Petition for Writ of Certiorari — United States v. United States Shoe Corp.

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No. G 7 — 3 1

In the Supreme Court of the United States

OCTOBER TERM, 1996

UNITED STATES OF AMERICA, PETITIONER

UNITED STATES SHOE CORPORATION

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

WALTER DELLINGER

Acting Solicitor General

FRANK W. HUNGER

Assistant Attorney General

LAWRENCE G. WALLACE

Deputy Solicitor General

KENT L. JONES

Assistant to the Solicitor

\ E C E \ * E D General

DAVID M. COHEN

JEANNE E. DAVIDSON

AUG 29 1997 Topp M. HUGHES

Attorneys

CLERK

off ct Of — US. Department of Justice

| SUPREME coun’: — Washington, D.C. 20530

— (202) 514-2217

QUESTION PRESENTED

Whether application of the Harbor Maintenance

Tax (26 U.S.C. 4461(a)) to goods loaded at ports of the

United States for export shipment violates the

Export Clause of the Constitution.

(I)

TABLE OF CONTENTS

Page

IIE cctetnneccentccndnsssenstiscinnsiiienenssensnsnenntnaesenssecunss 1

TK 2

Constitutional and statutory provisions involved .......... 2

ET 4

Reasons for granting the petition ................................. 12

% 26

ee la

11———— —̃ ¶¶⁰ — da

TABLE OF AUTHORITIES

Cases:

Alamo Rent-A-Car, Inc. v. City of Palm Springs,

... •fTññͤ 22

Alamo Rent-A-Car, Inc. v. Sarasota-Manatee Air-

port Authority, 906 F. 2d 516 (11th Cir. 1990), cert.

denied, 498 U.S. 1120 (1991) 15-16, 20

Armour Packing Co. v. United States, 209 U.S. 56

Ee 13

Board of Trustees of University of Illinois v. United

States, 280 US. 48 (19GB) .......................0000...000000e- 13

Capitol Greyhound Lines v. Brice, 339 U.S. 542

— — — 20-21

Evansville-Vanderburgh Airport Authority District

v. Delta Airlines, 405 U.S. 707 (1972) .......... 9, 16, 18,

20, 21, 22

Fairbank v. United States, 181 U.S. 283 (1901) . 12, 14,

23-24

Florida Power & Light Co. v. United States, 846

F. 2d 765 (D.C. Cir. 1988), cert. denied, 490 U.S.

111111 ———— 18

Glickman v. Wileman Bros. & Elliott, 117 S. Ct.

— ——— 14

Head Money Cases, 112 U.S. 580 (1884) .................. 10, 21

(III)

Cases—Continued: Page Constitution, statutes and regulation: Page

International Harvester Co. v. Evatt, 329 U.S. 416 38

— c 21 e 2. 6, 12

Maine v. Department of Navy, 973 F.2d 1007 (ist Export Clause . 8. 10, 13, 14, 18

2303 — — — 18. 24 Import-Export Clauss 18

Massachusetts v. United States, 435 U.S. 444 Omnibus Budget Reconciliation Act of 1990, Pub. L.

. 5, 9, 11, 13, 15, 16, 18, 20, 22, 23 No. 101-508, § 11214, 104 Stat. 1388-436.................... 5

National Cable Television Ass'n v. United States, Water Resources Development Act of 1986, Pub. L.

r ... 17 XJ . 4

New Hampshire Motor Transport Association v. . 5

Flynn, 751 F.2d 43 (Ist Cir. 1984) 17 4461. 100 Stat. 688 5

New Orleans Steamship Ass'n v. Plaquemines Port, Water Resources Developement Act of 1990, Pub. L. 1

Harbor and Terminal Dist., 690 F. Supp. 1515 No. — 1 ä — -

(E.D. La. 1988), aff’d, 874 F.2d 1018 (5th Cir. 1989), — — — — — Ea

2999 ——— — Z —Tʃ 2,4

A. ee 8. 12, 14, 23 ha a 4, 7,8, 14

Co. . Keokuk, 96 US 80 (1877) ............... 13 E —— 4

Richfield Oil Corp. v. State Board of Equalization, une 17

329 U.S. 69 (1946) ..........—.C —. 13 a uuimemnenen 5

San Juan Cellular Telephone Co. v. Public Service r ⁊ 5

Commission of Puerto Rico, 967 F 2d 683 (ist Cir. EE —. 7 3

— ² ˙hQ—Q— ] —'———— as 18 r 7

Union Pacific Railroad v. Public Utility Comm n, Se 7

114. K ˙ 18 I I en 6

ö Seen R ²˙ LÄ r 1 99.1111 5, 15, 16

United States v. American Bar Endowment, 477 26 U.S.C. 9505(c) ..... —

. 12 292828 —— ——ʒ—Z—ä

——.... . 8. 25

mn 4 ——— 7

FO Ee a 12 e — -

United States v. Hill, 506 U.S. 546 (1998) ............. 12, 25 . 7

United States v. Sperry Corp. 493 U.S. 52 (1989 — 16, 111313 — —— 6

18, 20, 22 Miscellaneous:

H.R. Rep. No. 881, 101 Cong., 2d Sess. (1990) ........... 16

S. Rep. No. 126, 99th Cong., 2d Sess. (1989) .. 5, 6, 15, 19

S. Rep. No. 228, 99th Cong., Ist Sess. (1986) ............. 5, 7,

* In the Supreme Court ol the United States

Miscellaneous Continued: * OcTOBER TERM, 1997

Water Resource Conservation, Development, and In-

frastructure Improvement Act of 1985: Hearing

—— the House Comm. on Ways and Means,

eans, 99th

— —— —— . 23 UNITED STATES OF AMERICA, PETITIONER

the Senate Comm. on Finance, 99th Cong., Ist

Sess. (1985)

No.

UNITED STATES SHOE CORPORATION

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

The Acting Solicitor General, on behalf of the

United States, respectfully petitions for a writ of

certiorari to review the judgment of the United

States Court of Appeals for the Federal Circuit in

this case.

OPINIONS BELOW

The decision of the court of appeals (App., infra, la-

45a) is reported at 114 F.3d 1564. The decision of the

United States Court of International Trade (App.,

infra, 46a-89a) is reported at 907 F. Supp. 408.

(1)

JURISDICTION

The judgment of the court of appeals was entered on

June 3, 1997. The jurisdiction of this Court is invoked

under 28 U.S.C. 1254(1).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

1. Article I, Section 9, Clause 5 of the Constitution

of the United States provides:

No Tax or Duty shall be laid on Articles ex-

ported from any State.

2. 26 U.S.C. 4461 provides:

(a) General rule.— There is hereby imposed a

tax on any port use.

(b) Amount of tax.—The amount of the tax

imposed by subsection (a) on any port use shall be

an amount equal to 0.125 percent of the value of

the commercial cargo involved.

(e) Liability and time of imposition of tax.—

() Liability—The tax imposed by sub-

section (a) shall be paid by —

(A) in the case of cargo entering the

United States, the importer,

(B) in the case of cargo to be exported from

the United States, the exporter, or

C) in any other case, the shipper.

(2) Time of imposition.— Except as pro-

vided by regulations, the tax imposed by sub-

section (a) shall be imposed

(A) in the case of cargo to be exported from

the United States, at the time of loading, and

(B) in any other case, at the time of

unloading.

3. 26 U.S.C. 4462 provides, in relevant part:

(a) Definitions.—For purposes of this sub-

chapter—

Port Use.—The term “port use” means —

(A) the loading of commercial cargo on, or

(B) the unloading of commercial cargo

from, a commercial vessel at a port.

(2) Port.—

(A) In general—The term “port” means

any channel or harbor (or component

thereof) in the United States, which—

(i) is not an inland waterway, and

(ii) is open to publie navigation.

* e+ „ **

(3) Commercial cargo.—

(A) In general—The term “commercial

cargo” means any cargo transported on a

commercial vessel, including passengers

transported for compensation or hire.

(B) Certain items not included.—The term

“commercial cargo” does not include—

(i) bunker fuel, ship's stores, sea

stores, or the legitimate equipment

necessary to the operation of a vessel,

(ii) fish or other aquatic animal life

caught and not previously landed on

shore.

XR * X X *

STATEMENT

Approximately 4000 cases have been filed in the

United States Court of International Trade to chal-

lenge the constitutionality of the Harbor Mainte-

nance Tax, 26 U.S.C. 4461. Approximately 90 similar

challenges to the tax are pending in the Court of

Federal Claims. The present case was selected by the

Court of International Trade as a test case for this

litigation. The other similar suits have been held in

abeyance pending the final disposition of this case.

