Amicus Curiae Brief — Wardair Canada Inc. v. Florida Dept. of Revenue

No. 84-902

IN THE —

Supreme Court of the nebo —

OCTOBER TERM, 1985

W ARDAIR CANADA. INC..,

Appellant,

FLORIDA DEPARTMENT OF REVENUE,

Appellee.

On Appeal from the Supreme Court of Florida

MOTION FOR LEAVE TO FILE BRIEF AND BRIEF OF

THE NATIONAL GOVERNORS’ ASSOCIATION,

INTERNATIONAL CITY MANAGEMENT ASSOCIATION,

NATIONAL CONFERENCE OF STATE LEGISLATURES,

NATIONAL LEAGUE OF CITIES,

COUNCIL OF STATE GOVERNMENTS,

U.S. CONFERENCE OF MAYORS, AND

NATIONAL ASSOCIATION OF COUNTIES

AS AMICI CURIAE IN SUPPORT OF APPELLEE

H. BARTOW FARR, II] BENNA RUTH SOLOMON

PAUL J. VAN DE GRAAF Chief Counsel

ONEK, KLEIN & FARR STATE AND LOCAL LEGAL CENTER

2550 M Street, N.W i44 N. Capitol Street, N.W.

Washington, D.C. 20037 Suite 349

(202) 775-0184 Washington, D.C. 20001

Of Counsel (202) 638-1445

Counsel of record for

Amici Curiae

QUESTIONS PRESENTED

2. Whether a stat

preempted by Congress {

also non-discriminatory,

likely to result in multiple

tne vround t

irom speaking

merce

IN THE

Supreme Court of the United States

OCTOBER TERM, 1985

No. 84-902

WARDAIR CANADA, INC..,

. Appellant

FLORIDA DEPARTMENT OF REVENUE,

Appellee.

On Appeal from the Supreme Court of Florida

MOTION FOR LEAVE TO FILE BRIEF OF

THE NATIONAL GOVERNORS’ ASSOCIATION,

INTERNATIONAL CITY MANAGEMENT ASSOCIATION,

NATIONAL CONFERENCE OF STATE LEGISLATURES,

NATIONAL LEAGUE OF CITIES,

COUNCIL OF STATE GOVERNMENTS,

U.S. CONFERENCE OF MAYORS, AND

NATIONAL ASSOCIATION OF COUNTIES

AS AMICI CURIAE IN SUPPORT OF APPELLEE

Pursuant to Rule 36 of the Rules of this Court, amici

respectfully move this Court for leave to file the attached

brief amicus curiae in support of appellee.*

* Appellee has consented to the filing of this brief. Appellant

has not.

(iil)

lV

The amici, organizations whose members include state,

> 4 ‘ d WInicinal TOV NTY) Bi and t+} 1} hcial

county, and municipal governments and their officials

lL, ‘ +1 f .4 ‘4 ; _ ‘ ‘ :

throughou he United States. have a vital intere in

‘

legal issues that affect state and local governments.

his case concerns a State excise tax on True! p ircnasea

hv foreion airline which — se — —— f

VY lorelgn alriines, whicn provides a crucia! source ol

revenue for the States during these times of fiscal crisis.

The Florida Supreme Court upheld the tax against

. °% . soit sy | . , _—T ) +; saclaw

various challenges by both foreign and domestic airlines

Although this case directly involves only the validity of

ae na os pr .

Florida’s tax as applied to one airline based in Canad:

the { ourt’s decisi¢ } n this case W 1] : ffect pending cases

involving the application of Florida’s tax to eighteen othe

airlines from thirteen other foreign countries. The

validity of similar taxes currently imposed by at least

two other States—lIllinois and New York s also impli-

cated.

The Florida Supreme Court held that the tax was not

preempted by a bilateral aviation agreement between the

United States and Canada because the agreement pro-

vides an exemption only from national customs, dutie

and excise taxes. The contrary view—that the agreeme1

impliedly preempts a state excise tax on aviation fuel

distorts this Court’s preemption jurisprudence and se-

verely intrudes on the powers and prerogatives of the

States. In the absence of express preemption, this Court

has appropriately insisted upon evidence of a congres-

sional intent to occupy the field or an actual conflict be

tween state and federal law. These concerns are particu-

larly important in the determination whether state taxes

are preempted because the state exercises a fundamental

power when it imposes taxes. In our view, the federa

government’s admission, as amicus curiae in this Court

that neither federal statutes nor international agree-

ments by their terms preclude the imposition of state

taxes on aviation fuel should be conclusive of the absence

of any preemption.

Vv

The Florida Supreme Court also held that the tax did

not intrude upon the federal government’s exclusive con-

trol over foreign affairs. In the absence of preemption,

this Court should be extremely wary of limiting a state’s

power to tax because of the tax’s alleged effect on foreign

affairs. Both Congress and the Executive Branch have had

considerable time and opportunities to act to preempt

state excise taxes on aviation fuel purchased by foreign

airlines, and neither has done so. On the basis of com-

mitments to use “best efforts” to preclude state taxes,

and in response to complaints by foreign governments

about those taxes, the Executive Branch has done noth-

ing but submit a brief to this Court; and that only in

response to a request from the Court. Amici are very

concerned that this approach to foreign relations will

cut too deeply and erratically into the States’ taxing

power. Such approach also has the potential to eviscerate

Congress’ legitimate shared role in foreign relations and

its role in protecting fundamental state interests. This

case is not one of those rare occasions in which the

Court should invalidate a state tax on the grounds of

its effect on foreign affairs.

Amici submit that the Florida Supreme Court’s deci-

sion is correct. Because a reversal of that decision will

have a direct and immediate adverse effect on matters

of compelling importance to amici and their members,

amici submit this brief to assist the Court in its resolu-

tion of the case.

Respectfully submitted,

H. BARTOW FARR, III BENNA RUTH SOLOMON

PAUL J. VAN DE GRAAF Chief Counsel

ONEK, KLEIN & FARR STATE AND LOCAL LEGAL CENTER

2550 M Street, N.W. 444 N. Capitol Street, N.W.

Washington, D.C. 20037 Suite 349

(202) 775-0184 Washington, D.C. 20001

Of Counsel (202) 638-1445

Counsel of record for

February 6, 1986 Amici Curiae

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED i

MOTION FOR LEAVE TO FILE BRIEF AMICI

CURIAE ato aes . ieaddaa iii

TABLE OF AUTHORITIES ix

INTEREST OF THE AMICI CURIAE 1

STATEMENT a caekeuua ans | ]

SUMMARY OF ARGUMENT 5

FEET Ee Te SR Pe nL Le TT 6

I. NEITHER CONGRESS NOR THE EXECU-

TIVE BRANCH HAS AFFIRMATIVELY PRE-

EMPTED STATE POWER TO IMPOSE EX-

CISE TAXES ON AVIATION FUEL.............. 7

A. The Federal Aviation Act Does Not Preempt

Florida’s Tax ...... -

B. Florida’s Tax Is Not Preempted by Interna-

tional Agreements Between the United States

and Canada Be i 11

Il. THE FLORIDA TAX DOES NOT IMPERMIS-

SIBLY INTERFERE WITH THE POWER OF

THE FEDERAL GOVERNMENT TO SPEAK

WITH ONE VOICE REGARDING FOREIGN

COMMERCE ............. a > evren 16

A. The Uniformity Principle is Not the Touch-

stone for the Validity of State Taxes Under

the Interstate and Foreign Commerce

Clauses 17

(vil)

Vill

TABLE OF CONTENTS—Continued

B. Florida’s Tax Should Not Be Invalidated on

the Ground that It Impermissibly Interferes

with Foreign Affairs

re) ’ y*

] The fhreat of retaiiation

CONCLUSION

ix

TABLE OF AUTHORITIES

CASES:

Aloha Airlines, Inc. v. Director of Taxation, 104

S.Ct. 291 (1983) 9,10

Boston Stock Exchange v. State Tax Comm'n, 429

U.S. 318 (1977) = ais 22

Brown v. Maryland, 25 U.S. (12 Wheat.) 419

(1827) ... pee 17,18

Chevron, U.S.A., Inc. v. Natural Resources Defense

Council, Inc., 104 S.Ct. 2778 (1984) 29

Commonwealth Edison Co. v. Montana, 453 U.S.

