

It is true that, with respect to the several forms

of inland transportation, this Court has held that

instrumentalities of interstate commerce are subject

'“Fees” that are related to the value of specific services

provided to vessels and containers, as opposed to generai taxes

to support the operations of government (see National Cable

Television Association V. United States, 415 U.S. 336, 340-341

(1974)), are, however, permissibly charged under the custom

of nations. See App., infra, 14a-15a. Cf. Hays v. The Pacific

Mail Steamship Co., supra, 58 U.S. (17 How.) 596; Packet Co.

v. Keokuk, 95 U.S. 80, 88-89 (1877).

to apportioned property taxation by the states in

which they operate. But in each instance it has been

careful to state that its decision did not involve for-

eign or ocean-borne commerce. In Pullman’s Palace

Car Co. v. Pennsylvania, 141 U.S. 18, 23-24 (1891),

upholding apportioned property taxation of railroad

rolling stock engaged in interstate commerce, the

Court explicitly differentiated the case of ships and

vessels upon the high seas. Quoting from Railroad

Co. v. Maryland, 88 U.S. (21 Wall.) 456, 470 (1874),

the Court pointed out (141 U.S. at 24) that:

Again, the vehicles of commerce by water being

instruments of intercommunication with other

nations, the regulation of them is assumed by

the national legislature. So that state interfer-

ence with transportation by water, and especially

by sea, is at once clearly marked and distinctly

discernible. But it is different with transporta-

tion by land.

Similarly, when the Court upheld apportioned prop-

erty taxation of barges on the Mississippi River by

non-domiciliary states in Ott v. Mississippi Barge

Line, 336 U.S. 169 (1949), it was careful to point

out that “[w]e do not reach the question of taxability

of ocean carriage but confine our decision to trans-

portation on inland waters.” Jd. at 173-174. And in

Braniff Airways, Inc. v. Nebraska State Board, 347

U.S. 590 (1954), upholding Nebraska’s apportioned

property taxation of the aircraft of an airline domi-

ciled in another state, the Court differentiated the

“home port” rule in Hays and other decisions involv-

ing sea-borne transportation, remarking (347 U.S.

at 600):

A closer analogy exists between planes flying in-

terstate and boats that ply the inland waters.

We perceive no logical basis for distinguishing

the constitutional power to impose a tax on such

aircraft from the power to impose taxes on river

boats. Ott v. Mississippi Valley Barge Line Co.,

336 U.S. 169 * * *,

But the Court has done more than leave Hays and

companion decisions unquesticned. It has held in

Standard Oil Co. v. Peck, 342 U.S. 382 (1952), that

its decisions upholding apportioned property taxation

of vessels on inland waters, and of aircraft of domes-

tic airlines engaged in interstate flights, neces-

sarily entailed disapproval of taxation of the full

value of those instrumentalities of interstate com-

merce by the jurisdictions of the domicile or home

base of the owner (id. at 384): “The rule which per-

mits taxation by two or more states on an apportion-

ment basis precludes taxation of all of the property

by the state of the domicile.” Accord, Braniff Air-

ways, Inc. v. Nebraska State Board, supra, 347 U.S.

at 601-602. In other words, one of the foundations

for the Court’s approval of apportioned property tax-

ation has been its ability to enforce full apportion-

ment by all of the potential taxing bodies, so that no

property was subject to multiple taxation on its full

value.

But neither the Court nor the United States as a

whole can ensure full apportionment when one of the

taxing bodies is a foreign nation. We deal here with

ships, and containers, owned by Japanese corporations,

based in Japan, subject to property taxation in Japan,

and in fact taxed in Japan (J.S. App. 18a). As the

superior court pointed out (id. at 28a): “There is

no way to prorate the [taxes on this property], as we

do in interstate commerce. The Japanese would be

paying a double tax, while a domestic company would,

by reason of proration, be paying only one tax.” The

multiple burden that unapportioned taxation places

on foreign-owned instruments of foreign commerce is

thus a reality and not merely “an abstraction.” De-

partment of Revenue vy. Association of Washington

Stevedoring Companies, No. 76-1706 (April 26,

1978), slip op. 11 (hereafter Washington Stevedor-

ing).. Only the application of the “home port” rule

®*In Washington Stevedoring this Court upheld application

of a general state occupations’ tax to stevedoring. The Court

stated that, because the incidence of the tax was on stevedor-

ing services performed wholly within one state, “the tax is

properly apportioned and multiple burdens logically cannot

occur.” Slip op. 11. In this case, however, the incidence of the

tax is on property employed as an instrumentality of foreign

commerce that comes within the jurisdiction of several na-

tions. Each nation may claim a right to tax all or part of

the property value. Moreover, in Washington Stevedoring

the Court was careful to observe that the tax on stevedoring

did not interfere with our foreign relations because it was

applied to services performed wholly in the State of Washing-

ton and was not assessed against any “foreign business or

vessel * * *.” Jd. at 19. The tax involved in this case has

directly affected our foreign relations by its application to

foreign-owned instruments of foreign commerce. See pages

20-22, infra.

can make our practice consistent with that of other

nations and avoid a multiple tax burden on foreign

commerce that domestic commerce does not share.

This Court has held that a state tax or regulation

that disadvantages interstate or foreign commerce

simply because it is interstate or foreign interferes

with the exclusive national authority to regulate such

commerce and is thus invalid under the Supremacy

Clause. See Washington Stevedoring, supra, slip op.

15; EVCO v. Jones, 409 U.S. 91, 93-94 (1972);

Harvester Co. v. Department of the Treasury, 322

U.S. 340, 349, 358-362 (1944) (Rutledge, J., con-

curring); Western Live Stock v. Bureau of Revenue,

303 U.S. 250, 255-256 (1938). The Supreme Court

of California reasoned in this case, however, that the

double taxation of foreign-owned containers that re-

sults from the state scheme is “not attributable to

* * * the taxing state” but instead to the foreign

state, and that it can be alleviated by “international

agreement” (J.S. App. 6a). But the state cannot dic-

tate to the United States or to foreign nations how to

agree on matters of foreign policy or foreign com-

merce; nor can the national government unilaterally

impose international agreements on foreign nations.’