I. a. The Harbor Maintenance Tax imposes a

port use charge of 0.125 percent of the value of any

commercial cargo that is loaded or unloaded from a

commercial vessel in any port of the United States.

26 U.S.C. 4461(a). The tax applies without differentia-

tion as to the origin or destination of the cargo. The

incidence of the tax is simply upon “any port use”

(26 U.S.C. 4461(b).

The Harbor Maintenance Tax was enacted as part

of the Water Resources Development Act of 1986,

Pub. L. No. 99-662, 100 Stat. 4082. That Act was

enacted by Congress to provide funds for the neces-

sary costs of maintaining and expanding channel and

harbor facilities by “impos[ing] Federal user fees or

s on the beneficiaries of these expenditures.”

22 No. 228, 99th Cong., Ist Sess. 5 (1986). Be-

cause the United States has an obvious interest in

making those who specifically benefit from its

services pay the cost” (Massachusetts v. United

States, 435 U.S. 444, 462 (1978)), Congress determined

to impose a nationally-uniform fee on the “value of the

cargo passing” through harbors (S. Rep. No. 126, 99th

Cong., 2d Sess. 9 (1985)). The Senate Report on the

Act explains that (S. Rep. No. 228, supra, at 5-6):

(T]he ad valorem basis of the charges is the only

acceptable basis on which to impose such charges.

This national, uniform basis minimizes any possi-

ble competitive disadvantage among cargo types

and U.S. ports which otherwise might result

from user charges.

The Harbor Maintenance Tax is er from the

exporter or other shipper whose cargo is

— 1 — me Mo in a port of the United States.

26 U.S.C. 4461(c)(1), (2). The charges thus collected

are deposited in the Harbor Maintenance Trust Fund

(26 U.S.C. 9505)) and “may only be expended for har-

bor operations and maintenance” costs incurred on

the shippers’ behalf (App., infra, 45a (Mayer, J bg

dissenting)). See 26 U.S.C. 9505(c).' In enacting this

1 The Harbor Maintenance Tax was originally established at

0.040 percent of value. Pub. L. No. 99-662, § 4461, 100 Stat.

4266. In the Omnibus Budget Reconciliation Act of 1990, Pub.

L. No. 101-508, § 11214, 104 Stat. 1388-436, it was increased to

its current level of 0.125 percent. Before the rate of this port

use charge was increased, the Harbor Maintenance Trust Fund

provided approximately 40 percent of the necessary funds for

the operation and maintenance of eligible channels and harbors.

Pub. L. No. 99-662, § 210, 100 Stat. 4106. Since 1991, the Trust

fee, Congress determined that the commercial users

who are the principal beneficiaries of the costs in-

curred in developing and maintaining channels and

—— nara general taxpaying public—

8 nance the upkeep of iliti

* pkeep of these facilities. S. Rep.

b. The Harbor Maintenance Tax is

the United States Customs Service. 8

such payments to the Customs Service along with

payments of customs duties. Exporters and domestic

shippers, who pay no duties, remit the tax to the

Customs Service on a quarterly basis pursuant to

19 C. F. R. 24.24. The monies collected by the Customs

Service are then transferred to the Harbor Main-

tenance Trust Fund pursuant to 26 U.S.C. 9505(b).

. 2. Respondent loads goods for shipment as exports

in ports of the United States and, along with import-

ers and domestic shippers, is therefore subject to the

Harbor Maintenance Tax. After making several pay-

ments of this port user charge, respondent com-

menced this refund suit in the United States Court of

International Trade. Respondent claimed that appli-

cation of the Harbor Maintenance Tax to cargo loaded

in a port of the United States for export violates the

Export Clause of the Constitution, which provides

that Ino Tax or Duty shall be laid on Articles

8 from any State.“ U.S. Const. Art. I, § 9, Cl.

The Court of International Trade agreed wi -

spondent that the Harbor Maintenance Tax Ace

Fund has provided approximatel

y 100 percent of those funds

Water Resources Development Act of 1990 :

640, § 316, 104 Stat. 4641. » Pub. L. No. 101-

prohibited tax on exports (App., infra, 46a-89a).” The

court rejected the government’s contention that this

statutory fee for “any port use” (26 U.S.C. 4461(a)) is

a permissible charge for the use of port facilities.

The court stated that “there is little indication that

Congress intended to establish a user fee” (App.,

infra, 56a) and that the “primary purpose of the [Har-

2 In enacting the Harbor Maintenance Tax, Congress speci-

fied that, f lor purposes of determining the jurisdiction of

any court of the United States or any agency of the United

States, the tax imposed by this subchapter shall be treated as if

such tax were a customs duty.” 26 U.S.C. 4462(f)(2); see id.

4462(f)(1). The Senate Report explained that “the Court of

International Trade is to have primary jurisdiction for actions

involving the port user charge provisions.” S. Rep. No. 228,

supra, at 10. Respondent seeks a refund of payments for

which it made a timely administrative protest with the Cus-

toms Service pursuant to the provisions applicable to customs

duties (19 U.S.C. 1514, 1515). The government acknowledged

that the Court of International Trade has jurisdiction in this

case, for respondent’s claim “contest{s] the denial of a protest”

(28 U.S.C. 1581(a)). The Court of Internacional Trade held,

however, that, regardless of any protest, the court would have

jurisdiction under 28 U.S.C. 1581(i) because respondent's claim

was filed in that court within two years after the tax was paid.

See App., infra, 75a-76a; 28 U.S.C. 2636(i). That holding was

affirmed by the Federal Circuit. App., infra, 14a.

We do not seek review of that holding in this petition.

Whether the jurisdiction of the court rests upon 28 U.S.C.

1581(a)—because respondent seeks review of a denial of a

protest—or upon 28 U.S.C. 1581(i)—because this suit was com-

menced within two years of payment—has no relevance to the

proper disposition of this case. That issue is of relevance only

for other claimants, who have challenged the Harbor Mainte-

nance Tax without first filing an administrative protest. This

jurisdictional issue is, moreover, peculiar to the refund re.

quests of exporters under the Harbor Maintenance Tax and

lacks recurring application in other contexts.

bor Maintenance] Tax is to raise revenue“ (id

The court reasoned that little nexus binds ——

sition of the ad valorem tax on cargo to the costs of

port maintenance” and that the “fees collected * * *

yield funds for the purpose of maintaining and devel-

oping American ports and harbors for all uses, com-

mercial and recreational” (id. at 58a). The court con-

cluded that Congress impermissibly imposed a consti-

rn duty under the pretext of fix-

1 a, quoting Pace v. Burgess, 92 U.S.

The court assumed, without decidi

statutory fee for “any port use” — te ao —

bor Maintenance Tax (26 U.S.C. 4461(a)) does not dis-

criminate against exports. The court nonetheless

concluded that, as applied to goods loaded for ex rt

the tax violates the Export Clause because it *

fairly related to “the cost of the benefits port users

receive from harbor maintenance and development

projects (App., infra, 60a). The court stated that the

port use fee imposed by the Harbor Maintenance Tax

has yielded revenues “in excess of costs incurred” in

operating and maintaining port facilities and that

these funds may be “used to fund projects yet to be

commenced, or even envisioned” (ibid.). The court

1 * the charge is therefore “excessive in

o the cost to * 1 idi

port facilities (ibid.). d

3. a. The Federal Circuit has exclusive jurisdi

tion over appeals from decisions of the Court ——

national Trade. 28 U.S.C. 1295(a)(5). Sitting as a

five-judge panel in this case, the court of appeals

affirmed the decision of the court below (App., in fra,

la-30a), with one judge dissenting (id. at 3la-45a).

The court held that the port use fee imposed by the

Harbor Maintenance Tax is unconstitutional as

applied to goods loaded for export from the ports of the

United States.

The court of appeals noted that, under this Court’s

decisions in Evansville-Vanderburgh Airport Au-

thority District v. Delta Airlines, 405 U.S. 707 (1972),

and Massachusetts v. United States, 435 U.S. 444

(1978), a government fee exacted in connection with

the provision of services may constitutionally be

applied to goods for export if the fee (i) does not

discriminate against exporters, (ii) is based upon a

fair approximation of use and (iii) is not excessive in

relation to the costs incurred by the government in

providing the services (App., infra, 17a). Without ad-

dressing the first and third prongs of this test, the

court concluded that the Harbor Maintenance Tax is

unconstitutional as applied to goods for export be-

cause “there is no correlation between the amount of

[the tax] an exporter pays and the amount the ex-

porter uses the port” (ibid.).