609 (1981) 2, 4, 2°

Complete Auto Transit, Inc. v. Brady, 430 U.S. 274

(1977) 1, 19, 20, 21, 23

Container Corp. v. Franchise Tax Board, 103 S.Ct.

2933 (1983) .. - cca _... passim

Dames & Moore v. Regan, 453 U.S. 654 (1981) 11, 28

Department of Revenue v. Association of Washing-

ton Stevedoring Cos., 435 U.S. 734 (1978) 20

Edelman v. Boeing Air Transport, Inc., 289 U.S.

249 (1933 coeaeds ant 18

Fidelity Federal Savings & Loan Ass’n v. de la

Cuesta, 458 U.S. 141 (1982) 8

Florida Lime & Avocado Growers, Inc. v. Paul, 373

U.S. 132 (1963) eeeiieasal ze ae 11

Garcia ». San Antonio Metropolitan Transit Au-

thority, 105 S.Ct. 1005 (1985) 28

Guaranty Trust Co. v. United States, 304 U.S. 126

(1938) 16

Helson v. Kentucky, 279 U.S. 245 (1929) . 18

Henderson v. Mayor of City of New York, 92 U.S.

259 (1875) s 17

Hillshorouah County, Fla. v. Automated Medical

Lahoratories, Inc., 105 S.Ct. 2371 (1985) .6, 9, 10, 12, 14

Hines v. Davidowitz, 312 U.S. 52 (1941) 11

Huron Portland Cement Co. v. City of Detroit, 362

U.S. 440 (1960) sisidataumniion 19

Japan Line, Ltd. v. County of Los Angeles, 441 U.S.

134 (1979) passim

Jones v. Rath Packing Co.. 4230 U.S. 519 (1977) 8

Michelin Tire Corp. v. Wages, 423 U.S. 276 (1976).. 21, 22

xl

TABLE OF AUTHORITIES—Continued

19 U.S.C. § 1372 10

19 U.S.C. § 1462 10, 11, 13, 29

19 U.S.C. § 1502 10, 11, 13, 29

19 U.S.C. §$ 1513 9, 10, 13, 24, 29

Nonscheduled Air Service Agreement, May 8, 1974,

United States-Canada, art. XII, 25 U.S.T. 787,

T.1L.A.S. No. 7826 1,5, 12, 13, 14, 16

1985 Fla. Laws 85-348 § 2 .... 2

Fla. Stat. Ann. § 206.42

~

Fla. Stat. Ann. § 212.08 (4) 2

Fla. Stat. Ann. § 212.70 ... 2

BOOKS AND OTHER AUTHORITIES:

A. Hamilton, The Federalist No. 32 6, 22

L. Henkin, Forcigqn Affairs and the Constitution

(1972) ca 11,15

Resolutions of the International Civil Aviation Or-

ganization 14, 15

Restatement (Second) of Foreign Relations Law

of the United States (1965) 14,15

IN THE

Suprene Court of the United States

OCTOBER TERM, 1985

No. 84-902

WARDAIR CANADA, INC.,

- Appellant,

FLORIDA DEPARTMENT OF REVENUE,

Appellee.

On Appeal from the Supreme Court of Florida

BRIEF OF THE

NATIONAL GOVERNORS’ ASSOCIATION,

INTERNATIONAL CITY MANAGEMENT ASSOCIATION,

NATIONAL CONFERENCE OF STATE LEGISLATURES,

NATIONAL LEAGUE OF CITIES,

COUNCIL OF STATE GOVERNMENTS,

U.S. CONFERENCE OF MAYORS, AND

NATIONAL ASSOCIATION OF COUNTIES

AS AMICI CURIAE IN SUPPORT OF APPELLEE

INTEREST OF AMICI CURIAE

The interest of amici is set out in the motion accom-

panying this brief.

STATEMENT

Appellant, a Canadian airline, brought this action seek-

ing an exemption from a Florida excise tax! on aviation

1 The Florida statute and the Florida Supreme Court describe

the tax as an excise tax. Fla. Stat. Ann. § 206.42; App. Al4. The

tax also resembles a sales tax. Although the tax is collected from the

dealer of aviation fuel and is “imposed for the privilege of the sale

fuel. Although appellant had been previously subject to a

lesser tax on aviation fuel, appellant challenged the tax

hat it

imposed by the legislature in 1983 on the ground t

violated both the Foreign Commerce Clause and the Su-

premacy Clause. Appellant obtained relief in the Florida

Circuit Court, but the Florida Supreme Court reversed.

In this Court, appellant contends: (1) that the state tax

is preempted by federal legislation and international

agreements, and (2) that, in any event, the tax imper-

; 17 ° , — . ’ ’ .

mMIssIDly intrudes into the federal governments exciusive

control over foreign affairs.

The facts are straightforward. Prior to April 1, 1983,

Florida imposed an excise tax on fuel purchased by com-

alr-

lines, that was prorated on the basis of the proportion of

mon carriers, such as railroads, shipping lines, and

, s . 4 7

eacen carriers ravel in Florida compared to its travel

worldwide. See Tropical Shipping & Construction Co. v.

Askew, 360 So. 2d 433 (Fla. 1978). Presumably because

foreign airlines paid little or no Florida tax under this

formula, they raised no complaints about the validity of

the tax.

The 1983 amendment to the excise tax repealed the

mileage proration formula for airlines. Fla. Stat. Ann.

s 212.08(4); App. A43. As a result of the amendment.

airlines paid a tax of 5 percent on a deemed price of

51.148 for each gallon of fuel purchased in Florida.* Al]

airlines buying fuel in Florida thus felt an equal tax

t retail ir rida tl levy of tax is ipon the ultimate ret

consume na tne dealer ict s agent for the state.” Fla. Stat

Ann. § 212.70. For present purposes, however, the distinction

between sales taxe and excise taxes is irrelevant See Commo?

vealth Edison Cr Montana, 453 U.S. 609, 616 (1981

The statute has since been amended again. The new amendment.

effectiv July ] 1985. provides th t tax f D.7 ents pel gall

ipplies te iviation fuel sold in this state r brought into this

State fo? Sf 1985 Fla. Laws 85-348 yA Bec is the amendment

appli S pl spectively id.., 9 it dos not fe this ppea which

involves tax liability from April 1, 1983, to July 1, 1985.

3

burden.* An airline purchasing fuel in Miami for a flight

to the Bahamas sustained the same tax burden per gal-

lon of fuel as an airline purchasing fuel in Miami for a

flight to Atlanta or Tallahassee.

Prior to passage of the amendment, an official of the

United States Department of State wrote to Florida offi-

cials noting that the State Department had already re-

ceived questions from foreign governments about the

Florida tax. The State Department “urge[d] [Florida

to] exempt foreign air carriers from taxes levied in your

jurisdiction on items for which the United States Gov-

ernment provides [such] an exemption.” App. A83.

The State Department reiterated the request after the

amendment passed. App. A87. In neither of these let-

ters did the Department of State suggest that Florida

lacked the power to levy the tax or that the tax was in-

consistent with federal legislation or international agree-

ments. In addition, the State Department cited no con-

crete threats of retaliation from foreign governments.

Soon after the amendment was enacted, a number of

foreign and domestic airlines brought lawsuits in the

Florida courts challenging the constitutionality of the

tax. These cases were all heard before the Circuit Court

of the Second Judicial Circuit in and for Leon County.