The state tax must thus be evaluated within the real-

istic framework of the custom of nations; it is within

that framework that the state tax creates an imper-

* Nothing could prohibit the Government of Japan from

taxing its nationals and corporations on the full value of their

property, and it now does so.

—_—

missible multiple burden on foreign-owned instru-

ments of foreign commerce.”

If it were thought that treaties could or should be

adopted to establish systems of apportioned taxation

of property in international commerce, this would, of

course, be a matter of national, not state concern.

We are informed by the Department of State that six

foreign governments, including some of our most im-

portant trading partners, have written to the Depart-

ment expressing concern about the effect on foreign

commerce of the California container tax (App.,

infra, 15a). In addition, 12 countries have sent

diplomatic notes concerning the stated intention of

owned instrumentalities of foreign commerce is sufficient by

itself to invalidate the tax under the Commerce Clause. We

note, however, that it appears that the tax, as applied to

foreign-owned containers, may be invalid for the additional

reason that it is not fairly related to the services provided

by the State. Although the factual record in this case is in-

adequate to support firm conclusions, it seems implicit from

the findings of the superior court (J.S. App. 16a-19a) that,

for the large part of their presence in this country, the con-

tainers taxed in this case are located at the wharf or in re-

lated dockside facilities. While they are thus located, they are

subject to ordinary wharfage or dockage fees assessed as com-

pensation for services actually provided by the State. See

California Harbors and Navigation Code, Section 4122 (West.

1978); Appellants’ Br. 46-47. Additional general taxation on

an ad valorem basis could thus subject the containers to taxa-

tion by the State twice under the same theory for the same

services. The case is thus distinct in this regard from the

general occupations tax upheld in Washington Stevedoring,

supra, and the general ad valorem tax upheld in Michelin Tire

Corp. V. Wages, supra, where no double taxation by the assess-

ing state was involved.

the State of California (id. at la-1la) to permit local

personal property taxation of foreign flag aircraft

flown to and from California in foreign commerce

(id. at 15a). These expressions of concern over

action disadvantageous to our trading partners may

be followed, if they produce no satisfactory response,

by other action. If the California tax should lead

to responsive actions (say, the imposition of counter-

vailing taxes) by nations deeming themselves disad-

vantaged, it could be anticipated that the responsive

action would be not to California, or to California

interests alone, but to the interests of the United

States.”

This case thus falls within the scope of the rule,

stated in Moorman Manufacturing Co. v. Bair, No.

“ This Court recognized an analogous situation in Chy Lung

Vv. Freeman, 92 U.S. 275 (1875). California had detained a

number of immigrant passengers on a ship from China because

of their failure to give bond, required by a California statute,

intended to indemnify counties, towns, and cities against lia-

bility for their support or maintenance for two years. In

holding that the Constitution prohibited California’s scheme.

the Court pointed out (id. at 279): .

* * * [I]f this plaintiff and her twenty companions had

been subjects of the Queen of Great Britain, can any one

doubt that this matter would have been the subject of in-

ternational inquiry, if not of a direct claim for redress?

Upon whom would such a claim be made? Not upon the

State of California; for, by our Constitution, she can hold

no exterior relations with other nations. It would be made

upon the government of the United States. If that govern-

ment should get into a difficulty which would lead to war,

or to suspension of intercourse, would California alone

suffer, or all the Union?

77-454 (June 15, 1978), slip op. 12, that “the free-

dom of the States to formulate independent policy in

{the] area [of commerce] may have to yield to an

overriding national interest in uniformity * * *.”

“We cannot have trade and commerce in world

markets and international waters exclusively on our

terms, governed by our laws, and resolved in our

courts.” The Bremen v. Zapata Off-Shore Co., 407

U.S. 1, 9 (1972). The taxation of foreign-based in-

struments of foreign commerce is thus a matter that

is subject only to a national rule conformable with

the practice of nations or adopted pursuant to the

authority of the federal government.

D. Imposition Of The Tax On Appellants’ Ships Or The

Containers Carried In Them Interferes With The

Objectives Of The Customs Convention On Containers

And The Comprehensive Scheme Of Federal Regula-

tion Of Instrumentalities Of Foreign Commerce

The Commerce Clause affords Congress the power

to “regulate commerce with foreign nations, and

among the several States * * *.” Although a state

may, in some circumstances, take action that affects

foreign or interstate commerce, a state may not in-

trude in an area where there is pervasive federal

regulation. Ray v. Atlantic Richfield Co., No. 76-930

(March 6, 1978); Campbell v. Hussey, 368 U.S. 297,

300 (1961). Nor may a state take action that de-

feats the objectives of federal regulation. Rice v.

Santa Fe Elevator Corp., 331 U.S. 218, 229-230

(1947). In the instant case, a comprehensive ar-

rangement of federal regulation has been adopted;

this arrangement precludes general state taxation ™

of foreign-owned instruments of foreign commerce,

and of sea-borne containers in particular.”

Article 2 of the Customs Convention on Containers

requires the United States to grant “temporary ad-

mission free of import duties and import taxes and

free of import prohibitions and restrictions * * * to

containers” used exclusively in international com-

merce. 20 U.S.T. at 304." Article 1(a) of the Con-

* Tolls and fees charged in connection with specific services

rendered by the states to instruments of foreign commerce

are not affected by the federal scheme. See note 7, supra. Cf.

Transportation Co. V. Parkersburg, 107 U.S. 691, 696 (1882).

Nothing in our argument or in the Court’s cases would pre-

vent the states from collecting wharfage fees and other

similar user charges.

** Appellants argue (Br. 32) that Article XI of the Treaty

of Friendship, Commerce and Navigation Between the United

States and Japan (4 U.S.T. 2063) prohibits application of the

state tax to their containers. The United States does not sup-

port this contention. Article XI states only that nationals of

the contracting parties are not to be assessed taxes “within

the territories of such other Party, [that are] more burden-

some than those borne by nationals and companies of such

other Party.” 4 U.S.T. at 2072. This provision guarantees

that the United States will not levy on Japanese nationals,

“within the [United States],” taxes that exceed those that it

levies on its own nationals. The treaty does not purport to

equalize world-wide tax burdens; so long as appellants are not

treated differently from United States citizens under domestic

tax statutes, the treaty has no application.