The court of appeals gave three reasons for its

conclusion. First, the court noted that the tax is im-

posed on and collected from the party who ships the

goods rather than on “the ship owners” who are the

“direct users” of the ports and harbors (App., infra,

19a). Second, the court stated that, because the statu-

tory port use fee is assessed on the value of goods

being shipped, it lacks any reasonable connection with

the cost or value of the benefits provided from use of

the port (id. at 2la-22a). Third, the court found it

objectionable that “exporters are forced to pay for

harbor maintenance across the entire country, even

though they receive no benefit from maintained har-

bors at any port other than the one they actually use”

(id. at 22a).

The court rejected the government's contention

that a fee based solely upon the use of a port is not a

tax on an “[aJrticle of export” within the meaning of

the Export Clause. The court reasoned that the fee

falls on the goods, and not on the use of the port,

because it “is imposed on an ad valorem basis at the

time the exported goods are loaded on the vessel” and

the “exporter, rather than the manufacturer, pays the

tax” (App., infra, 24a).

The court also rejected the government’s conten-

tion that the Harbor Maintenance Tax is not a pro-

scribed tax on exports because it constitutes a valid

exercise of the power of Congress to regulate inter-

state and foreign commerce. The court concluded

that the statutory fee on “port use” is not a regula-

tion of commerce because the fee “regulates nothing”

(App., infra, 27a). The court stated that the Harbor

Maintenance Tax does not regulate commerce be-

cause “[iJt is not designed to reduce the overall use of

the ports” and because “the government has not per-

suaded us that the [tax] is designed to simply recoup

the costs of the services” provided to users of ports

and harbors (ibid.).

b. Judge Mayer dissented. He noted that a user fee

differs from a tax because “a tax is enacted to raise

revenue ‘to go to the general support of the govern-

ment,’ see Head Money Cases, 112 U.S. 580, 596

(1884), while a user fee is designed as a specific

charge for the use of government facilities and serv-

ices” (App., infra, 32a). Based upon the text and the

extensive legislative history of the statute, Judge

Mayer concluded that the Harbor Maintenance Tax is

a constitutionally valid fee for the use of harbor facili-

ties that satisfies all three prongs of the test estab-

lished by this Court in Massachusetts v. United

States, 435 U.S. at 464, 466-470. peed

First, Judge Mayer disagreed with the majority’s

conclusion that a fee assessed equally against export-

ers and all other shippers for the use of the ports of

the United States is constitutionally infirm because

the parties who must pay the fee are not the “direct

beneficiaries” of the services that the government

provides. He noted that this conclusion is illogical as

a matter of economics and also “flies in the face of

Congress’ finding that exporters are the direct bene-

ficiaries” of port services (App., infra, 42a). Because

the ultimate burden of any fee imposed on “port use

is allocated by economics, not by statute, Judge

Mayer emphasized that “it is unimportant whether

the fee be assessed against exporters and importers,

the ultimate beneficiaries of the harbor maintenance

and operations projects, or against the actual vessel

owner, to be passed on to the importers or exporters

if it chooses” (ibid.). 8

Judge Mayer also rejected the majority's eonclu-

sion that the Harbor Maintenance Tax is not fairly

related to the costs incurred by the government in

provising and maintaining port facilities (App., infra,

39a-45a). It was expressly to avoid discrimination

among ports and port users that Congress chose to

allocate the costs of providing these services under a

nationally-uniform charge based upon the value of

goods shipped (id. at 39a). Judge Mayer concluded

that the Constitution does not require Congress to

calculate the port use fee separately for each port,

because “[e]very exporter has all ports and harbors

available to it” (id. at 40a).

REASONS FOR GRANTING THE PETITION

Trade and the Court of Federal Claims, any appeal

from the approximately 4000 pending challenges to

the Harbor Maintenance Tax would necessarily be to

that circuit. It is therefore unlikely that any other

court of appeals will have an opportunity in the future

to review this same issue.

The numerous pending cases seek refunds of hun-

dreds of millions of dollars of fees that have been col-

lected to fund the operation and development of the

ports of the United States. In similar circumstances,

this Court has recognized the need for plenary review

of Federal Circuit decisions of significant fiscal im-

portance. See, e.g., United States v. Hill, 506 U.S.

546, 549 (1993); United States v. Goodyear Tire &

Rubber Co., 493 U.S. 132, 138 (1989); United States v.

American Bar Endowment, 477 U.S. 105, 109 (1986).

Such review is especially appropriate in this case

because the Federal Circuit has held an Act of Con-

gress unconstitutional.

I. a. This Court has long recognized the distinc-

tion that exists between an unconstitutional “Tax or

Duty * * * laid upon Articles exported” (U.S.Const.

Art. I. § 9, Cl. 5) and a permissible user fee that exacts

compensation * * for services properly

rendered.” Fairbank v. United States, 181 U.S. 283,

304 (1901), quoting Pace v. Burgess, 92 U.S. 372, 375

(1875). “[Rjevenue measures that operate only to

compensate a government for benefits supplied” are

i t

not constitutionally proscribed, for the governmen

“has an obvious interest in making those who —.—

cally benefit from its services pay the cost (Unite

States v. Massachusetts, 435 U.S. at 462).

e The court of appeals did net dlapute thet Congress may

properly exercise its power under the Commerce „

“recoup the costs of the services” provided to users _

and harbors (App., infra, 27a). A burden upon exports 4

posed pursuant to a valid exercise of Congress's power

regulate commerce does not violate the Export *

Armour Packing Co. v. United States, 209 US. 56,

(1908). The powers to tax and to regulate 2

independent sources of legislative authority. See Richfie -

Corp. v. State Board of Equalization, 329 US. 69, Me

(1946); Board of Trustees of University of Illinois v. *

States, 289 U.S. 48, 58 (1933). Restrictions applicable to

imposes a fee to recover expenses incurred tere

merce. See, g., Packet Co. v. Keokuk, 95 US. 80 (1877) ees

assessed for wharf usage were charges for services and =

tax); New Orleans Steamship Ass'n v. Plaquemines a

Harbor and Terminal Dist., 690 F. Supp. 1515, 1522 12

1988) (“charges levied to defray the cost of services that -

hamper, but indeed, aid interstate commerce, have consistently

been upheld by the Supreme Court”), aff d. 874 F.2d 1018 (5th

Cir. 1989), cert. denied, 495 U.S. 932 (1990).

That the Harbor Maintenance Tax does not “reduce the

funds enhance, not reduce, commercial use of port facilities.

— ——— wes enacted to provide fends

“for operations — —— oa

borne commerce.” S. Rep. No. 228, supra, at 5. — —

concluded that “{sjuch additional investment in U.S. ports wi

facilitate economic development and make the Nation’s water

more efficient.” bid. The compulsory

contribution that Congress has required from those who benefit

In determining whether a charge imposed

use of commercial facilities provided by the —

ment constitutes a “tax” within the proscription

of the Export Clause or a permissible charge for

services properly rendered,” the initial inquiry is

whether the primary purpose of the charge is to earn

revenue: “The point to guard against is, the imposi-

tion of a duty under the pretext of fixing a fee.” Pace

v. Burgess, 92 U. S. at 375-376. See also Fairbank v.

United States, 181 U.S. at 304. Enhancement of the

general revenue, however, is plainly not an overt or

disguised purpose of the Harbor Maintenance Tax

This statutory fee on “any port use” (26 U.S.C

4461(a)) was enacted as part of a comprehensive leg-

islative program providing for the operation and

“tax,” in the constitutional sense. See e.g., 8.

. e. g., S. Rep.

No. 228, supra, at 5 (“the committee —

— new port user charges”). In imposing this

— — use of ports of the United

— — N explained that t he taxes and fees

in legislation are not for the purpose of raising

revenue. Rather, they are to repay costs related di-

rectly to the servicing of commerce. These fees and

taxes offset services rendered to vessels.” S. Rep.

No. 126, supra, at 7.

Consistent with this clear statement of legislative

purpose, the fees collected under this statute are

deposited in the specially designated Harbor Mainte-

nance Trust Fund, from which they may be expended

only for port and harbor maintenance. 26 U.S.C.

9505(c). These funds may not be used to support the

general welfare. See App., infra, 36a (Mayer, J.,

dissenting) (“The government has been true to this

constraint.”).

The fact that this Trust Fund currently enjoys a

positive balance (see note 1, supra) does not mean, as

the courts below erroneously concluded (App., infra,

57a-58a), that the Harbor Maintenance Tax is a dis-

guised and proscribed “tax” rather than a valid “fee”

for services. The precise level of funding required

each year for the development, maintenance and op-

eration of harbor resources obviously fluctuates over

time. As this Court explained in Massachusetts v.