The circuit court, in its first decision, rejected the claim

by domestic airlines that the tax violated the Interstate

Commerce Clause and the Equal Protection Clause of the

United States Constitution, as well as provisions of the

Florida Constitution. Delta Air Lines, Inc. ». State of

Florida, Department of Revenue, No. 83-761 (May 23,

1983). Next, the circuit court addressed a similar chal-

lenge to the tax by a group of foreign airlines that did

*In Delta Air Lines, Inc. v. Department of Revenue, App. A,

the Florida Supreme Court invalidated a provision of the state

tax laws that provided a corporate tax credit, because the tax credit

discriminated against interstate commerce. The court went on, how-

ever, to hold that the tax credit provisions were severable. Florida

has not sought review of that ruling in this Court.

not include appellant. The court relied on its decision

in Delta Air Lines, supra, to reject summarily the Equal

Protection and Interstate Commerce Clause claims

(Lineas Aereas Costarricenses, S.A. v. State of Florida,

Department of Revenue, App. A26), but the court ac-

cepted the argument that the tax was invalid as ap-

plied to these foreign airlines, because such application

was in conflict with international air transport agree-

ments. App. A27-A35. Turning finally to appellant’s case,

the circuit court took the same position that it had in

Lineas Aereas, supra, holding that the application of the

tax to appellant was inconsistent with an international

agreement between the United States and Canada. App.

A21.

On appeal, the Florida Supreme Court reversed.

App. Al. The court began its analysis by finding that

the state’s tax had not been preempted by the Nonsched-

uled Air Service Agreement, May 8, 1974, United States-

Canada, art. XII, 25 U.S.T. 787, T.1.A.S. No. 7826 |here-

inafter cited as U.S.-Canada Agreement]. More specifi-

cally, the court noted that “|t]he provisions in the agree-

ment between the United States and Canada clearly ex-

press an intent to apply to only national taxes and du-

ties.” App. Abd.

The court also rejected appellant’s Foreign Commerce

Clause challenge. The court relied on its affirmance of

the circuit court’s decision in the case brought by domes-

tic carriers ‘App. A8), in holding that the state tax

did not violate the four-prong test under the Interstate

Commerce Clause outlined in Complete Auto Transit, Inc.

v. Brady, 430 U.S. 274 (1977). Turning to the foreign

commerce implications, the court held that the state tax

did not run afoul of the two additional requirements

articulated in Japan Line, Ltd. v. County of Los Angeles,

441 U.S. 434 (1979). App. A5. After reiterating

that the U.S.-Canada Agreement did not provide foreign

carriers with an exemption from state taxes, the court

stated that it did “not believe this [tax] prevents our

5

federal government from speaking with one voice.” App.

A6. Two justices dissented from this result, arguing

that “the individual states of this country are precluded

by [international] agreements from taxing fuel used by

foreign airlines.” App. A7.

This Court noted probable jurisdiction on November 4,

1985.

SUMMARY OF ARGUMENT

This case involves a narrow constitutional challenge to

the exercise of a fundamental state power: the power to

tax the purchase of goods in the state. Unlike many

taxes previously before this Court, the tax at issue here

concededly rests upon an adequate nexus with the State;

is non-discriminatory, fairly apportioned, and fairly re-

lated to services provided by the state; and presents no

threat of multiple taxation. The challenge mounted by

appellant thus rests upon two, and only two, grounds:

first, that the tax is preempted by federal legislation and

international agreements; and, second, that the State’s

exercise of its taxing power has impermissibly intruded

upon the federal government’s exclusive power over for-

eign affairs. Neither contention is persuasive.

1. Florida’s tax on aviation fuel is not preempted by

the Federal Aviation Act, 49 U.S.C. §§ 1301-1557. Under

this Court’s tests for determining whether Congress has

preempted a state ‘aw, see Silkwood v. Kerr-McGee Corp.,

104 S. Ct. 615, 621 (1984), the party urging preemption

must expose an inconsistency between the intent of Con-

gress and the effect of the state law. Appellant offers no

evidence that Congress intended the Federal Aviation Act

to have any effect on state taxation of aviation fuel. In-

deed, the Act expresses an intent to permit state taxes

like Florida’s.

Nor is Florida’s tax preempted by an international

agreement between Canada and the United States. Both

of the international agreements cited by appellant were

specifically intended not to override state taxes, such as

Florida’s, and thus obviously do not preempt them. See

impose an essentially standardless judgment regard

impact of a State tax on Iorelgn commerce, paf tli

wnen, as nere, ne coorainace Drancnes Nave rh

YY) 7?) } 7 ; loc? + : ©) > Sb " ahh e ]

em) | ne aX de@spIlle a i@a opportu! \ 0 ao

sucn circumstances, ne Cour > iould appiv a Strol

+ + + ] > .

Sump.lon Na an o.nerwist Vall@ Stal aX Ci

:

with the dominant federal! power over ioreign com

N } cr } ? ’ } YY) th} ‘ T

i) i OW LIL awk Wet n I] ade in Lliis Cant ‘) f Yer ( ’

yNrestumMDp+rior!

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ARGUMENT

We pevin wiltn a straightforward proposition Ln

| ‘

to tax 1S OT virtually unique importance to tne stat

deed, tor over two centuries, thls power Nas Deel

. : :

nized as a fundamen al aspect OI State soverelgn

—_— ‘ ‘ . g +} | ‘ , . . +> , ~

example. as part of the debate over ratifying t

snould rye

I

tut n Alexander Hamilton wrote in The Fk

32. at 197-98 (Rossiter ed.

‘

States should possess an ind

196]

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reve

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State Department, which was a party to those agreement

. > . * *] . ao? > + rT’ } > .

cont edes tnat neltner preempts I iorida s AX. | na Nn-

, : : , , 20°7c

cession alone should be dispositive. See id. at 25/6

9 aelten ms —— 1] » . —

9 Having survived a challenge based on actual pre-

+, +} a] — ; | 7 ; } , ] ‘t }

empcvlol e iorlda ax SnOUL no pe ri ‘' e-

!

— , tf . erie t} n +he ‘ —s rfoarea = : ‘ Ff

CaUunrt OL SvVeECUIALIUO! lla i \ LiivLel Ca WV i a j i

I

fede ra rOVE r] Mme | I ) ~ eaAK Wl [ 0] ‘ y . ¢ CV dl |

. ’

ng foreign commerct In marking ou e permissible

line between state taxing power and the dormant federa

powell over commerce, the oul Sn yuld vive wilde | 1Luae

‘ ta4 ‘ thea ae —

) f axes a re NON-CGQIscrillilii »} allt é

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+? . > . , . . + + . *.

portioned. and that could not result in multiple taxation

“or

.

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merce

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unwarranted by any article or clause of its Constitution.”

Id. at 198.

Notwithstanding these strong sentiments, it is by now

well-established that the state power to tax is necessarily

subordinate to particular powers of the National Gov-

ernment. Nevertheless, the Court has repeatedly stressed

the importance of this state power, even when balanced

against Commerce Clause limitations. See, e.g., Container

Corp. v. Franchise Tax Board, 103 S. Ct. 2933, 2955

(1983); Commonwealth Edison Co. Vv, Montana, 453 U.S.

609, 616 (1981). Moreover, the excise tax challenged

here is not a new or novel exercise of the taxing power:

States have traditionally levied this sort of excise tax on

goods purchased within their borders. See, e.g.,° United

Air Lines, Inc. v. Mahin, 410 U.S. 623 (1973): Nashville,

C. & St. L. Ry. v. Wallace, 288 U.S. 249 (1933).

In seeking to set aside Florida’s tax, appellant raises

two distinct, though related, claims. First, it argues that

the federal government has affirmatively preempted the

tax. As we discuss below, however, nothing cited by ap-

pellant comes close to the sort of clear indication of an

intent to preempt that this Court has required before

striking down otherwise valid state action. Second, appel-

lant contends that, even if the tax has not been preempted,

this Court must declare that it interferes impermissibly

with the power of the federal government “to speak with

one voice” regarding foreign commerce. As we further

discuss, appellant has not shown the unusual threat to

federal authority that would justify setting aside the state

taxing power under this largely speculative standard.

I. NEITHER CONGRESS NOR THE EXECUTIVE

BRANCH HAS AFFIRMATIVELY PREEMPTED

STATE POWER TO IMPOSE EXCISE TAXES ON

AVIATION FUEL.

To support its arguments regarding preemption, appel-

lant has touched upon a variety of materials ranging

from the general provisions of the Federal Aviation Act

to highly specific, though inapposite, provisions of an in-

ternational agreement between the United States and

Canada. None of these provisions preempts the tax at

issue here.

A. The Federal Aviation Act Does Not Preempt

Florida’s Tax.