* Under Article 11 of the Customs Convention on Con-

tainers, 20 U.S.T. at 308, containers that are used “even

occasionally” for domestic traffic while in a foreign nation

may be subjected to duties and taxes within that nation.

vention provides that “the term ‘import duties and

import taxes’ shall mean not only Customs duties but

also all duties and taxes whatsoever chargeable by

reason of importation.” Jbid. The obligations of the

United States under the Convention are implemented

by regulations (19 C.F.R. 10.41a) adopted by the Sec-

retary of the Treasury pursuant to Section 322(a) of

the Tariff Act of 1930, 19 U.S.C. 1322(a). This

statute authorizes the Secretary to grant the “cus-

tomary exceptions from the application of the customs

laws” to “[v]ehicles and other instruments of inter-

national traffic.”

Under the Secretary’s regulations and the Customs

Convention itself, the United States allows the tem-

porary admission of containers without formal entry

into the commerce of the United States,” and without

payment of duty, when the containers are being used

exclusively in international commerce. Customs Con-

vention on Containers, Articles 3, 11, 20 U.S.T. at

306, 308; 19 C.F.R. 10.4la(a)(1), (c), (f).° Ad-

mission is conditioned, however, on payment of a

bond (1) to secure compliance with the requirement

1° All imported articles (with certain specified exceptions)

must be formally entered into the commerce of the United

States within five days of arrival in a port of the United

States. 19 U.S.C. 1484.

Reexportation may be excused because of damage to the

container or at the election of the owner. However, customs

duties will then become applicable (Customs Convention on

Containers, Article 4, 20 U.S.T. at 306) and the container must

then be formally entered into commerce under 19 U.S.C.1484.

See note 15, supra.

that the containers be reexported and (2) to ensure

that the container is used exclusively for foreign

commerce. 19 C.F.R. 10.4la(c). See note 14, supra.

The effect of granting temporary admission in a

bonded status for containers used exclusively in

foreign commerce is to preclude these articles from

entering the commerce of the United States. The

containers cannot be used for the transportation of

goods in interstate commerce or be sold or used in

domestic commerce without losing their status as “‘in-

struments of international traffic” and becoming sub-

ject to formal entry and the assessment of duties.

19 C.F.R. 10.41a(d).”

In allowing the temporary admission of such arti-

cles under bond and without formal entry into the

commerce of the United States, the national govern-

ment has given to “instruments of international traf-

fic,” and to shipborne containers in particular, the

same status it gives under the customs laws to arti-

cles admitted to a “bonded manufacturing ware-

house.” 19 U.S.C. 1311. Under the analogous “bond-

ed warehouse” provision, articles may be admitted

into the United States under bond, altered by “manu-

facture * * * while in bond * * * and then withdraw[n]

* * * for export * * * free of the import duty

which would otherwise be payable.” * In McGoldrick

v. Gulf Oil Corp., 309 U.S. 414 (1940), this Court

17 Similar treatment is afforded under the customs laws for

the supplies and stores that are retained on vessels arriving

in the United States from foreign ports. 19 U.S.C. 1446.

** McGoldrick v. Gulf Oil Corp., 309 U.S. 414, 422 (1940).

held that a state may not impose its general sales

tax on articles brought into the United States pur-

suant to the bonded warehouse provision. The Court

determined that the federal exemption from customs

duties for articles admitted to a bonded warehouse

under 19 U.S.C. 1311 is “tantamount to a declara-

tion that * * * the imported merchandise shall not

become a part of the common mass of taxable prop-

erty within the state * * * and shall not become sub-

ject to the state taxing power.” Jd. at 429. The

Court’s reasoning was based on the fact that the

“obvious tendency of the [federal] exemption” from

duties for articles admitted to a bonded warehouse

“is to encourage” the commerce that would otherwise

be hindered by the imposition of the tax. Jd. at 427;

see id. at 428. As the Court noted, however, (id.

at 429):

It is evident that the purpose of the Con-

gressional regulation of the commerce would fail

if the state were free at any stage of the trans-

action to impose a tax which would lessen the

competitive advantage conferred on the importer

by Congress, and which might equal or exceed

the remitted import duty. See, People v. Com-

pagnie Generale Transatlantique, 107 U.S. 59,

63.

Because the state tax conflicted with the accomplish-

ment of the congressional purpose, the Court con-

cluded that the “state tax in the circumstances must

fail as an infringement of the Congressional regula-

tion of the commerce.” 309 U.S. at 429."

The rationale of McGoldrick applies here as well.”

The national government admits containers employed

in foreign commerce to the United States under bond

for exclusive use in such commerce and subject to the

requirement that they be reexported. By admitting

the containers under bond, and subject to reexporta-

tion, the federal regulations implementing the Cus-

toms Convention on Containers prevent the contain-

ers from becoming part of domestic commerce. Be-

cause they are not in United States commerce, the

containers may not be regarded as “a part of the com-

mon mass of taxable property within the state * * *.”

McGoldrick v. Gulf Oil Corp., supra, 309 U.S. at

429; see Ammex Warehouse Co. v. Department of

Alcoholic Beverage Control, 224 F. Supp. 546, 555

®% In McGoldrick, the Court also noted that customs regula-

tions had expressly declared that merchandise in bonded

warehouses “should be free from state taxation.” Jbid. The

Court did not rely on the regulations, however. The Court

held that the regulations state “only what is implicit in the

Congressional regulation” of the commerce. /bid.

* It is not necessary for the Court to decide whether the

Convention establishes the importance of unif»mity and thus

leads to invalidation of the state tax under the Commerce

Clause or whether, instead, the Convention is a law of the

United States leading to preemption of the state tax. The

analysis is much the same. Compare Raymond Motor Trans-

portation, Inc. V. Rice, 434 U.S. 429 (1978), with Douglas v.

Seacoast Products, Inc., 481 U.S. 265 (1977). The dispositive

feature under either analytical approach is that the federal

government has established that disparate state laws offend a

p. reeived need for nationwide uniformity.

(S.D. Cal. 1963), and thus are not subject to state

taxation.