United States, 435 U.S. at 470 n. 25, in rejecting the

same contention adopted by the court of appeals in

this case:

Even if the revenues in any one year exceeded

the outlays, it would not follow that the tax is

invalid as applied. * * [The validity of the tax

lis] determined by comparing total revenue with

total outlays: i. e., a surplus of revenue over

outlays in any one year can be offset against

actual deficits of past years and perhaps against

projected deficits of future years.

See also Alamo Rent-A-Car, Inc. v. Sarasota-

Manatee Airport Authority, 906 F.2d 516, 522 (11th

Cir. 1990) (“given the long term nature of maintaining

and developing an airport, it was appropriate * to

— in future development plans when setting user

at, 2 Sea U.S. 1120 (1991).

lecision o court of appeals thus serious!

— — this Court’s precedents in concluding that

charges imposed by the Harbor Maintenance Tax

represent an unconstitutional “duty” masqueradin

as a “fee. As the dissent instead correctly —

sizes (App., infra, 32a-33a), the relevant fact is that

the Trust Fund into which the fees are deposited may

not be expended at any time for any purpose other

than the operation, maintenance and development of

— 7 1 I for commercial navigation.

S.C. e H.R.

Sena ae „ H.R. Rep. No. 881, 101 Cong., 2d

b. The decisions of this Court establi

fee does not constitute a proscribed — — ‘fee (i)

does “not discriminate against” a constitutionally

protected interest, (ii) is “based upon some fair

— sy sy : use” and (iii) is “not shown to be

ve in relation to the cost

of the benefits conferred.” . nd 9 ’. United

— — U.S. at 464. See also Evansville-Vander-

rgh Airport Authority District v. Delta Airlines

405 U.S. at 716-720. When, as in the present case the

Statute was enacted with a “specific declaration by

Congress that the (fees collected] are intended to

reimburse costs incurred by the United States, the

burde n must lie with [the plaintiff] to demonstrate

that the fee, in reality, is impermissibly designed to

raise general revenues. United States v. Sperr

R 493 U.S. 52, 60 (1989). *

court of appeals did not con

bor Maintenance Tax — deen lla

Nor did the court conclude that the fee imposed by the

statute is excessive in relation to the costs of the

benefits conferred (App., infra, 17a).’ Instead, the

court concluded that the statutory fee is unconstitu-

tional because it is not based upon some “fair approxi-

mation of use” of the ports of the United States (id. at

23a). Each of the three rationales offered by the court

of appeals in support of its conclusion is incorrect and

conflicts with decisions of this Court.

(i) The court of appeals stated that the statutory

fee is not based upon some “fair approximation of use”

because it is imposed on exporters and other parties

who ship goods rather than on “the ship owners” who

are the “direct users” of the Nation’s ports and har-

bors (App., infra, 18a, 19a). The court of appeals pro-

vided no citations of authority to support this proposi-

tion, however, and no such authority exists.

4 The Harbor Maintenance Tax clearly satisfies these two

prongs of the test used by this Court in determining whether

the exaction is a permissible user fee. The statutory fee applies

to all importers, exporters and domestic shippers (26 U.S.C.

4461(c)) and thus does not discriminate against exporters.

And, for the reasons described in the text (pages 14-15, supra),

the fees collected are not excessive in relation to the expendi-

tures made by the government. Although the Trust Fund cur-

rently enjoys a positive balance, that fact does not affect the

constitutionality of the fee. See, e. g., Massachusetts v. United

States, 435 U.S. at 470 n.25; App., infra, 44a (Mayer, J., dis-

senting). For example, in New Hampshire Motor Transport

Association v. Flynn, 751 F.2d 43, 47 (Ist Cir. 1984), the court

upheld a user fee even though the monies collected were to be

used to fund projects not yet commenced rather than to repay

the government for past services rendered.

° Respondent argued in the court of appeals that only a

“direct beneficiary” of a government program may be sub-

jected to a fee for the costs of that program. Respondent

claimed that such a rule was established in National Cable

Television Ass'n v. United States, 415 U.S. 336 (1974). That

Indeed, this Court has expressly rejected the very

rationale on which the court of appeals relied. In

United States v. Sperry Corp., 493 U.S. at 60, quoting

Massachusetts v. United States, 435 U.S. at 463 n.19,

the Court explained that it:

has never held that the amount of a user fee must

be precisely calibrated to the use that a party

makes of Government services. * * * All that

we have required is that the user fee be a “fair

approximation of the cost of benefits suppplied.”

In upholding a government fee imposed on the use of

airport facilities in Evansville-Vanderburgh Airport

Authority District v. Delta Airlines, 405 U.S. at 714

(emphasis supplied), the Court emphasized that it is

“not * * * particularly important whether the

charge is imposed on the passenger himself, to be

collected by the airline, or on the airline, to be passed

on to the passenger if it chooses. In either case, it is

the act of enplanement and the consequent use of

runways and other airport facilities that give rise to

the obligation.”

decision, however, concerned whether a particular agency fee

had been authorized by a particular statute. See id. at 342-344.

The Court “recognized that it was not announcing universal

definitions of ‘tax’ and ‘fee’” but was “simply determining the

meaning of these terms in a particular context quite different

from that presented in” cases involving the limitations on

taxing authority under the Export and Import-Export Clauses.

Union Pacific Railroad Co. v. Public Utility Comm 'n, 899 F. 2d

854, 861 (9th Cir. 1990). See also San Juan Cellular Telephone

Co. v. Public Service Commission of Puerto Rico, 967 F.2d 683,

687 (Ist Cir. 1992); Maine v. Department of Navy, 973 F.2d

1007, 1014 (1st Cir. 1992); Florida Power & Light Co. v. United

States, 846 F.2d 765 (D.C. Cir. 1988), cert. denied, 490 U.S.

1045 (1989).

, as in Evansville, it is the use of government-

— “facilties that give[s] rise to the obligation

to pay the fee. As Judge Mayer correctly concluded in

dissent in this case, because the ultimate burden of

any fee imposed on “port use” is allocated by —

ics, not by statutes, “it is unimportant whether the

fee be assessed against exporters and importers, the

ultimate beneficiaries of the harbor maintenance

and operations projects, or against the actual ——

owner, to be passed on to the importers or exporters 1

it chooses” (App., infra, 42a). The court of appeals

improperly ignored the holding of this Court in

Evansville in reaching its erroneous decision in this

The court of appeals similarly erred in ignoring the

determination of Congress that it is the exporters

and other shippers, and not “the ship owners (App.,

infra, 19a), who are the “direct beneficiarlies] of port

maintenance services. Congress enacted the Harbor

Maintenance Tax to avoid the harsh consequences

that inadequate and deteriorating ports and harbors

would have for commercial shippers. 8. Rep. No. 126,

supra, at 8. The fee on “port use was designed

specifically to provide funding to enhance the facili-

ties available for transporting the goods of commer-

cial shippers. In assessing the port use fee against

the shippers who use these facilities, Congress *

tionally concluded that “a portion of Federal expendi-

tures needed for port operations and maintenance

should be borne by the direct beneficiaries of such

expenditures.” S. Rep. No. 228, supra, at 5. The

court of appeals lacked any plausible basis for re-

jecting this determination of Congress that —

shippers are the “direct beneficiaries of suc

expenditures” (ibid.).

(ii) The court of appeals also erred in holding that

the statutory fee on “port use” is not based upon a

“fair approximation of use” because it is assessed on

the value of goods being shipped rather than on

tonnage or some other factor (App., infra, 21a). That

holding conflicts with numerous decisions of this

Court.

“This Court has never held that the amount of a

user fee must be precisely calibrated to the use that a

party makes of Government services.” United States

v. Sperry Corp., 493 U.S. at 60. Recognizing that,

“when the Federal Government applies user charges

to a large number of parties, it probably will charge a

user more or less than it would under a perfect user-

fee system,” the Court has specifically “declined to

impose a requirement that the Government ‘give

weight to every factor affecting appropriate compen-

sation.’” Id. at 61, quoting Massachusetts v. United

States, 435 U.S. at 468.

For example, flat registration fees that do not vary

based upon the amount of use have been sustained if

that fee recovers a “fair approximation of the costs of

the benefits supplied.” Evansville-Vanderburgh

Airport Authority District v. Delta Airlines, 405

U.S. at 716-717. Fees for the use of transportation

resources based upon the “fair market value” of the

vehicle or upon the gross revenues of the transporta-

tion service have also been sustained See id. at 715-

716; Alamo Rent-A-Car, Inc. v. Sarasota-Manatee

Airport Authority, 906 F.2d at 516.