This Court in the past several years has had repeated

occasions on which to articulate the standards governing

preemption of state legislation. As the Court has made

clear, each of the different formulations is a variation on

the inquiry into whether Congress intended to override

the specific state law in question. See Fidelity Federal

Savings & Loan Ass’n v. de la Cuesta, 458 U.S. 141, 152

(1982). Of course, Congress can expressly preempt state

law in areas of national concern. See Jones v. Rath Pack-

ing Co., 430 U.S. 519, 525 (1977). In addition, “[i]f

Congress evidences an intent to occupy a given field, any

state law falling within that field is preempted.” Suilk-

wood, supra, 104 S. Ct. at 621. Finally, a state law is

preempted “to the extent it actually conflicts with federal

law,” or “stands as an obstacle to the accomplishment of

the full purposes and objectives of Congress.” Ibid.

Appellant concedes that the Federal Aviation Act, 49

U.S.C. §§ 1301-1557, does not expressly preempt the

Florida tax on aviation fuel. It thus begins its pre-

emption analysis at the second stage, contending that the

act instead expresses a congressional intention to occupy

the field of aviation regulation. The problem with this

argument, however, is that it fails to consider two im-

portant preemption principles. First, this Court has re-

peatedly held that, in the absence of express preemption,

Congress must express an intent to occupy the specific

field covered by the challenged state law. See, e.g.,

Pacific Gas & Electric Co. v. State Energy Resources

Conservation & Deve lopment Comin’n, 1038 S. Ct. 17138,

1726-27 (1983); Rice v. Santa Fe Elevator Corp., 331

U.S. 218, 236 (1947). Second, the Court has indicated

q

that such an intention must be especially explicit in order

to overcome the “presumption” that the exercise of a

fundamental state power “can constitutionally coexist with

federal regulation,” Hillsborough County, supra, 105 S.

Ct. at 2376.

The Court’s decision in Silkwood, supra, 104 S.Ct. at

622-24, provides a good example of these principles.

There, the Court held that federal statutes governing

nuclear energy did not preempt state law allowing the

award of punitive damages for tort law violations by

nuclear facilities. Although it was beyond dispute that

the federal government had taken a primary and exten-

sive role in the regulation of nuclear energy, such exten-

sive federal regulation did not mean that all state laws

having an incidental connection with nuclear energy were

preempted. Instead, the Court in Silkwood examined

whether there was evidence in the statute or legislative

history that Congress meant to occupy the area of reme-

dies for nuclear energy accidents. The Court found no

explicit evidence of such intent. /bid.

Applying those principles to this case, we concede at

the outset that Congress has taken an extensive role in

the regulation of aviation. But appellant has shown no

intention on the part of Congress to occupy the field of

state taxation of aviation fuel. To the contrary, when

the Act addresses the subject of state taxes affecting

aviation, it indicates a congressional intention to permit

state taxes like Florida’s. See 49 U.S.C. § 1513. As this

Court has observed, Congress chose expressly to preempt

“a limited number of state taxes” in seection 1513(a), and

to distinguish other state taxes “reserved in § 1513(b).”

Aloha Airlines, Inc. v. Director of Taxation, 104 S. Ct.

291, 294 n.6 (1983). Thus, section 1513(a) prohibits the

States from levying any tax “on persons traveling in air

commerce or on the carriage of persons traveling in air

commerce.” The Court has indicated that Congress in-

tended by this provision to forbid the States from levying

taxes focused on airline passengers, such as head taxes

EE

10

and gross receipts taxes. See 104 S. Ct. at 294-95 (dis-

cussing legislative history). Section 1513(b), by contrast,

expressly permits the States to impose other taxes to be

paid by air carriers (id. at 294 n.6), by allowing “prop-

erty taxes, net income taxes, franchise taxes, and sales or

use taxes on the sale of goods or services.” 49 U.S.C.

$1513(b). Florida’s excise tax on aviation fuel clearly

falls within this latter category.

Appellant cites nothing of comparable clarity to sup-

port its position. Indeed, when describing the scope

of the federal exercise of power under the Act, appel-

lant mentions “licensing, route services and other air

services, rates and fares, tariffs, competition, [and|

safety” (Appellant’s Brief 37), but not state taxes on

fuel. Nor do the provisions that apply specifically to

foreign air carriers expressly occupy the field of state

taxation. Although appellant places much emphasis on

the fact that the Act requires foreign airlines to have a

federal permit (see 49 U.S.C. § 1372), these permit pro-

cedures focus solely on the qualifications of the foreign

carrier itself, not on the carrier’s obligations under state

law. Similarly, although appellant points out that Con-

gress had delegated to the Department of State the power

to negotiate air transport agreements with foreign na-

tions (see 49 U.S.C. §$§ 1462, 1502),* the mere delega-

tion of authority to act, and by such actions to preempt,

is not equivalent to a congressional intent to preempt.

See Hillsborough County, supra.

Appellant is no more convincing in its submission that

the state tax is in direct conflict with the Act. Although

appellant raises the problem of a conflict in general terms,

it fails to point to a single provision of the Act that

actually conflicts with Florida’s tax. This Court has stated

that, in order for the requisite conflict to exist, it must be

* These provisions may simply qualify the Executive’s authority

to enter into binding internationa] agreements by requiring the

Department of State to consult with the Department of Transpor-

tation. 49 U.S.C. §§ 1462, 1502(b).

11

impossible for someone to follow the provisions of both

federal and state law. See Florida Lime & Avocado Grow-

ers, Inc. v. Paul, 373 U.S. 132, 142-43 (1963). Appellant

has not suggested any way in which it is unable to satisfy

the provisions of the Act if it pays the Florida tax.

Finally, contrary to appellant’s position, the state tax

does not stand as an obstacle to any of the Act’s purposes.

As this Court has recently made clear, this standard also

requires a specific inconsistency between federal and state

law. For example, in Silkwood, supra, 104 S. Ct. at 621,

the Court cited Hines v. Davidowitz, 312 U.S. 52 (1941),

as a case illustrating how a state law can stand as an

obstacle to a federal statute. The Court in Hines held

that the federal Alien Registration Act preempted a state

alien registration act. The Court began by noting the

federal power “to restrict, limit, regulate, and register

aliens” (id. at 68), but did not find preemption on this

ground. Rather, the Court held that the state law could

not stand because Congress intended the federal statute to

provide the sole standard for such restrictions on aliens,

and the state statute provided an inconsistent standard.

There is no comparable inconsistency between federal and

state law here, and thus no interference with federal

objectives.

B. Florida’s Tax Is Not Preempted by International

Agreements Between the United States and Canada.

The extent of the Executive’s authority to enter into

international agreements that bind the United States, and

by extension override state law, has by no means been

clearly drawn by this Court. See, e.g., Dames & Moore v.

Regan, 453 U.S. 654 (1981); L. Henkin, Foreign Affairs

and the Constitution, 173-88 (1972). In this case, how-

ever, the Court need not assess the inherent authority of

the Executive to act in this sphere because, as noted above,

Congress has expressly delegated to the Executive the

power to enter into international agreements concerning

air transportation. 49 U.S.C. §§ 1462, 1502. At the same

12

time, the Court need not address whether that delegation

includes the authority to preempt state tax laws, because

it is clear that the international agreements cited by

appellant do not bar Florida from taxing aviation fuel

sold to appellant within the State. No matter which pre-

emption standard the Court looks to, Florida’s tax is not

preempted, because the agreements themselves recognize

the validity of such taxes. A federal rule that exempts a

state law obviously does not preempt it. See Hillsborough

County, supra, 105 8. Ct. at 2375-76.

Appellant places great reliance in its brief on the pro-

visions of the U.S.-Canada Agreement, supra, arguing

that the Agreement by its terms was intended to foreclose

state taxing power.® The language of the Agreement, how-

ever, betrays that position. The Agreement—like many

international agreements in this area *“—limits itself to

exempting foreign air carriers, such as appellant, from

“national duties and charges” on aviation fuel. App. A58

(emphasis added). Indeed, the use in the Agreement of

the word “national” is strong evidence that state taxes

were not intended to be covered, given the existence of

other agreements in the air transportation area that do

distinguish between state taxes and national taxes.? We

° An international agreement addresses only the relations between

the contracting parties. Thus, a single international agreement can-

not preempt a state law as applied to all foreign carriers engaged in

commerce in the state but at most as applied to those carriers en-

gaged in commerce between the state and the foreign contracting

nation.