A state tax would frustrate accomplishment of the

federal objective in allowing temporary free admis-

sion to containers under bond. The purpose of the

Customs Convention on Containers, as implemented

under 19 U.S.C. 1322, is to “develop and to facilitate

the use of containers in international commerce.”

20 U.S.T. at 304." To achieve this purpose, contain-

ers have been afforded immunity from “not only Cus-

toms duties but also all duties and taxes whatsoever

chargeable by reason of importation.” Customs Con-

vention on Containers, Article 1, 20 U.S.T. at 304.

The substantial general state property tax that has

*! The federal regulatory policy of fostering the unrestricted

use of transportation equipment in international commerce

extends to the treatment of other kinds of transportation

equipment, including vessels and aircraft engaged in inter-

national commerce. See 19 C.F.R. 10.4la. Just as in the case

of containers designated as “instruments of international

traffic,” vessels and aircraft engaged exclusively in interna-

tional commerce normally arrive in and depart from the United

States without formal entry as imported merchandise under

19 U.S.C. 1484, appraisement or assessment of duties. Vessels

are subject to the special entry provisions of 19 U.S.C. 1434

and 1435, and implementing regulations, 19 C.F.R. Part 4.

These provisions also apply to the arrival and departure of air-

craft pursuant to Section 1109(c) of the Federal Aviation Act

of 1958, as amended, 49 U.S.C. 1509(c), and implementing

regulations, 19 C.F.R. Part 6. The federal regulatory scheme

for aircraft implements Article 24 of the Chicago Convention

on International Civil Aviation, 61 Stat. 1186, which obligates

the United States temporarily to admit aircraft in interna-

tional commerce free of duty.

been assessed against the containers involved in this

ease (J.S. App. 16a) conflicts with the spirit and

design of the federal scheme.” It lessens the effec-

tiveness of the federal regulation by burdening for-

eign-owned containers with a multiple tax burden

that hinders the use of such containers in our foreign

commerce.

Moreover, to the extent that the tax may lead to

the imposition of retaliatory taxes by our trading

partners (see page 21, supra), the interference with

the widespread use of containers in international

commerce would be greatly magnified. Thus, in its

“practical operation,” see First Federal Savings &

Loan Association v. Tax Commission, No. 77-334

(June 15, 1978), slip op. 4, the state tax interferes

with the objectives of the federal regulation of this

aspect of foreign commerce. The state tax “stands

as an obstacle to the accomplishment and execution

“The uniform practice of nations has been to exempt

foreign-owned containers from all taxes resulting merely

from the presence of the containers in the receiving nation but

to permit the assessment of “fees” related to services in fact

rendered. The conduct of the parties to this treaty bears

significantly in understanding its proper effect. See Factor v.

Laubenheimer, 290 U.S. 276, 294-295 (1933).

The fact that Japan did not become a signatory of the

Customs Convention on Containers until 1972 (Br. 33 n. 9)—

the last of the three tax years here in question—is not critical

to the resolution of this case. The immunities established

under that Convention were enacted into positive law of the

United States through promulgation of the generally appli-

cable regulations in 19 C.F.R. 10.41a. The significance of the

treaty itself is primarily in demonstrating the federal intent

in adopting the federal regulatory scheme.

f the full purposes and objectives” of the federal

regulation of commerce, Hines v. Davidowitz, 312

U.S. 52, 67 (1941), and is thus invalid as an inter-

ference with the exclusive federal authority to regu-

late commerce.” See Ray v. Atlantic Richfield Co.,

28 Although, for the reasons set out in the text, we agree

with appellants that California may not levy a property tax on

appellants’ containers, we do not agree with all of appellants’

arguments. For example, as we indicate in note 13, supra,

the Treaty of Friendship, Commerce and Navigation with

Japan does not apply to taxes levied at equal rates on all

property. We disagree with several of appellants’ other argu-

ments as well. Appellants argue that a federal excise tax, 46

U.S.C. 121, prevents state taxation of their containers (Br.

28). But this statute does not apply to containers admitted

pursuant to the Convention under bond, and the imposition

(or non-imposition) of a particular federal tax would not, in

any part, preclude state taxation of the same property. See

Federalist Papers No. 32-34 (The Fede. alist 240-253 (B.

Wright ed. 1961)).

Appellants argue (Br. 28) that the state taxes violate

“various aviation treatise and agreements” and “the GATT.”

They do not identify any “aviation treaty,” and so it is not

possible to respond to this argument. The GATT—the General

Agreement on Tariffs and Trades, 61 Stat. A3—does not deal

with state taxation of containers, and appellants do not point

to any provision of the GATT that would be relevant to this

case. At all events, the GATT is an executive agreement

rather than a treaty, and we do not argue that it would of its

own force nullify any state law. Cf. Zenith Radio Corp. VY.

United States, No. 77-539 (June 21, 1978), slip op. 13 n. 13.

In some situations the GATT would have persuasive force in

demonstrating a need for national uniformity or in demon-

strating international custom, and thus in establishing that

particular taxes are unconstitutional under the Commerce

Clause, but this argument is not available here.

Appellants also maintain that the state taxes violate the

Duty of Tonnage Clause (Br. 35-37) and the Due Process

Clause (Br. 48-49). The former argument fails because the

tax is not based on the weight, amount, or value of the cargo

that may have been in the containers; it is levied on the con-

tainers themselves. Moreover, the tax does not appear to be

a subterfuge for a Duty of Tonnage. The due process argu-

ment is unpersuasive under the standards of Lehnhausen V.

Lake Shorte Auto Parts Co., 410 U.S. 356 (1973).

Appellants’ argument based on the Import-Export Clause

(Br. 37-43), however, is more substantial. Until recently

this Court consistently held “that all [state] taxes on imports

and exports and on the importing and exporting processes were

banned by the Clause.” Washington Stevedoring, supra, slip

op. 16. The tax on containers unquestionably burdens the

“importing and exporting process” and consequently, under

a long line of decisions, would violate the Import-Export

Clause.

Washington Stevedoring and Michelin Tire Corp. v. Wages,

supra, however, have fundamentally altered the approach to

Import-Export Clause cases. The essential inquiry now is not

the burden of the tax, but whether the tax is an “Impost or

Duty.” Those words historically have included only taxes

“directed at imports or commercial activity as such” (423 U.S.

at 292), and it is difficult to contend that the California tax,

levied on the general mass of property within the State, is a

tax “directed at imports or commercial activity as such.”