Mileage or tonnage is not a necessary factor in

calculation of a transportation use fee. As the Court

emphasized in rejecting the challenge to the flat

registration fee assessed in Massachusetts v. United

States, 435 U.S. at 463, quoting Capitol Greyhound

Lines v. Brice, 339 U.S. 542, 545 (1950), the validity of

a use fee “should be judged by its result, not its

formula, and must stand unless proven to be unrea-

sonable in amount for the privilege granted.” Accord

Evansville-Vanderburgh Airport Authority District

v. Delta Airlines, 405 U.S. at 716. Even though

“(cJomplete fairness” would require that the use fee

be calibrated based upon “every factor affecting appro-

priate compensation” for the government services

provided, “[tJhese factors are so countless that

we must be content with ‘rough approximation rather

than precision.’” Capitol Greyhound Lines v. Brice,

339 U.S. at 545, quoting International Harvester Co.

v. Evatt, 329 U.S. 416, 422-423 (1947).

The statutory fee for port use satisfies the require-

ment that it not “be unreasonable in amount for the

privilege granted.” The funds obtained through col-

lection of the fee recover the costs incurred in provid-

ing port services (pages 14-15, supra), and the fee is

imposed on the parties whose goods are enhanced in

value by these services. A recovery of a portion of the

value of the benefits conferred—from those who

receive that value—is not “unreasonable in amount

for the privilege granted.” In holding to the contrary

in this case, the court of appeals failed to adhere to

this Court’s consistent admonition that the validity of

the fee is to be “judged by its result, not its formula.”

The Court has often emphasized that perfection in

the allocation of costs among those who benefit is not

required. For more than a century, the Court has

recognized that “[pJerfect uniformity and perfect

equality of taxation, in all the aspects in which the

human mind can view it, is a baseless dream.” Head

Money Cases, 112 U.S. 580, 595 (1884). It is therefore

“the amount of the tax, not its formula, that is of

central concern.” Evansville Airport Authority

District v. Delta Airlines, 405 U.S. at 716-717. In

United States v. Sperry Corp., 493 U.S. at 60, for

example, the Court upheld a federal fee imposed for

use of the Iran Claims Tribunal that was based solely

on the value of the recovery. In upholding that ad va-

lorem fee, the Court specifically rejected the notion

“that the amount of a user fee must be precisely

calibrated to the use that a party makes of Govern-

ment services.” Ibid. It is thus “beyond dispute that

an ad valorem charge can be a user fee” (App., infra,

41a (Mayer, J., dissenting), citing, e.g., United States

v. Sperry Corp., 493 U.S. at 59-64; Alamo Rent-A-

Car, Inc. v. City of Palm Springs, 955 F.2d 30 (9th

Cir. 1992)).

Congress reasonably concluded that an ad valorem

fee was appropriate in the present context as well.

Such a formula reasonably charges the costs of port

operations to those who benefit from actual use of the

ports. Moreover, allocating costs based upon the

value of the goods being shipped substantially reduces

administrative costs and burdens. Congress was

aware that the Customs Service “has a strong pres-

ence at ports of entry and is experienced at appraising

imported merchandise.” S. Rep. No. 228, supra, at 10.

Because the core information collected by the Cus-

toms Service concerns the value of the cargo, struc-

turing the Harbor Maintenance Tax on an ad valo-

rem basis reduces administrative costs by utilizing

The Court noted in Massachusetts v. United States, 435

U.S. at 466 that, “[i]f the National Government were required

more precisely to calibrate the amount of the fee to the extent

of the actual use of the airways, administrative costs would

increase and so would the amount of revenue needed to operate

the system.”

the existing data collection system. Extensive testi-

mony was presented to Congress favoring such an ad

valorem fee over a port-specific fee or a flat tonnage

fee. See, e.g., User Fees for Ports and Waterways:

Hearing Before the Senate Comm. on Finance, 99th

Cong., Ist Sess. 47 (1985) (Senate Hearing); Water

Resource Conservation, Development, and Infra-

structure Improvement Act of 1985: Hearing Before

the House Com: or Ways and Means, 99th Cong.,

ist Sess. 59 (1985) Cn Hearing). Shippers of low-

value cargo testified that any fee for port use that was

calculated upon tonnage would “disproportionately

* * * affect bulk cargo marketability when compared

to [its] impact on containerized cargo. It also would

disadvantage export dependent ports in contrast to

import dependent ports.” Senate Hearing, supra, at

19; see House Hearing, supra, at 59. In imposing the

statutory fee on an ad valorem basis, Congress ra-

tionally concluded that shippers of higher value cargo

would receive greater benefits (e.g., greater profits)

from the enhancement of port facilities and that value

is therefore the only acceptable basis on which to

impose such charges. This national, uniform basis

minimizes any possible competitive disadvantages

among cargo types and U.S. ports which otherwise

might result from user charges.” S. Rep. No. 228,

supra, at 5-6. ha

tip cchoe the method of “fair approximation

that Congress reasonably elected to employ in impos-

ing this fee for port use, the court of appeals thus

disregarded not only the decisions of this Court but

also the clear legislative record. In particular, the

court failed to follow the well-established rule, sum-

marized by this Court in Fairbank v. United States,

181 U.S. at 304, quoting Pace v. B

. g urgess, 92 U.S. at

proper fees * * * are in no sense a duty on

exportation. They are simply the compensation

given for services properly rendered. The rule by

which they are estimated may be an arbitrary

one; but an arbitrary rule may be more conven-

ient and less onerous than any other which can be

adopted. * * Having due regard to that lati-

tude of discretion which the legislature is enti-

tled to exercise in the selection of the means for

attaining a constitutional object, we cannot say

that the charge imposed is excessive or that it

amounts to an infringement of the constitutional

provision * * * ,

(iii) The court of appeals further erred in con-

cluding that the statutory port use fee is objection-

able because “exporters are forced to pay for harbor

maintenance across the entire country, even though

they receive no benefit from maintained harbors at

any port other than the one they actually use” (App.

infra, 22a). This Court rejected an identical conten-

tion in sustaining a federal fee for airport services in

Massachusetts v. United States, 435 U.S. at 468. The

Court explained that, even though a user may actu-

ally land or take off from only a limited number of

facilities, charging a nationally- uniform fee that con-

tributes to a national fund for airport services is

permissible because nationwide “services are avail-

able for their use if needed and * * * the provision of

the services makes the airways safer for all users.”

Ibid. (footnote omitted) See also Maine v. Depart-

ment of Navy, 973 F.2d at 1013-1014 (upholding a

state fee as a “fair approximation” of the use of state

services when the parties benefit from the availability

of the services as well as from any actual use). The

decision of the court of appeals in this case conflicts

with this settled rule.

2. Several thousand cases pending in the Court of

International Trade and the Court of Federal Claims

raise the same question presented in this case. The

fees imposed by the Harbor Maintenance Tax involved

in these cases exceed several hundred million dollars.

Any appeal from judgments rendered in these cases

will lie exclusively to the Federal Circuit. 28 U.S.C.

1295(a)(3), (5). It is therefore unlikely that any other

court of appeals will have an opportunity to review the

issue decided in this case.

In similar contexts, this Court has recognized the

need for plenary review of Federal Circuit decisions

of significant fiscal importance. See, ¢.g., United

States v. Hill, 506 U.S. at 549; cases cited page 12,

supra. Such review is particularly appropriate when,

as in the present case, the federal Circuit has failed

to follow the decisions of this Court in improperly

declaring an Act of Congress unconstitutional.

CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted.

SEPTEMBER 1997

WALTER DELLINGER

Acting Solicitor General

FRANK W. HUNGER

Assistant Attorney General

LAWRENCE G. WALLACE

Deputy Solicitor General

KENT L. JONES

Assistant to the Solicitor

General

DAVID M. COHEN

JEANNE E. DAVIDSON

Topp M. HUGHES

Attorneys

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

No. 96-1210

UNITED STATES SHOE CORPORATION,

PLAINTIFF -APPELLEE

THE UNITED STATES, DEFENDANT-APPELLANT

Decided: June 3, 1997

Before: MAYER, MICHEL, RADER, and BRYSON,

Circuit Judges, and SmitH, Senior Circuit Judge.

Opinion for the court filed by Circuit Judge

MICHEL. Dissenting opinion filed by Circuit Judge

MAYER.

MICHEL, Circuit Judge.