® See, e.g., Air Transport Services Agreement, Aug. 15, 1960,

United States-Mexico, art. 7, 25 U.S.T. 65; Air Transport Services

Agreement, Jan. 8, 1947, United States-Ecuador, art. 3(b). 61 Stat.

2775.

7 As noted in the federal government’s brief, a number of inter-

national agreements in this area bar national taxes while obligating

the Executive to use its “best efforts’ to secure exemptions for

foreign carriers from state and local taxes on aviation fuel. U.S.

Brief on Appeal 16-17

Even these best-efforts provisions, however, cannot fairly be read

to preempt state tax laws. The provisions are not self-executing

13

note that, in Container Corp., supra, 103 S.Ct. at 2956,

the Court relied on this same distinction in holding that

an international agreement did not preempt the tax

challenged in that case.°

This interpretation is supported by that given to the

Agreement by both the Canadian government and the

State Department. For its part, Canada allows its own

and thus cannot be said by themselves to preempt state law. More

important, undertaking an obligation to use “best efforts” to effect

a result is an admission that the result is not already effected. Thus,

these best efforts provisions simply oblige the Executive to take

reasonable steps in opposition to such laws—for example, the send-

ing of notes to taxing authorities. Both the Department of State

and various foreign governments have interpreted these provisions

this way. In the State Department’s letters to Florida, the Execu-

tive never stated that the state lacked the power to tax in light of

any international agreement. See App. A&82-A83, A&87. And although

the diplomatic notes from foreign governments included in the

appendix to the federal government's brief encourage the State De-

partment to oppose Florida’s tax, only a few suggest that the tax is

in fact preempted by international agreement. U.S. Brief on Appeal

22, la-58a. It is not clear why the State Department thought that

sending notes to Florida was likely to be more effective than legis-

lation or international agreements under 49 U.S.C. §§ 1462, 1502.

Amici also submit that none of these agreements other than the

U.S.-Canada Agreement governs whether Florida’s tax as applied

to appellant is preempted, nor is the potential preemptive effect of

these other agreements on Florida’s tax as applied to other foreign

carriers doing business in Florida an issue in this case. It may be

that certain of the international agreements are more susceptible

to an interpretation that they preempt state law because they do

not contain language limiting the exemption from taxation. The

Court, however, should address each preemption case on its own

merits. See Sumitomo Shoji America, Inc. v. Avagliano, 457 U.S.

176, 185 n.12 (1982). Moreover, if the absence of limiting language

is relevant to the preemptive effect of these other agreements, the

presence of such language is surely relevant to nonpreemption in

this case.

*In addition, Congress was aware of state taxation affecting air

carriers in 1973—prior to the signing of the U.S.-Canada Agree-

ment—when it preserved state power to tax the sale of goods and

services to air carriers. See 49 U.S.C. § 1513(b).

14

provinces to tax the aviation fuel of American air car-

riers. U.S. Brief on Appeal 13. Not surprisingly, there-

fore, the record reveals no evidence that Canada has

made any complaints about Florida’s tax. It has neither

sent a diplomatic note nor presented its views in this liti-

gation. Similarly, the State Department, whose views are

presented in the federal government’s brief, concedes that

the U.S.-Canada Agreement does not preempt Florida’s

tax. U.S. Brief on Appeal 17. The Court has suggested

that such an interpretation by the agency delegated by

Congress with the authority to preempt state law is

usually dispositive. See Hillsborough County, supra, 105

S. Ct. at 2376; Sumitomo Shoji America, Inc. v. Avagliano,

457 U.S. 176, 184-85 (1982); Restatement (Second) of

Foreign Relations Law of the United States § 152 (1965).

We also note that the question of preemption must be

viewed even more critically when it is a federal agency,

rather than Congress, that is said to have acted to pre-

empt. In Hillsborough County, supra, 105 S. Ct. at 2379,

the Court indicated that, under such circumstances, the

intent to, preempt must be even more specific. There,

the Court noted that the Federal Drug Administration

had the ability to make its intentions clear and “| could|

be expected to monitor, on a continuing basis” the rela-

tionship between federal obligations and state law. J/bid.

The Department of State, of course, occupies a similar

position in the field of foreign affairs. In short, the

State Department was aware of state taxes on aviation

fuel and, we assume arquendo, could have and still can

preempt them explicitly in an international agreement.

Nor does the Florida tax conflict in any way with the

Chicago Convention on International Civil Aviation,

opened for signature, Dec. 7, 1944, 61 Stat. 1180. As

appellant must concede, the Convention only addresses

state and local taxes on fuel carried into the United

States, not fuel purchased here. 61 Stat. at 1186. In-

deed, like the U.S.-Canada Agreement, the provisions of

the Convention by negative implication support Florida’s

15

power to tax. Its terms confirm that the international

community has long been aware of the burden of state

and local taxes, and that the parties contracting inter-

national agreements know how to include a provision ex-

pressly preempting such taxes if they desire to do so.

Finally, appellant cites the resolutions of the Interna-

tional Civil Aviation Organization (ICAO), which was

established by the Chicago Convention, as authority for

preemption. Even if those resolutions do reveal an in-

ternational interest in exempting foreign airlines from

state and local taxes,” this Court has never suggested

that the statement of an interest in a broad, unsigned

resolution preempts state law. The resolutions of the

ICAO are not a source of federal law that can override

state law under the Supremacy Clause. See L. Henkin,

supra, at 194-95; see also Restatement, supra, $$ 130-31

(discussing treaties and international agreements.” In-

deed, the State Department in its brief indicates *hat the

ICAO did not intend the resolution to be a source of law.

U.S. Brief on Appeal 11-13. Moreover, the expression of in-

ternational concern about state taxes as early as 1966

again cuts against appellant’s argument, by revealing that

the United States and Canada could have expressly ad-

®One resolution covers taxes levied “by any taxing authority

within a State.”” The term “State” in the resolution in fact refers

to contracting nations. Thus, it remains a question of interpreta-

tion whether Florida is a “taxing authority within” the United

States. Even if it is, however, the resolution does not support

appellant’s argument, because the resolution only provides for rec-

iprocity between nations. As noted above, there is currently taxing

reciprocity between the United States and Canada.

1 Both appellant and the federal government rely in part on the

fact that most nations prohibit local taxes on aviation fuel. This

Court, however, has indicated that international practice does not

play a decisive role in its assessment of a state tax under the

Foreign Commerce Clause. See Container Corp., supra, 103 S. Ct

at 2956-57; Japan Line, supra, 441 U.S. at 442-43. Furthermore,

Canada, the only foreign nation directly implicated in this case,

permits local taxes on aviation fuel.

16

dressed the issue of state taxes in the later U.S.-Canada

Agreement if they had intended to prohibit such taxes.

The cases relied upon by appellant add nothing to its

argument. In both United States v. Pink, 315 U.S. 203

(1942). and United States v. Belmont, 301 U.S. 324

(1937), this Court held only that state law could not be

applied in light of an international agreement between

the United States and the Soviet Union. The cases sim-

ply confirm the abstract proposition that an international

agreement can preempt state law. Both cases involved

refusals by state courts to recognize decisions by a for-

eign government that the Executive had agreed to recog-

nize, creating a specific conflict between the state law

rule and the international agreement. More to the point

here, however, are the repeated statements by this Court

that a treaty or international agreement does not over-

ride a state law unless that intention is clearly stated.

See Guaranty Trust Co. v. United States, 304 U.S. 126,

143 (1938). None of the materials relied on by appel-

lant provides such a clear displacement of Florida’s ex-

cise tax on aviation fuel.

Il. THE FLORIDA TAX DOES NOT IMPERMISSIBLY

INTERFERE WITH THE POWER OF THE FED-

ERAL GOVERNMENT TO SPEAK WITH ONE

VOICE REGARDING FOREIGN COMMERCE.