Nevertheless, we believe that the California tax offends

the purposes of the Import-Export Clause, which the Court

identified in Michelin, supra, 423 U.S. at 285-286. As the Court

pointed out, “the Federal Government must speak with one

voice when regulating commercial relations with foreign gov-

ernments,” and state taxes sometimes could upset foreign trade

or intrude on matters exclusively within the national preroga-

tive. For the reasons discussed in the text, we submit that

the property tax at issue here could disrupt the foreign rela-

tions of the United States, and that it frustrates the ability

of the national government to conduct trade with foreign

nations. The state tax intrudes into an area where the United

States “must speak with one voice” (Michelin, supra, 423

U.S. at 285) and thus violates the Import-Export Clause as

well as the Commerce Clause. Because the arguments under

the two constitutional provisions are so similar in the circum-

No. 76-930 (March 6, 1978), slip op. 5; McGoldrick

v. Gulf Oil Corp., supra, 309 U.S. at 429.

CONCLUSION

The judgment of the Supreme Court of California

should be reversed.

Respectfully submitted.

WADE H. McCREE, JR.,

Solicitor General.

BARBARA ALLEN BABCOCK,

M. CARR FERGUSON,

Assistant Attorneys General.

KENT L. JONES,

Assistant to the Solicitor General.

LEONARD SCHAITMAN,

ERNEST J. BROWN,

SEPTEMBER 1978. Attorneys.

stances of this case, however, we have not elaborated on the

Import-Export Clause argument. It is enough to note here

that neither Michelin nor Washington Stevedoring undermines

our submission. In both cases the Court pointed out that the

tax it upheld did not affect the authority of the federal govern-

ment to conduct foreign relations (423 U.S. at 286; Washing-

ton Stevedoring, supra, slip op. 19); in both cases there was

no possibility of a multiple tax on the same property or services

(Washington Stevedoring, supra, slip op. 19); in both cases

the taxes were levied on goods or services fully admitted to the

commerce of the United States and the goods were no longer

in transit (423 U.S. at 289-290; Washington Stevedoring,

supra, slip op. 23). Here, by contrast, the tax affects foreign

relations, causes multiple tax burdens, and is levied on con-

tainers that are still part of foreign commerce and have never

been formally entered into United States commerce.

~ se

APPENDIX A

STATE OF CALIFORNIA [SEAL]

STATE BOARD OF EQUALIZATION

1020 N Street, Sacramento, California

(P.O. Box 1799, Sacramento, California 95808)

916/445-6479

March 24, 1978

78/49

TO COUNTY ASSESSORS, COUNTY COUNSELS

AND OTHER INTERESTED PARTIES:

Enclosed is a copy of a notice of public hearing to be

held June 29, 1978, at 10:00 a.m. in Room 102, 1020

N Street, Sacramento, California on a proposed

amendment to property tax Rule 202, Allocation of

Aircraft of Certificated Air Carriers and Scheduled

Air Taxi Operations.

The amendment extends the situs rule of subdivision

(b) of Rule 202 to aircraft operated solely in foreign

commerce. The Board’s legal staff is of the opinion

that two recent cases, Sea Land Service v. County of

Alameda, 12 Cal. 3d 772, and Japan Line, Ltd. v.

County of Los Angeles, 23 Cal. 3d 180, have over-

turned the former rule that aircraft operated solely

in foreign commerce are protected from state prop-

erty taxation by the Home-Port Doctrine. These two

cases hold that the Home-Port Doctrine does not

shield property with situs in California from taxa-

tion on an apportioned basis. Because our property

tax rules are merely declarative of existing law, we

propose to amend Rule 202 to conform to these court

decisions.

Written comments with respect to the enclosed notice

are welcome and should be directed to me. If you

wish to present testimony pertaining to the amend-

ment at the hearing, please notify me by mail or tele-

phone by June 14, 1978, so that an orderly agenda

can be prepared.

Sincerely,

s/ Janice Masterton

JANICE MASTERTON

Calendar Clerk

JM /se

Enclosure

NOTICE OF PROPOSED CHANGES IN THE

REGULATIONS OF THE STATE BOARD

OF EQUALIZATION

Notice is hereby given that the State Board of

Equalization, pursuant to the authority vested by

Section 15606 of the Government Code, and to im-

plement, interpret or make specific Sections 1150

through 1156 of the Revenue and Taxation Code

proposes to amend Section 202(b) of Article 5, Sub-

chapter 2, Chapter 1, Title 18, of the California Ad-

ministrative Code, as follows:

1. Amend Section 202, subsection (b), Article 5,

subchapter 2, chapter 1 to read:

Rule No. 202. (Cal. Adm. Code) ALLOCATION OF

AIRCRAFT OF CERTIFICATED AIR CAR-

RIERS AND SCHEDULED AIR TAXI Op-

ERATORS

(b) SITUS. Aircraft operated by certificated air

carriers (within the meaning of section 1150 of the

Revenue and Taxation Code) or scheduled air taxis

‘within the meaning of subdivisions (a) and (b) of

section 1154 of the Revenue and Taxation Code) and

flown in intrastate, interstate, or foreign commerce

shall be deemed to be situated only in those taxing

agencies (within the meaning of section 404 of the

Revenue and Taxation Code) in which the aircraft

normally make physical contact. The physical con-

tact must be intentional rather than by accident or

as the result of an emergency, and it must involve

embarking or disembarking of crew, passengers, or

freight.

Aireraft flying over the state without landing do

not acquire situs for property tax purposes. Con-

versely, the situs of aircraft that depart from a tax-

ing agency within the state, fly out of the state, and

return to the same or another taxing agency within

the state without landing outside the state is within

the state’s taxing jurisdiction throughout the flight.

Situs for property tax purposes is not affected by

the legal or commercial! domicile of the operator of

the aircraft, nor by the fact that the aircraft is oper-

ated solely in foreign commerce.