The United States (“the government”) appeals from

the December 4, 1995 decision of the United States

Court of International Trade granting summary judg-

ment to United States Shoe Corporation (“US Shoe”)

and holding that the court possessed jurisdiction over

this case pursuant to 28 U.S.C. § 1581(i), not 28

U.S.C. § 1581(a), that the Harbor Maintenance Tax

(“HMT”) violates the United States Constitution and

is therefore void as applied to exports. See United

States Shoe Corp. v. United States, 907 F. Supp. 408

(Ct. Int'l Trade 1995). The case was submitted for our

(la)

decision after oral argument by the parties before a

five-judge panel on February 7, 1997, following brief-

ing not only by the parties but also by numerous

amici. The Court of International Trade correctly

exercised jurisdiction under 28 U.S.C. § 1581(i) and

correctly concluded that the HMT violates the Ex-

port Clause, U.S. Const., Art. 1, § 9, cl. 5, because it is

a tax on exports rather than a user fee. The HMT, as

applied to exports, is not a user fee but rather a tax

because it is paid by the exporter, not the direct user

of the harbor, and is calculated solely based on the

value of the cargo loaded for export and bears no

reasonable relationship to the cost of the use of the

port facilities maintained by the government and

therefore cannot be a fair approximation of use. We

therefore affirm the judgment invalidating the HMT

as applied to exports and ordering a refund to U.S.

Shoe.

BACKGROUND

The HMT was imposed by Congress as part of the

Comprehensive Water Resources Development Act of

1986 (“the Act”), Pub. L. No. 96-622, 100 Stat. 4082

(codified at 26 U.S.C. § 4461). The Act also estab-

lished the Harbor Maintenance Trust Fund (“the

Trust Fund”) to provide for the operation and mainte-

nance of channels and harbors. The details of the

HMT, the Act, and the Trust Fund relevant to this

lawsuit are set forth in the trial court’s opinion and

are not repeated here in detail. See United States

Shoe, 907 F. Supp. at 411-12.

In short, the Act imposes an ad valorem tax of

0.125 percent of the value of the commercial cargo in-

volved in “any port use” of federally maintained navi-

gable waterways. 26 U.S.C. §§ 4461, 4462(a)(2) (1994).

The HMT is imposed on bot exports and imports. As

it specifically applies to exports, the HMT statute

provides:

(a) General rule.— There is hereby imposed a

tax on any port use.

b) Amount of tax.—The amount of tax

imposed by subsection (a) on any port use shall

be an amount equal to 0.125 percent of the value

of the commercial cargo involved.

(e) Liability and time of imposition of tax.—

(1) Liability—The tax imposed _ by

subsection (a) shall be paid by—

(B) in the case of cargo to be exported

from the United States, the exporter....

(2) Time of imposition.— Except as pro-

vided by regulations, the tax imposed by

subsection (a) shall be imposed—

(A) in the case of cargo te be exported

from the United States, at the time of

26 U.S.C. § 4461 (1994) (emphasis added). The term

“port use” is defined as “the loading of commercial

cargo on, or ... the unloading of commercial cargo

from, a commercial vessel at a port.” 26 U.S.C.

§ 4462(a)(1) (1994). The term “port” is defined as “any

channel or harbor (or component thereof) in the

United States, which ... (i) is not an inland waterway,

and (ii) is open to public navigation.” 26 U.S.C.

S 4462(a)(2)A) (1994). The term “commercial cargo”

is defined as “any cargo transported on a commercial

vessel, including passengers transported for compen-

sation or hire,” but does not include “bunker fuel,

ship’s stores, sea stores, or the legitimate equipment

necessary to the operation of a vessel, or ... fish or

other aquatic animal life caught and not previously

landed on shore.” 26 U.S.C. § 4462(a)(3) (1994). Thus,

although there are certain exemptions, the tax is

generally imposed against all imports, exports,

domestic shipments, and passengers. See 26 U.S.C.

§§ 4461(c)(1), 4462(a\(3)(A) (1994).' Money collected

pursuant to the Act is transferred by Customs to the

Trust Fund for disbursal upon further appropriation

by Congress. See 26 U.S.C. § 9505(b) (1994). The fees

were designed to finance the cost of harbor dredging.

See S. Rep. No. 99-126 at 9 (1986), reprinted in 1986

U.S. C. C. A. N. 6639, 6647. By the end of fiscal year

1994, the total amount of fees collected and deposited

in the Trust Fund was over 2.7 billion dollars, of

which over 700 million dollars was paid by exporters.

Although the HMT was first enacted in 1986, there

were no constitutional challenges until recently. US

Shoe paid the HMT on articles exported for the period

April 1 through June 30, 1994. US Shoe then brought

suit in the Court of International Trade for the re-

fund of these payments on the ground that the HMT,

as applied to exports, is unconstitutional. In January

1995, given the large number of pending lawsuits

For passengers the tax is calculated based on the charge

assessed for transportation. See 26 U.S.C. § 4462(a)(5)(B)

(1994).

challenging the constitutionality of the HMT, the

Court of International Trade established a three-

judge panel and heard this case as a test case. See 28

U.S.C. § 255 (1994) (authorizing the chief judge of the

Court of International Trade to designate a three-

judge panel to hear cases raising the constitutional-

ity of any Act of Congress or which have broad or

significant implications in the administration or

interpretation of customs laws).

The parties filed cross-motions for summary judg-

ment and, on October 25, 1995, the trial court issued

its decision granting U.S. Shoe’s motion for summary

judgment. United States Shoe, 907 F. Supp. at 408.

The trial court first concluded that the HMT was

unconstitutional as applied to exports because it

constituted a tax, rather than a user fee, as it did not

have regulation as its primary purpose and it did not

recoup the costs of services provided to the payor. Id.

at 413-18. Specifically, the trial court noted that “the

Act neither discourages nor regulates use of a har-

bor; neither does it so intend.” Jd. at 413. The trial

court also found that “the primary purpose of the

[HMT] is to raise revenue, as Congress has imposed

‘a duty under the pretext of fixing a fee.“ Id. at 414

(citation omitted). The trial court further determined

that jurisdiction was not properly based on 28 U.S.C.

§ 1581(a), because there was no decision of Customs to

protest. Id. at 418-21. In part, the trial court relied

2 As of the summer of 1996, there were approximately 2400

complaints pending in the Court of International Trade, as well

as approximately 40 complaints pending before the Court of

Federal Claims and one complaint pending in district court.

The great majority of these lawsuits have been stayed pending

the outcome of this appeal.

on the fact that “Customs does not determine the

application, policies, or rates of the [HMT], but

merely serves to implement its provisions.” Id. at

420. Rather, the trial court held jurisdiction was

properly based on 28 U.S.C. § 1581(i) because Con-

gress directed that the HMT be treated as a customs

duty and because customs duties, by their very na-

ture, provide for revenue from imports. /d. at 421.

The Court of International Trade enjoined the gov-

ernment from assessing and collecting the HMT and

ordered the parties to file a proposed judgment.

The government appealed, urging that we hold that

jurisdiction over these disputes is only proper pursu-

ant to 28 U.S.C. § 1581(a) and that the HMT is consti-

tutional. We heard this case as a five-judge panel

pursuant to Local Rule 47.2, which states that “ap-

peals in cases from the Court of International Trade

decided by a three-judge court pursuant to 28 U.S.C.

§ 255 will ordinarily be referred to a panel of five

judges.” Fed. Cir. R. 47.2.

ANALYSIS

We “review the summary judgment in this case ‘for

correctness as a matter of law, deciding de novo the

proper interpretation of the governing statute and

regulations as well as whether genuine issues of

material fact exist.“ St. Paul Fire & Marine Ins.

Co. v. United States, 6 F.3d 763, 767 (Fed. Cir. 1993)

(quoting Guess? Inc. v. United States, 944 F.2d 855,

857 (Fed. Cir. 1991)). Here, the parties do not dispute

any facts, but only dispute questions of law relating

to the proper interpretation of the jurisdictional

statutes and the constitutionality of the HMT as

applied to exports.

The parties do not dispute that the Court of Inter-

national Trade possesses exclusive jurisdiction over

this type of matter seeking a refund of HMT pursuant

to 28 U.S.C. § 1581, in light of Congress’ provision

that If lor purposes of determining the jurisdiction of

any court of the United States or any agency of the

United States, the tax imposed by this subchapter

shall be treated as if such tax were a customs duty.”

26 U.S.C. § 4462(f)(2) (1994). The only dispute is

whether subsection (a) or subsection (i) of section

1581 applies. The dispute exists because subsection

(a) requires that the exporter first file a protest and

limits recovery to amounts protested within 90 days

of payment, while subsection (i) states only that the

action must be initiated within two years of the date

on which the cause of action accrued.

The relevant statutory subsections provide as

follows:

(a) The Court of International Trade shall have

exclusive jurisdiction of any civil action com-

menced to contest the denial of a protest, in whole

or in part, under section 515 of the Tariff Act of

1930.