Because the federal government has not affirmatively

preempted the Florida excise tax, the remaining question

is whether this Court should hold that the tax nonethe-

less interferes with the federal power to speak with one

voice regarding foreign commerce. We submit that it

should not, for several reasons.

First, we believe that the decisions of this Court, in

both the interstate and foreign commerce areas, have

correctly moved away from efforts to invalidate state

laws on the general ground that they interfere with uni-

form federal treatment. Rather, the Court has recognized

that state taxes are to be presumed valid unless they

17

involve more concrete forms of intrusion upon com-

merce, such as discrimination, improper apportionment,

or, in the case of foreign commerce, multiple taxation.

Second, we submit that the courts are generally in a

poor position to decide whether a state tax does, in fact,

so hobble federal power that it cannot compatibly sur-

vive. Because Congress and the Executive Branch have

unquestioned power to preempt those taxes truly deemed

burdensome, the courts should be reluctant to override

state sovereignty in the absence of the clearest sort of

showing of improper intrusion. Finally, we think that

the evidence of obstruction in this case is particularly

thin. Neither appellant nor the United States as amicus

curiae has demonstrated the type of risk to the conduct

of foreign affairs that would justify striking down a

state tax that Congress and the Executive Branch have

not chosen to preempt.

A. The Uniformity Principle is Not the Touchstone for

the Validity of State Taxes Under the Interstate

and Foreign Commerce Clauses.

The attempt to limit state powers based upon an as-

serted need for uniform federal treatment is hardly an

unusual one. This Court has long recognized that, under

the Interstate and Foreign Commerce Clauses, the regu-

lation of such commerce is the exclusive domain of the

federal government. Thus, the Court early on held that

certain state laws were invalid because the needs of for-

eign or interstate commerce required a uniform federal

rule, even though Congress had not already provided such

a rule. See, e.g., Henderson v. Mayor of City of New

York, 92 U.S. 259 (1875); Brown v. Maryland, 25 US.

(12 Wheat.) 419 (1827). Nevertheless, as the Nation

expanded and commerce developed, it became clear that

too literal an application of the rule of uniformity would

severely limit traditional state powers. Given the fact

that most state legislation has some effect on interstate or

foreign commerce, the Court has taken a more accommo-

dating view toward the inevitable conflict between the ex-

18

clusive federal control over foreign and interstate com-

merece and the incidental effects of state law on such

commerce.

The vagaries of this conflict are well illustrated in the

eases addressing challenges to state taxes"' based upon

the Interstate Commerce Clause. The early cases in this

area took the stern view that any intrusion into the fed-

eral sphere was an impermissible breach of the need for

uniformity. See, e.g., Brown v. Maryland, supra. Later,

however, the Court modified that broad prohibition, at-

tempting instead to delineate standards that distinguished

between impermissible taxes on commerce itself, see, e.9.,

Helson v. Kentucky, 279 U.S. 245 (1929), and permis-

sible taxes on local actions, see, e.g., Edelman v. Boeing

Air Transport, Inc., 289 U.S. 249 (1933). This dis-

1] In N ethos stern States Portland CC ment (on. State of Minne-

at l. 258 1) Ss 150. 157-58 1959 the Court wrote:

Commerce between the States having grown up like Topsy, the

Congress meanwhile not having undertaken to regulate taxa-

tion of it, and the States having understandably persisted in

their efforts to get some return for the substantial benefits

they have afforded it, there is little wonder that there has

been no end of cases testing out state tax levies. The resulting

judicial application of constitutional principles to specific state

statutes leaves much room for controversy and confusion and

little in the way of precise guides to the States in the exercise

of their indispensable power of taxation. This Court alone has

handed down some three hundred full-dress opinions spread

I

through slightly more than that number of our reports. As was

said in Miller Bros. Co. State of Maryland, 1954, 347 USS.

340, 344, the decisions have been “not always clear * * * con-

sistent or reconcilable. A few have been specifically overruled,

while others no longer fully re sent U! pre nt state « tne

law.”

2It was in these cas that the ( rt held that state could

ee: :

not tax an “Instrument ty of commerce it lL Se Helson ra

A ynellant argues that viat n fuel is an instr mentality . f om-

d Dp} ian aryvu bicit iviatli i it) | al ill iftie’ti LiLy ( Til

merce. We do not argue this point, except to note the difficulty of

determining why fuel is any more an “instrumentality of com-

merce,” than, for example, the food served on board. Amici submit

19

tinction between direct and indirect taxes on commerce

was defined in large part on the basis of the Court’s

case-by-case assessment of the need for uniform rules in

interstate commerce. See Huron Portland Cement Co. v.

City of Detroit, 362 U.S. 440, 448 (1960).

The boundary between direct and indirect burdens on

commerce ultimately proved unsatisfactory. In more re-

cent times, the Court has moved to abandon any bright

line limiting the taxing power of the states based on the

perceived need for federal uniformity in interstate com-

merce. Without reviewing this movement in detail, it is

sufficient to note that the Court gradually evolved a four-

part test that draws upon various principles identified in

earlier cases but does not turn on the absence or presence

of a need for uniformity per se. See Complete Auto

Transit, supra. Thus, the Court in Complete Auto

Transit held that a state tax does not violate the Inter-

state Commerce Clause if it “is applied to an activity

with a substantial nexus with the taxing State, is fairly

apportioned, does not discriminate against interstate com-

merce, and is fairly related to the services provided by

the State.” 430 U.S. at 279.

This four-part test, as presently applied by the Court,

protects interstate commerce from certain measurable

intrusions by state governments without subjecting state

actions to the sort of judicial guesswork invited by the

notion of federal “uniformity.” The first factor merely

echoes the due process limit on taxation: namely, that

States must enjoy some minimum relationship with the

that, in any event, the question whether aviation fuel is an instru-

mentality of commerce is not controlling, because the Court has

abandoned this standard for Commerce Clause analysis. Although

Japan Line, supra, describes the shipping containers as instrumen-

talities of commerce, the description does not seem to have been

intended the revive the constitutional significance that the term

once had. The Court’s discussion attributes no significance to the

fact that the containers were instrumentalities of commerce; and

the holding did not turn, even in part, on this fact.

entity or event to be taxed. See Commonwealth E

supra, 453 U.S. at 622-26. The second and

reflect the kind of quantifiable burdens that the |

has recognized as genuine threats to the federal s)

and the flow of interstate commerce. See Northwest

States Portland Cement Co. v. Minnesota, 358 U.S. 450,

,

457 (1959). The apportionment standard, for example,

taxation (see Department of Revenue . Associati f

Washington Ste vedoring Cos., 435 U.S. 734, 746 (1978

while the discrimination test guarantees that the effect

of state taxes are felt without regard to state boundaries

See Commonwealth Edison. supra, 53 U.S. at 618-19.

Te courts can play an effective role in limiting these

bur lens on interstate commerce because the courts are

actually better positioned than Congress to develop a

record for determining whether a tax discriminates

against interstate commerce or results in multiple taxation.

The Court has expressed a clear unwillingness, how-

ever, to go beyond these reasonably structured inquiries

For example, in Commonwealth Edison, supra, 453 U.S.

at 628, the Court rejected the argument that it should

use the fourth factor—whether a tax is fairly related to

services provided by the state—to assess whether a state

tax was so high as to offend the dominant federal power.

In declining to undertake that review, the Court advised

that Congress has the prime responsibility for determin-

ing which state taxes are “contrary to federal interest.”

Thus, in contrast to its active posture in assessing dis-

crimination and the threat of multiple taxation, the

Court has taken a more deferential view of state power

in light of bare assertions of a paramount “feder:

interest.”

The same course should be followed in the context of

the Foreign Commerce Clause. As this Court indicated

in Japan Line, supra, a case involving a Foreign Com-

merce Clause challenge to a California ad valorem prop-

}

erty tax on shipping containers, the basic analysis under

21

the Foreign Commerce Clause tracks the four-prong in-

quiry used in the interstate context (see Complete Auto

Transit, supra, 430 U.S. at 279). In addition, however,

the Court identified two other factors that must be

considered: “the enhanced risk of multiple taxation” in

the international context (441 U.S. at 446), and the pos-

sibility that a state tax “may impair federal uniformity

in an area where federal uniformity is essential” (id. at

448). Describing this uniformity principle the Court

quoted language from a recent decision interpreting the

Import-Export Clause, noting “the Framers’ overriding

concern that ‘the Federal Government must speak with

one voice when regulating commercial relations with for-

eign governments.’” 441 U.S. at 449 (quoting Michelin

Tire Corp. v. Wages, 423 U.S. 276, 285 (1976) ).