Notice is also given that any person interested may

present statements or arguments orally or in writing

relevant to the action proposed, at Room 102, Con-

" sumer Affairs Building, 1020 N Street, Sacramento,

CA 95814 at 10:00 a.m. on June 29, 1978. The State

Board of Equalization upon its own motion or at the

instance of any interested person, may thereafter

adopt the above proposed amendment substantially

as set forth without further notice.

Upon request, copies of the above regulation may

be obtained from:

State Board of Equalization

1020 N Street

Sacramento, California 95814

The State Board of Equalization, has determined

that, pursuant to Section 2231 of the Revenue and

eee ek nen

Taxation Code, no increased costs or new costs to

local government will result from this regulation.

Dated: March 15, 1978

STATE BOARD OF EQUALIZATION

/s/ Gordon P. Adelman

for DouGLAS D. BELL

Executive Secretary

STATE OF CALIFORNIA

BOARD OF EQUALIZATION

PROPERTY TAX DEPARTMENT

PROPERTY TAX RULES AND REGULATIONS

Chapter 1. State Board of Equalization—

Property Tax

Subchapter 2. Assessment

Article 5. Situs

References: Sections 1150-1156, Revenue and Taxa-

ation Code

Rule 202. ALLOCATION OF AIRCRAFT OF CERTIFI-

CATED AIR CARRIERS AND SCHEDULED AIR

TAXI OPERATORS

(a) AIR TAXIS. An aircraft whose owner on the

lien date used it in scheduled air taxi service at any

time during the representative period selected pursu-

ant to subsection (f), or which has been purchased

for scheduled air taxi service but not yet put into

such service and not yet used in any other service,

is assessable under sections 1150 to 1156 of the Reve-

nue and Taxation Code and not under Part 10, Divi-

sion 1, or under other situs provisions of Part 2,

Division 1, of the Revenue and Taxation Code.

(b) SITUS. Aircraft operated by certificated air

carriers (within the meaning of section 1150 of the

Revenue and Taxation Code) or scheduled air taxis

(within the meaning of subdivisions (a) and (b) of

hse ne Ue eel 8 -sens

re ee

section 1154 of the Revenue and Taxation Code) and

flown in intrastate, interstate, or foreign commerce

shall be deemed to be situated only in those taxing

agencies (within the meaning of section 404 of the

Revenue and Taxation Code) in which the aircraft

normally make physical contact. The physical con-

tact must be intentional rather than by accident or

as the result of an emergency, and it must involve

embarking or disembarking of crew, passengers, or

freight.

Aircraft flying over the state without landing do not

acquire situs for property tax purposes. Conversely,

the situs of aircraft that depart from a taxing agency

within the state, fly out of the state, and return to

the same or another taxing agency within the state

without landing outside the state is within the state’s

taxing jurisdiction throughout the flight.

Situs for property tax purposes is not affected by the

legal or commercial domicile of the operator of the

aircraft, nor by the fact that the aircraft is operated

solely in foreign commerce.

mula to be used by each assessor is composed of two

factors: (1) ground and flight time and (2) aircraft

arrivals and departures.

Time allocable to an airport is the amount of time

that certificated aircraft and scheduled air taxis are

on the ground at the airport, plus a portion of the

incoming and outgoing flight time computed pursuant

to subsection (d). The ratio of the time allocable to

the airport during a representative period to the sum

of the time allocable to the airport and the time al-

locable elsewhere is the ground and flight time factor.

In computing the ground and flight time factor, the

following shall be excluded:

From the time allocable to the airport—

(1) All ground and flight time prior to the air-

eraft’s first entry into the revenue service of the air

carrier in control of the aircraft on the current lien

date.

(2) All ground time in excess of 12 consecutive

hours at the airport following entry into revenue

service.

From the total time—

(1) All ground and flight time prior to the air-

craft’s first entry into the revenue service of the air

carrier in control of the aircraft on the current lien

date.

This factor shall be multiplied by 75 percent to ob-

tain a weighted ground and flight time factor.

The aircraft arrivals and departures factor is the

ratio of the number of arrivals at and departures

from an airport during a representative period to

the total number of arrivals at and departures from

all airports during the representative period. This

factor shall be multiplied by 25 percent to obtain a

weighted arrivals and departures factor.

at me le

The weighted time factor shall be added to the

weighted arrivals and departures factor. The sum

of the two weighted factors yields the allocation ratio

to be applied to the full cash value of the aircraft to

determine the full cash value allocable to the airport.

(d) ALLOCATION OF FLIGHT TIME. For air-

craft flying from one California airport to another

California airport, the flight time attributable to

each airport is one-half the flight time between the

airports.

For aircraft arriving from an airport outside the

state or leaving for an airport outside the state, the

flight time from or to the state boundary shall be

allocated to the California airport in which the air-

craft first lands or last takes off, as the case may be.

The flight time to the state boundary crossing point

on a great circle flight to the first landing point out-

side the state; (2) divide this mileage by the total

great circle mileage from the airport to the first land-

ing point outside the state; (3) multiply this per-

centage by the total flight time from the airport to

the first landing point outside the state. The same

procedure shall be used for inbound flights from out-

side the state. To allow for differences in take-off,

landing, and cruising speeds and for varying take-off

and landing patterns, the time allocated to an airport

shall not be less than five minutes for an incoming

or an outgoing flight. In lieu of the actual flight time

for a single flight, the average flight time between

two ports, or between a port and the state line, for

10a

two or more flights of a single carrier or of more

than one carrier shall be used when such an average

is promulgated by the board unless the assessor has

documented evidence which justifies departure from

such average time.

(e) SOURCES. OF ALLOCATION DATA. For

scheduled operations, arrivals and departures and

ground and flight time shall be derived from the car-

rier’s operating schedules. For nonscheduled opera-

tions, including but not limited to, overhaul, pilot

training, charter, military contract flights, and stand-

by services, ground and flight time and arrivals and

departures shall be derived from the carrier’s re-

corded operations.

(f) REPRESENTATIVE PERIOD. Annually, on

or before February 15, the board shall consult with

the assessors of the counties in which air carriers’

aircraft normally make physical contact. On or be-

fore March 1, the board shall designate a representa-

tive period to be used by all assessors in assessing the

aireraft of each carrier for the forthcoming fiscal

year.