* * X X *

(i) In addition to the jurisdiction conferred

upon the Court of International Trade by subsec-

tions (a)-(h) of this section and subject to the ex-

ception set forth in subjection (j) of this section,

the Court of International Trade shall have

exclusive jurisdiction of any civil action com-

menced against the United States, its agencies,

or its officers, that arises out of any law of the

United States providing for -

(1) revenue from imports or tonnage;

(2) tariffs, duties, fees, or other taxes on the

importation of merchandise for reasons other

than the raising of revenue;

(3) embargoes or other quantitative restric-

tions on the importation of merchandise for

reasons other than the protection of the public

health or safety; or

(4) administration and enforcement with

respect to the matters referred to in para-

graphs (1)-(3) of this subsection and subsec-

tions (a)-(h) of this section. ....

28 U.S.C. § 1581 (1994).

— A.

Although admitting that it does not fit perfectly,

the government argues that subsection 1581(a) never-

theless confers jurisdiction over this dispute. The

government argues section 1581(a) is the “established

route” for obtaining judicial review of duties, charges,

and exactions imposed by Congress. As Congress en-

visioned that the HMT would be treat ed like a duty,

the government argues jurisdiction under this sub-

section is the only logical result. The government

admits, as it must, that subsection (a) requires that

prior to the time an exporter can seek judicial review,

Customs must issue a decision, the decision must be

protested, and the protest must be denied. See 19

U.S.C. §§ 1514 (stating that decisions of the Customs

Service are final unless a protest is filed), 1515

(stating that all protests will be reviewed within two

years of filing). The government argues that the

relevant “decision” is Customs’ acceptance of the ex-

porter’s payment. In support, the government points

to a generic regulation suggesting that the date of

exaction (the date of payment) constitutes a protesta-

ble event. See 19 C.F.R. § 174.12(e) (1996) (“Protests

shall be filed ... within 90 days after ... [t]he date of the

decision, involving neither a liquidation nor reliquida-

tion, as to which the protest is made (e.g., the date of

an exaction. ...”)). According to the government, this

regulation eliminates any confusion regarding the

availability, timing or other procedures applicable to a

protest and over 1000 HMT protests have been

received by Customs pursuant to this regulation.

Relying on legislative history, U.S. Shoe responds

that Congress directed that the HMT be treated like

a duty so that the Court of International Trade, with

its expertise in international trade matters, would

have jurisdiction over any disputes and so as to facili-

tate Customs’ collection and processing of the HMT.

See H. Rep. No. 99-228 at 10 (1986), reprinted in 1986

U.S.C.C.A.N. 6705, 6714-15 (“In order to facilitate

administration and collection of the port user charges

li.e., the HMT] by the U.S. Customs Service, ... all

administrative and enforcement provisions ... are to

apply ... as if such charges were customs duties.”).

Thus, according to U.S. Shoe, it is not clear that Con-

gress intended for jurisdiction over this type of

dispute to fall within a particular subsection of sec-

tion 1581, and there is no evidence that Congress

intended to amend the requirement of 19 U.S.C. § 1514

that there must be a Customs “decision” before filing

a protest. US Shoe further argues that acceptance of

10a

payment is not a protestable decision and that there-

fore subsectim. (a) cannot apply.

We find US Shoe’s arguments persuasive. Subsec-

tion (a) is not directly applicable because it applies to

suits commenced to contest the denial of a protest.

Decisions of the Customs Service are final unless a

protest is filed. 19 U.S.C. § 1514(a) (1994). Decisions

can refer to, for example, “the classification and rate

and amount of duties chargeable” or “all charges or

exactions of whatever character within the jurisdic-

tion of the Secretary of the Treasury.” Id. While the

HMT is likely a charge or exaction, we do not believe

that the actual payment or receipt of the HMT can be

a “decision” of Customs, as Customs has not made

any decision—it merely passively collects money in

the amount required by the statute. Customs doesn’t

even notify exporters of the need to pay the HMT;

rather, the exporter pays all accumulated fees on a

quarterly basis by simply mailing a check or money

order to Customs along with appropriate forms. See

19 C. F. R. S 24.24(e)(2)(ii) (1996).

Typically, “decisions” of Customs are substantive

determinations involving the application of pertinent

law and precedent to a set of facts, such as tariff clas-

sification and applicable rate of duty. Indeed, prior

case law indicates that Customs must engage in some

sort of decision-making process in order for there to

be a protestable decision. Thus, for example, in Dart

Export Corp. v. United States, 43 C. C. P. A. 64 (1956),

one of our predecessor courts held that Customs’

acceptance of estimated duties paid by an importer

upon entry did not constitute a final, protestable deci-

sion which would deprive the government of the right

to liquidate the entry at a later date, because the

payment was based entirely on information provided

lla

by the importer, rather than after analysis and adju-

dication by Customs. Id. at 69-70, 74. Likewise, here,

the HMT is based entirely on the exporter’s informa-

tion and calculation. See 19 C. F. R. § 24.24(e)(2)(i)

(1996). Specifically, this regulation provides that:

{W]hen cargo is loaded on a commercial vessel for

export at a port within the definition of this sec-

tion, the exporter of that cargo (the name that ap-

pears on the SED or equivalent document author-

ized under 15 CFR 30.39(b)) is liable for the pay-

ment of the port use fee at the time of loading.

The fee is based upon the value of the shipment

loaded as required to be indicated on the SED or

equivalent documentation.

Id. Thus, Customs merely passively collects pay-

ments calculated by the exporters pursuant to stat-

utes and regulations and performs no active role

whatsoever. It performs no analysis; it issues no di-

rectives or decisions; it imposes no liabilities.

Similarly, in Mitsubishi Elec. Am., Inc. v. United

States, 44 F.3d 973 (Fed. Cir. 1994), this court held

that the Court of International Trade lacked jurisdic-

tion over Mitsubishi’s complaint under section 1581(a)

because the Customs Service did not make any anti-

dumping “decisions” as Customs merely followed the

Department of Commerce’s instructions in assessing

and collecting specified duties. Id. at 977. The court

pointed out that Customs’ role was merely ministe-

rial and that Customs did not determine the rate or

amount of the antidumping duties. Id. Commerce

actually conducted the antidumping duty investiga-

tion, calculated the antidumping duties, and issued

the antidumping order; Customs merely collected the

estimated duties. Jd. at 976. Likewise, here, there

12a

was nothing for Customs to decide, because all sub-

stantive particulars regarding the imposition and

amount of HMT are established by Congress. The

amount of the HMT (0.125 percent of the value of the

commercial cargo) is set by statute, 26 U.S.C. § 4461,

and the exporter performs the calculation, 19 C. F. R.

§ 24.24. Customs is merely collecting the HMT in the

amount and manner specified by Congress. Thus,

there is simply no decision that U.S. Shoe could have

protested, or should have been required to protest, in

order to allow the Court of International Trade to

hear this dispute.

Norfolk & W. Ry. v. United States, 843 F.Supp. 728

(Ct. Int’l Trade 1994), aff'd, 62 F.3d 1395 (Fed. Cir.

1995), relied on by the government, is not to the con-

trary. There, a railroad company brought an action

challenging user fees collected on vehicles and ves-

sels entering the United States. Id. at 729. The rail-

road company filed a user fee refund request with the

Secretary of the Treasury on the grounds that its

railroad barges were not ferries and that, as barges,

they were subject to a cap on user fees. Id. at 730.

The refund request was granted. However, several

years later, Customs informed the railroad company

that its barges were indeed ferries and not subject to

the cap. Jd. The court concluded that the user fees

were charges subject to protest and that jurisdiction

fell under 1581(a). Jd. at 732-33 (“The user fees at

issue in this case are clearly ‘charges’ within the

meaning of § 1514(a) and, therefore, are subject to

protest under this subsection.”). A careful reading of

this case, however, makes clear that the user fees

were protestable charges because there had been a

specific decision by Customs applying statutory defi-

nitions that certain vessels were ferries rather than

13a

barges, thus subjecting the cargo to user fees. Id. at

730, 733. There, Customs was authorized to collect

certain user fees on vehicles and vessels entering the

United States. Id. at 729. The Railway transported

railroad cars on barges into the United States from

Canada. Id. The amount of fees due varied based on

whether the barge was considered a ferry or not. The

Railway was notified by Customs that it was required

to pay a $7.50 user fee for each of the railroad cars,

but no fees for its barges because Customs considered

the barges to be ferries. Id. at 730. The Railway filed

a protest of that decision. There is no comparable

analysis and decision here. This is not a case where,

for example, U.S. Shoe contended its exports fell

within one of the HMT exemptions and Customs de-

cided to the contrary.

We therefore hold that because the collection of the

HMT does not involve a protestable decision on the

part of Customs, the trial court correctly concluded

that jurisdiction over this dispute did not arise under

28 U.S.C. § 1581(a). In light of this holding, we need

not reach U.S. Shoe’s additional arguments that any

protest it might have filed would have been futile or

manifestly inadequate.