Although appellant and the United States appear to

take this reference to a “one voice” standard as an en-

dorsement of the sort of “uniformity” inquiry largely

abandoned in interstate commerce cases, we think that

view of the Court’s recent cases to be considerably over-

stated. To begin with, in actually applying the “one

voice” notion, the Court has recognized that the princi-

pal inquiry to be made is whether the federal government

has chosen to mark out an area for uniform treatment

through exercise of its powers of preemption. We have

no quarrel with that view. Our point is simply that,

when the federal government has not preempted state

action, the courts should be hesitant to fashion their own

version of preemption based solely on the idea of “one

voice” over foreign commerce. The decision in Japan

Line says nothing to the contrary on that issue.

We also note that the “one voice” standard suffers

from the same central defect as the concept of “uni-

formity” in interstate commerce: it speaks to only one

side of the balance at stake. As was the case in the field

of interstate commerce, virtually any state tax affecting

foreign commerce can be said to affect uniform federal

treatment and thus, under a rigid application of the “one

99

ht ha

voice” principle, be impermissible. But that analysis ulti-

mately does nothing more than restate the essential ques-

tion, which is whether the tax so interferes with the need

for one dominant power that it cannot stand. The an-

swer to that question depends upon a more sensitive bal-

ancing of the interests involved."

This Court, in fact, recognized as much in Con-

tainer Corp., supra. There, the Court stated that, even

absent preemption, the uniformity principle would be

violated if the state tax “implicates foreign policy issues

which must be left to the federal government.” 103 8S. Ct.

at 2955. At the same time, however, the Court expressly

admonished that such foreign policy concerns had to be

balanced against “the sovereign right of the United States

as a whole to let the States tax as they please.” Jbid.

The Court in Container Corp. concluded that the balance

in that case must be struck in favor of permitting the

State to exercise its power.

1S Indeed, the origins of the “one voice” language show that it

was never intended to serve by itself as a measure for this Court’s

assessment of state taxes under the Foreign Commerce Clause. In

Michelin Tire, supra, the Court used that language to describe the

purpose of the Import-Export Clause, which articulates an absolute

limit on the States’ power to have any taxes on import or exports

While the Import-Export Clause limits all taxes in a defined area,

the Foreign Commerce Clause, lie the Interstate Commerce Clause,

does not provide such an inflexible limitation on state taxing power.

See The Federalist No. 32, supra. Instead, under the Commerce

Clauses, the Court must attempt to distinguish between those taxes

that are permissible and those taxes that are not, even though

both kinds of taxes have some effect on foreign ur interstate com-

merce. See Boston Stock Exchange v. State Tax Comm'n, 429 U.S.

318, 328-29 (1977)

By the same token, this case must be distinguished from cases

in which the States are attempting directly to participate in foreign

affairs. See, e.g., Zschernig v. Miller, 389 U.S. 429 (1968). Such

cases, like those involving the Import-Export Clause, do not in-

volve striking a balance between state taxing power and the effect

of a given state tax on foreign affairs, but turn on whether the

State has acted in a defined area that is expressly reserved for

federal control.

23

This Court has also acknowledged that the ‘‘one voice”’

doctrine, if applied as appellant urges, will unavoidably

lead the courts into difficult and uncertain inquiries. Thus,

the Court noted in Container Corp., supra, that it has no

special competence “in determining precisely when foreign

nations will be offended by particular acts, and . in

deciding how to balance” foreign policy concerns against

state taxing power. Jbid. The problem is made even more

difficult when the issue arises, as it frequently will arise,

in the context of garden-variety commercial litigation. In

such cases, like this one, the foreign policy concerns of

the United States will often be presented by a taxpayer

simply seeking to evade a tax rather than by the United

States at its own initiation. The line between private

economic concerns and public foreign policy concerns may

thus prove particularly troublesome to discern.

The process of identifying federal policy through litiga-

tion will also create needless uncertainty for state legisla-

tures. As we have already noted, in the usual order of

analysis, a court will be faced with the argument that a

state tax conflicts with the “one voice” principle only

after it has already decided that the tax is non-discrimi-

natory, fairly apportioned, not likely to result in multiple

taxation,’ and, further, that it has not been preempted by

Congress or by the Executive Branch. In such circum-

stances, we think that it will be the rare case where the

impact of a tax is so harmful to federal foreign policy

that it cannot coexist with that policy. Yet, because the

“one voice” standard seems to carry the seeds of a pre

sumption against taxes affecting foreign commerce, there

is no way short of litigation for the legislature to tell

with any certitude whether a particular tax is valid or

not.

14 Although the apportionment factor in Complete Auto Transit,

supra, protects against multiple taxation, Japan Line, supra, makes

clear that the foreign context raises special concerns about

multiple taxation, because of the courts’ inability to review foreign

axes. In this case, of course, there is no risk of multiple taxation of

the fuel purchased in Florida.

24

In our view, this tension between state taxing power

and federal control over commerce is largely unnecessary

At bottom, the judgments about the latitude to be given

state legislatures and the possible impact of their actions

on foreign affairs are ones of policy: political choices

about how much impact should be tolerated to allow full

exercise of the States’ sovereign powers. In the absence

of clear evidence to the contrary, we submit that the

Court should assume a willingness on the part of the fed-

eral government to tolerate state taxes meeting all other

standards for legitimacy under the Interstate and Foreign

Commerce Clauses. At the very least, the Court should

require some indication why, if the tax truly does inter-

fere with important federal policy, Congress or the

Executive Branch has not taken steps to preempt it. In-

deed, in this case, Congress has expressed an intention to

tolerate state taxes, like Florida’s, on the sale of goods

and services to air carriers. See 49 U.S.C. §$ 1513(b).

—~

The Court need not decide here when, if ever, the “one

voice” standard by itself would be a satisfactory basis

for striking down an otherwise valid state tax. For pres-

ent purposes, it is enough simply to hold that a tax

meeting all other standards under Japan Line, and not

preempted by the federal government, carries with it a

strong presumption of validity. As we discuss below, noth-

ing in the record of this case approaches the sort of

showing necessary to overcome that presumption.

B. Florida’s Tax Should Not Be Invalidated on the

Ground that It Impermissibly Interferes with For-

eign Affairs.

Once the maze of different standards under the Foreign

Commerce Clause has been negotiated, this case comes

down to a narrow inquiry. Neither Congress nor the

Executive has affirmatively preempted Florida’s tax. See

pages 7-16 supra. And appellant concedes, as it must,

that this case does not involve a threat of discrimination

or multiple taxation. The sole question thus is whether

25

Florida’s tax is one of those rare taxes that so interferes

with important federal policy that this Court should de-

clare it unconstitutional.

Although appellant and the United States advance a

series of different arguments for their position that the

state tax does improperly interfere with dominant federal

policy, many of these arguments depend upon the same

materials cited to show preemption by Congress and the

State Department. As we have already discussed, none

of these materials makes it clear that federal policy re-

quires the preclusion of state taxes on aviation fuel. In

addition, however, appellant and the United States point

to two other factors that, in their view, show an over-

riding federal interest in the invalidation of the Florida

excise tax: the threat of retaliation and the position taken

by the State Department before this Court. Neither of

these factors should be held controlling.

1. The threat of retaliation

References to possible retaliation, as a ground for over-

turning a state tax, must be treated with some caution.