(g) APPLICATION OF ALLOCATION FORMU-

LA. The aircraft of certificated air carriers and

scheduled air taxi operators shall be segregated by

type, and a separate allocation ratio shall be com-

puted for each type which has established a tax situs

within the state, excluding those makes within a type

which have not established a tax situs within the

state. Each allocation ratio shall then be applied to

lla

the total value of the carrier’s aircraft of each type

to which the allocation ratio applies, excluding those

makes within a type which have not established a

tax situs within the state.

The types are as follows:

(1) Piston-powered

(2) Turboprop-powered

(3) Helicopter

(4) Turbojet and Turbofan powered

(A) Two engine

(B) Three engine

(D) DC-8-60 series

(E) Boeing 747

(F) DC-10 and L 1011

History: Adopted March 9, 1967, effective March 10, 1967.

Amended January 8, 1969, effective February 12,

1969.

Amended December 12, 1969, effective January 11,

1970.

Amended February 16, 1970, effective March 26,

1970.

Amended December 20, 1971, effective January 19,

1972.

Amended February 21, 1974, effective February 26,

1974.

Amended December 17, 1975, effective January 25,

1976.

12a

APPENDIX B

STATE OF CALIFORNIA [SEAL]

STATE BOARD OF EQUALIZATION

1020 N Street, Sacramento, California

(P.O. Box 1799, Sacramento, California 95808)

916/445-6479

June i6, 1978

78/104

TO COUNTY ASSESSORS, COUNTY COUNSELS

AND OTHER INTERESTED PARTIES:

CANCELLATION OF PUBLIC HEARING—

RULE 202

This is to inform you of the cancellation of public

hearing of proposed amendments to Rule 202, Allo-

cation of Aircraft of Certificated Air Carriers and

Scheduled Air Taxi Operators, originally scheduled

for June 29, 1978, at 10:00 a.m. A copy of the no-

tice of cancellation is printed on the reverse.

The purpose of the proposed amendments was to

conform to the California Supreme Court decision in

the case of Japan Line, Ltd. v. County of Los An-

geles, 20 Cal. 3d 180. This case is now before the

U.S. Supreme Court.

If the hearing is rescheduled, the time and place of

hearing will be announced.

Sincerely,

s/ Janice Masterton

JANICE MASTERTON

JM/k Calendar Clerk

13a

NOTICE OF CANCELLATION OF PUBLIC

HEARING OF THE BOARD

OF EQUALIZATION

By published notice dated March 24, 1978, the

State Board of Equalization gave notice of its in-

tention to hold a public hearing to consider revision

of the Property Tax Rule 202, Allocation of Aircraft

of Certificated Air Carriers And Scheduled Air Taxi

Operators. This hearing was originally scheduled to

be held on June 29, 1978, begininng at 10:00 a.m. in

Room 102 at 1020 N Street, Sacramento, California,

95814.

Notice is hereby given that the hearing on the

above matter has been cancelled, and mey or may

not be rescheduled. In the event of rescheduling, the

exact time and place of the hearing will be announced

in a subsequent notice.

Dated: June 16, 1978

STATE BOARD OF EQUALIZATION

/s/ Gordon P. Adelman

for DOUGLAS D. BELL

Executive Secretary

14a

APPENDIX C

[SEAL]

DEPARTMENT OF STATE

Washington, D.C. 20520

September 7, 1978

The Honorable Wade H. McCree, Jr.

Solicitor General

U.S. Department of Justice

Washington, D.C. 20530

Dear Mr. Solicitor General:

This is in response to your office’s request in the

ease of Japan Lines, Ltd. v. County of Los Angeles,

20 Cal. 3d 180, appeal docketed, No. 77-1378 (March

28, 1978) for certain information concerning tax

practices of foreign countries and for views of the

Department of State concerning the case.

We have queried all U.S. embassies as to tax prac-

tices in their host countries toward foreign flag car-

riers and other instruments of foreign commerce. We

have received responses from our posts in more than

one hundred and twenty countries. According to in-

formation developed by our posts, largely from dis-

cussions with the pertinent foreign officials and pri-

vate U.S. flag carriers operating in each country, no

foreign government, or political subdivision such as

a province, state or municipality, imposes property

taxes on foreign flag vessels, airlines, or containers,

with the possible exception of Afghanistan. Certain

foreign jurisdictions impose use taxes, e.g., road

a ee ee

ee ae

15a

taxes on trucks and harbor use or aircraft landing

fees. Afghanistan imposes a tax on containers; we

are asking our Embassy to provide further informa-

tion as to whether this tax applies regardless of

whether the container is imported and regardless of

ownership by foreign flag carriers. It should be noted

that several countries impose taxes or import duties

on containers which are not re-exported within a

minimum time period (30 days to a year). Some

embassies have not yet responded or have indicated

that the desired information was not yet available

to them. We will notify you promptly should further

information come to our attention.

Six foreign governments, including some of our

most important trading partners, have written to the

Department expressing concern about the California

container tax. In addition, twelve countries have sent

diplomatic notes objecting to proposed personal prop-

erty taxation by the State of California of foreign

flag aircraft flown to and from California in foreign

commerce.

The Department believes that the home-port doc-

trine, originally announced by the Supreme Court in

Hays v. Pacific Mail Steamship Co., 58 U.S. (17

How.) 596 (1855), should be dispositive of the in-

stant case. It precludes the application of ad valorem

property taxes to an instrumentality of interstate or

foreign commerce by all jurisdictions except for the

home or domiciliary of the instrumentality. Jd. at

597-99. Since appellant’s cargo containers are mobile

equipment used in foreign commerce by foreign flag

16a

vessels domiciled in Japan, the home-port doctrine

would prevent California from imposing a property

tax on the containers.

Respondents argue that the Court has repudiated

the home-port doctrine in favor of an apportionment

scheme, whereby each taxing authority having suffi-

cient contacts with the instrumentality of commerce

is entitled to levy a tax reflecting the time spent by

the instrumentality in its own jurisdiction. Respond-

ents’ brief at 9. Whatever the merits of respondents’

argument in the context of interstate commerce,* the

Court has not abandoned the home-port doctrine for

foreign commerce, see Braniff Airways, Inc. v. Ne-

braska Board of Equalization and Assessment, 347

U.S. 590, 599-600 (1954); Ott v. Mississippi Valley

Barge Line Co., 336 U.S. 169, 173 (1949). See also,

Harvard Int’l. Program in Taxation, World Tax

Series: Taxation in the United States 173 (1963).