First, the threat of retaliation may presumably be put

forward in every case where a foreign government does

not have a similar or equal tax. Thus, an argument based

on possible retaliation does very little to separate taxes

with acceptable effects on foreign commerce from those

with unacceptable effects. Moreover, quite apart from the

ubiquity of the concern, we think that even the fact of a

retaliatory tax, as opposed to a mere threat, would not be

sufficient to justify automatic invalidation of a state tax:

Congress may believe that some additional tax on Ameri-

can companies abroad is a perfectly acceptable price to

pay for respecting the States’ sovereign power to tax at

home.'* The federal interest in interstate commerce is

16 Although the Court in Japan Line, supra, invalidated a state

tax, it did not rely on a finding that the tax was permissible in all

respects save its encroachment upon the federal government’s ex-

clusive power over foreign affairs. The Court noted that the threat

26

not necessarily served by whatever policy results in the

lowest rate of overall taxation.

We thus submit that mere threats of retaliation should

be given little weight. If the threat is rea! and significant,

Congress and the Executive Branch have the capacity to

recognize it and, in addition, either to discourage it or

accommodate :t by statute or agreement. For the Judicial

Branch, by contrast, the only choices are to ignore the

threat or capitulate to it by invalidating the tax. In our

view, the matter of dealing with retaliation is best left

to other branches.

In any event, this case is hardly an attractive one

in which to invalidate a state tax because of possible

retaliation."® Retaliation is simply not a factor in this

ease. First, the record is devoid of evidence of any threat

of retaliation by the Canadian Government. Although

several foreign governments have presented the State De-

partment with diplomatic notes, see U.S. Brief on Appeal

la-58a, none was received from the Canadian government.

Moreover, the State Department offers no evidence of any

other kinds of foreign policy repercussions with Canada.

of retaliation by foreign governments was a consideration in

whether the State exceeded its taxing power (441 U.S. at 450

yet, the Court was concerned with the threat of retaliation that

might result from multiple taxation. Jd. at 452-55. The Court

evidenced similar concerns in both Container Corp., supra, 103

S. Ct. at 2955-56, and Mobil Oil Corp. v. Commissioner of Taxes of

Vermont, 445 U.S. 425, 446-49 (1980 This case, of course, poses

]

no risk of multiple taxation.

® The federal government ! much of the fact that the Court

in Container Corp. distinguished its holding sustaining a state tax

from its decision in Japan Line, invalidating a state tax, in part, on

the basis that Container Corp. involved a challenge by a domestic

corporation while Japan Line involved ; challenge by a foreign cor-

poration. These cases should nots however, be read to provide an

exception from state taxes for foreign corporations. Just as the

Interstate Commerce Clause does not totally exempt domestic out-of-

state corporations from state taxes, so, too, the Fore ign Commerce

Clause does not totally exempt foreign corporations.

27

Second, and perhaps most telling, some of the Canadian

provinces themselves levy a similar tax. Thus, it is highly

doubtful that the Canadian Government has any legitimate

basis for a complaint about the Florida tax."

2. The submission of the United States

The brief filed by the United States as amicus curiae

in this Court presents somewhat different problems. Al-

though the informed views of the State Department are

not irrelevant (see Container Corp., supra, 103 S. Ct. at

2956), it would seem anomalous to uphold a state tax

against a preemption challenge based on the formal ac-

tions by Congress and the Executive, only to strike it

down based on a general statement of preference in a

brief submitted to this Court. In our view, a federal

policy articulated in a brief submitted at the invitation

of this Court should typically be regarded as insufficient

to override a state tax. 4

To begin with, we thin4 that a requirement of more

formal action carries with it a more fitting respect for

state lawmaking. As we have said, the ultimate decision

about state taxes in a case such as this is one of

policy: a balancing of state power against federal in-

terests in certain practices of trade. Although the federal

government has the power to declare its interest dominant,

it is essential to ensure that the policy decision to do so is

made with sufficient formality and reflection. We note,

17 Moreover, amici submit that Florida’s tax is valid as applied

more generally. There is no compelling evidence in the record that

any foreign government is going to retaliate in any way that poses

serious foreign relations repercussions. Indeed, the diplomatic notes

in the record contain few actual threats of any retaliatory action.

Most simply request the State Department to oppose Florida’s tax.

There is almost no evidence about what these foreign governments

will do if this Court upholds Florida’s taxing power. A suggestion

by this Court that Florida’s tax appears to be valid generally may

merely lead to an effort by the State Department and foreign gov-

ernments that oppose the tax to enter into international agreements

that directly address the relevant foreign policy concerns.

_-

28

for example, that the views of the United States have not

been part of this case at all, until this Court invited the

Solicitor General to express those views. That last-minute

intervention should not be the benchmark for determining

whether state power can preperly be exercised.

We also think a more formal process will allow for

the proper interaction among the branches of the federal

government. As the Court has made clear, the “nuances

(of foreign policy] are much more the province of the

Executive Branch and Congress than of this Court.”

Container Corp., supra, 103 S. Ct. at 2956. The primacy

of formal action by the Executive and Congress, through

international agreement or federal statute, preserves the

important role that Congress plays in balancing the tax-

ing power of the States against the foreign affairs power

of the federal government. This congressional role has

been acknowledged by all three branches of the federal

government. The State Department admits in its brief

that a possible conflict with state law is a factor in

determining whether to proceed by international agree-

ment, in which Congress plays no active role, or by treaty,

which must be approved by the Senate. U.S. Brief on

Appeal 18. Thus, Congress has decided to take a more

formal role in the context of international agreements by

enacting legislation that requires the Secretary of State

to provide Congress with all such agreements. See 1

U.S.C. § 112b. This monitoring, in turn, gives Congress

increased opportunities to react to international agree-

ments that it finds inappropriate. And this Court has

repeatedly noted the significance of the shared responsi-

bilities of Congress and the Executive in foreign relations,

see Dames & Moore, supra, as well as the role of Congress

in guarding fundamental state interests, see Garcia v.

San Antonio Metropolitan Transit Authority, 105 8.Ct.

1005, 1017-20 (1975).**

18 The Court’s recent acceptance of agency regulations for the

purposes of statutory interpretation provide an apt analogy. The

Court has held that it will follow a reasonable regulation promul-

29

We do not rule out the possibility that, in some cases,

more formal action might be inappropriate or impractical.

But this case is not one of them. To the contrary, the

international agreements entered into by the Executive

bear witness to its awareness of the state taxing power

for decades. Despite that awareness, however, the Execu-

tive has repeatedly failed to take any action expressly to

preempt those taxes. Nor has the State Department ex-

plained why any foreign policy problems could not be

remedied through agreements that expressly preempt

Florida’s tax as applied to foreign commerce. See 49

U.S.C. $$ 1462, 1502. Finally, the State Department of-

fered its views in the litigation challenging the tax

only after the appeal was docketed in this Court and

only after the Court expressly requested that the United

States take a position. Even so, the Executive has made

no mention of Congress’ statement in the Federal Avia-

tion Act, 49 U.S.C. § 1513(b), generally permitting state

taxes like Florida’s, an omission that confirms the dif-

ficulties inherent in relying too strongly on informal pro-

nouncements by the Executive.

In short, this case presents no unusual circumstances

that would justify invalidation of a state tax because of

the effect of that tax on foreign policy. Although appel-

lant plainly would prefer to keep the tax monies rather

than pay them over to the State of Florida, a refusal to

accede to that preference does not seriously interfere

with the power of the federal government to regulate

foreign commerce.

gated by the agency charged with the statute’s enforcement. See,

e.g., Chevron, U.S.A., Inc. v. Natural Resources Defense Council,

Inc., 104 S.Ct. 2778, 2781-83 (1984). This acceptance is based in

part on the recognition that Congress has delegated certain author-

ity to the agency to fill in gaps in a statute by regulation. Jd. at

2782. At the same time, the Court has never suggested that it would

rely on the same principles in accepting an agency position evidenced

solely by its brief before this Court.

30

CONCLUSION

For the foregoing reasons, the judgment of the Florida

Supreme Court should be affirmed.

Respectfully submitted,

H. BARTOW FARR, III BENNA RUTH SOLOMON

PAUL J. VAN DE GRAAF Chief Counsel

ONEK, KLEIN & FARR STATE AND LOCAL LEGAL CENTER

2550 M Street, N.W. 144 N. Capitol Street, N.W.

Washington, D.C. 20037 Suite 349

(202) 775-0184 Washington, D.C. 20001

(202) 638-1445

Counse ] of re cord 1or

Of Counsel

Amici Curiae

February 6, 1986