Indeed, on several occasions the Court has emphasized

that non-domiciliary property taxation is permissible

under the Commerce Clause of the Federal Constitu-

tion only where it is possible to prevent multiple

taxation exceecing one ad valorem value of the taxed

* The Court has never overruled the home-port doctrine

announced in Hays with regard to all facets of interstate

commerce. For example, the Court in Ott v. Mississippi Valley

RParge Line Co., 366 U.S. 169 (1949), while upholding appor-

tioned taxation of river barges, expressly did not reach the

question of ocean-going interstate commerce. Jd. at 173. See

“Developments in the Law-Federal Limitations on State Tax-

ation of Interstate Business,” 75 Harv. L. Rev. 978, 986-87

(1962).

site eesti AE

i a oe Oe OR ad

17a

item, Central Railroad Co. v. Pennsylvania, 370 U.S.

607, 611 (1962); Standard Oil Co. v. Peck, 342 U.S.

382, 385 (1952); Ott v. Mississippi Valley, supra, at

174. Cf. Department of Revenue of Washington v.

Association of Washington Stevedoring Companies,

46 U.S.L.W. 4363 (April 26, 1978); Complete Auto

Transit, Inc. v. Brady, 430 U.S. 274, 288-89, n. 15

(1977).

For instruments of foreign commerce, the Court

cannot effectively prevent multiple taxation in excess

of one full ad valorem tax, except by upholding the

home-port doctrine. While in domestic commerce the

Court can supervise and correct inequities in the ap-

portionment of interstate tax burdens, the Court has

no power to ensure that there is a reasonable alloca-

tion of taxing power between states and foreign

countries. Under the home-port doctrine, in contrast,

the Court is able to maintain American practice in

accordance with the internationally accepted rule of

domiciliary taxation designed to prevent multiple

burdens on foreign commerce. The danger of per-

mitting state taxation of instruments of foreign com-

merce on an apportioned basis in contravention of

the home-port doctrine is evident in circumstances

like this case; Japan taxes containers of Japan Lines

at their full value under a home-port theory, yet

California is seeking to impose additional taxes for

time spent in California. It is our view that the

risk of pyramiding taxation of instruments of for-

eign commerce imposed by the taxing authorities of

. :

18a

separate nations can be effectively avoided only by

continued adherence to the home-port doctrine in

such cases.

The policy underlying Hays has been consistently

followed in the conduct of our foreign policy. It is

reflected, for example, in the 1956 Customs Conven-

tion on Containers, 20 U.S.T. 301, T.LA.S. 6634, 338

U.N.T.S. 103, which provides for temporary admis-

sion of containers free of import duties, taxes, pro-

hibitions and restrictions, see Articles 1{a) and 2-6,

see also the 1972 Customs Convention on Containers,*

Articles 1(a) and 3-11, and in the Convention on

International Civil Aviation, 61 Stat. 1180, T.I.A.S.

1591, 15 U.N.T.S. 295, in which contracting parties

undertake to establish uniform customs procedures

affecting international air navigation (Article 23)

and to admit aircraft and aircraft stores and equip-

ment free of duty, fees and similar national or local

duties and charges (Article 24). Our adherence to

the home-port doctrine is consistent with nearly uni-

versal international practice.

There are important reasons of foreign policy for

not disturbing the home-port rule in foreign com-

merce. While foreign countries, and their political

subdivisions, do not now impose property taxes on

* Customs Convention on Containers, 1972, signed at Geneva

on Dec. 5, 1972, reprinted in [1973] Customs Convention on

Containers, 1972, and International Convention for Safe Con-

tainers, Senate Doc. Exec. X, 93rd Cong. Ist Sess. 1. Instru-

ment of ratification signed by the President on Oct. 8, 1976.

Entry into ferce for the United States is pending deposit of

the instrument of ratification.

19a

U.S. containers or flag carriers, we cannot discount

the possibility that such taxes will be imposed in re-

taliation if the California tax is upheld. Such re-

taliation would not necessarily be limited to the same

degree and kind of taxation imposed by California.

The extensive U.S. flag ship, air carrier, and con-

tainer operations throughout the world could become

subject to tax theories of more than a hundred sover-

eign governments and their countless subdivisions.

Retaliation, moreover, may not be restricted to tax-

ation. The United States, for example, now owns a

substantial portion of the containers used in foreign

commerce. Retaliation could take the form of meas- .

ures to decrease use of U.S.-owned containers.

It is most unlikely that other countries would alter

their approach to taxation to conform to the appor-

tionment theory of property taxation of California.

The home-port rule has long been sanctioned by in-

ternational custom, and nations are unlikely to mod-

ify their taxing power over their own containers,

vessels, and aircraft because one or more localities

of the United States assert a broader power than

the international custom.

Conceivably, the United States could seek interna-

tional agreement on an apportionment rule. However,

achieving such agreement as a replacement for the

home-port rule would not be practicable, even if the

United States were not alone in advocating a new

standard. Taxing practices with respect to home-

flag carriers vary widely among countries, and rules

of reasonable apportionment affecting those practices

;

20a

would require far more difficult accommodations

among sovereign nations than apportionment among

states of the United States. A process of bilateral

negotiations, either in response to requests of for-

eign governments as a consequence of a local prop-

erty tax levy in the United States, or requested by

the United States as a consequence of retaliatory |

foreign action, would likewise be extraordinarily |

complicated and difficult.

In sum, adherence by the United States to the

home-port doctrine with respect to instrumentalities

of foreign commerce is consistent with long-standing |

international practice followed by virtually all gov-

ernments, and refiects our view that it is the only

practical rule to assure that such instrumentalities

are not excessively burdened by multiple taxation.

5 Ane rGhlir res ete

Sincerely,

EA AI BIO. co RAEN ene od CORE HN Het ee et eee

/s/ Lee R. Marks

LEE R. MARKS

Deputy Legal Adviser

Ve eee ee

W ov. S. GOVERNMENT PRINTING orrice; 1978 273542 123

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.