Given that the Court of International Trade did not

possess jurisdiction under 28 U.S.C. § 1581(a), if it

possessed jurisdiction over this dispute, as the gov-

ernment concedes that it did, it can only have been

pursuant to the default provision, 28 U.S.C. § 1581(i).

The government argues subsection 1581(i) cannot

apply because that subsection provides for jurisdic-

tion in only those limited circumstances when juris-

diction under any of the other subsections is unavail-

l4a

able or manifestly inadequate. However, this is no

bar to jurisdiction here because jurisdiction under

the other subsections, specifically subsection (a)—the

only other arguable possibility—is unavailable. The

government also argues that, by its own terms, sub-

section 1581(i) applies only to imports, not to exports.

We do not agree. As U.S. Shoe persuasively argues,

the Court of International Trade properly exercised

its jurisdiction under 28 U.S.C. § 1581(i). Congress

expressly directed that for jurisdictional, administra-

tive and enforcement purposes, the HMT was deemed

to be a customs duty. Thus, it is beyond dispute that

Congress intended the Court of International Trade

to have jurisdiction over disputes regarding the

HMT, as the Court of International Trade has exclu-

sive jurisdiction over customs matters. Moreover,

there is no argument made by either U.S. Shoe or the

government that the Court of International Trade can

exercise jurisdiction over this dispute pursuant to

any statute other than 28 U.S.C. § 1581. As discussed

above, subsection 1581(a) does not apply. The only

other credible, and indeed the only other argued,

possibility is subsection 1581(i). Admittedly, subsec-

tion (i) does not specifically refer to disputes concern-

ing the constitutionality of fees such as the HMT. It

does, however, specifically refer to the “administra-

tion and enforcement with respect to the matters

referred to in” the preceding paragraphs, including

any law providing for revenue from imports. This

dispute does involve the “administration and enforce-

ment” of a law providing for revenue from imports

because the HMT statute, although applied to exports

here, does apply equally to imports. Additionally, the

mere fact that subsection 1581(i) does not speak pre-

cisely to this issue and does not use the word

15a

“exports” is not dispositive, as it was intended to

give the Court of International Trade broad residual

authority over civil actions arising out of federal

statutes governing import transactions. Conoco,

Inc. v. United States Foreign-Trade Zones Bd., 18

F.3d 1581, 1588 (Fed. Cir. 1994) (emphasis added).

Thus, in light of the fact that the HMT is a law

providing for revenue from imports (as well as

exports) and the fact that subsection 1581(i) grants

broad residual authority concerning import transac-

tions to the Court of International Trade, the trial

court properly asserted jurisdiction over this dispute

pursuant to 28 U.S.C. § 1581(i). We must therefore

consider whether the trial court correctly held that

the HMT, as applied to exports, is unconstitutional.’

Il.

The United States Constitution provides that:

No Tax or Duty shall be laid on articles

exported from any State.

U.S. Const., Art. I, § 9, cl. 5. The Supreme Court

recently analyzed the Export Clause in United States

v. International Bus. Mach., — U.S. ——, 116 S.Ct.

1793 (1996). There, the Supreme Court held that the

Export Clause does not permit “the imposition of a

generally applicable, nondiscriminatory federal tax on

goods in export transit.“ IBM, 116 S.Ct. at 1795. In

other words, even those taxes that are imposed

equally on exports and imports or other articles of

commerce are prohibited by the Export Clause. See

Id. at 1803. (“The better reading [of the Export

We need not and do not address the constitutionality of

the HMT statute as applied to anything except exports.

l6a

Clause], that adopted by our earlier cases, is that the

Framers sought to alleviate their concerns by com-

pletely denying to Congress the power to tax exports

at all.”) (emphasis added). Thus, if the HMT is a tax

on goods in export transit, it is invalid. We address

first whether the HMT is a tax and second whether

the HMT is imposed on goods in export transit.

The HMT statute provides:

(a) General rule.— There is hereby imposed a

tax on any port use.

(b) Amount of tar.— The amount of tar

imposed by subsection (a) on any port use shall

be an amount equal to 0.125 percent of the value

of the commercial cargo involved.

(e) Liability and time of imposition of tax.—

(1) Liability—The tax imposed by sub-

section (a) shall be paid by—

(B) in the case of cargo to be exported

from the United States, the exporter....

(2) Time of imposition.—Except as pro-

vided by regulations, the tax imposed by

subsection (a) shall be imposed—

(A) in the case of cargo to be exported

from the United States, at the time of

17a

26 U.S.C. § 4461 (1994) (emphasis added). Thus, this

statute, at least as it applies to exports, appears to be

a prohibited tax on exports in that the tax is imposed

based on the value of the exported goods and accrues

at the time the goods are loaded on a ship for export.

Although the legislative history refers to the HMT

as a user fee, the statute itself repeatedly refers to

the HMT as a tax and is codified in the Internal

Revenue Code.

The government, however, argues that the fact that

the HMT is referred to as a tax is not dispositive and

that the HMT is actually a user fee, not a tax. The

test used to distinguish between taxes and user fees

was first articulated in Evansville-Vanderburgh

Airport Auth. Dist. v. Delta Airlines, 405 U.S. 707

(1972), and more recently applied in Massachusetts v.

United States, 435 U.S. 444 (1978). That test states

that user fees are valid as such so long as they: (1) do

not discriminate against the constitutionally pro-

tected interest (here, exports); (2) are based on a fair

approximation of use; and (3) are not excessive in

relation to the cost to the government of the con-

ferred benefits. See Massachusetts, 435 U.S. at 464.

We need not decide whether the HMT discriminates

against exports or is excessive in relation to the cost

to the government of the conferred benefits. Instead,

we discuss only whether the HMT is based on a fair

approximation of use.

US Shoe argues, and the trial court held, that the

HMT is not a fair approximation of the cost of the

benefits received by exporters because there is no

correlation between the amount of HMT an exporter

pays and the amount the exporter uses the port. In

other words, the amount of the HMT has no relation-

ship to the size or weight of the vessel or the neces-

18a

sary depth of the port required by the vessel. For

example, “[llow value bulk cargo importers and ex-

porters use port facilities to a much greater extent

than high value non-bulk cargo importers and export-

ers.” U.S. Shoe, 907 F. Supp. at 415. Yet, even though

the bulk cargo exporters generally require a larger

vessel and a deeper port, and therefore “use” the port

to a greater extent, they pay a lower tax than high

value, low bulk cargo exporters. Moreover, a ship

that docks but does not load or unload cargo is not

required to pay a fee, even though that ship otherwise

utilizes the port. Additionally, there is apparently no

correlation between the amount of fees collected at a

particular port and the expenditure of funds from the

Trust Fund to maintain that particular port. Indeed

the trial court found that “most large ports paying

the majority of the costs receive no more than 30%

back in maintenance expenditures.” Id. Finally, it is

not consistent with a true user fee that so many

users are exempted, such as those carrying bunker

fuel, ship’s stores, equipment necessary for the opera-

tion of the vessel and fish and other aquatic animal

life not previously landed on shore, 26 U.S.C. §'4462(a)

(1994), since ships carrying these products use the

port facilities to the same extent as ships carrying

products subject to the HMT.

The government argues that the HMT is based on a

fair approximation of use and, in support, relies on

other cases in which similar ad valorem user fees

have been upheld. The government first relies on

United States v. Sperry Corp., 493 U.S. 52 (1989),

where the Supreme Court held that a user fee of 1.5%

of all awards recovered from the Iran-United States

Claims Tribunal was not an unconstitutional taking

but a valid user fee. There, Sperry had argued that

19a

the fee could not be a user fee because it did not bear

any relationship to the cost of the tribunal to the

United States or the value of the tribunal to Sperry.

Id. at 60. In rejeeting this argument, the Court

stated that a user fee need not be “precisely cali-

brated to the use that a party makes of government

services” and need only be a “fair approximation.” Id.

The Court also recognized that, where user fees are

applied to a large number of parties, some users will

be charged more and some less than in a perfect

user-fee system. Id. at 61. Here, the government ar-

gues that, as in Sperry, the fact that the benefits

received do not exactly correspond to the amount of

the HMT does not render the HMT statute unconsti-

tutional.

We do not find Sperry dispositive for two reasons.

First, unlike the present case, in Sperry the person

receiving the award and paying the fee was the direct

beneficiary of the process for which they were paying.

In other words, parties that had their claims adjudi-

cated by the tribunal or otherwise received the bene-

fit of the tribunal were required to pay the costs of

establishing and maintaining the tribunal. Here, on

the other hand, as applied to exports, the direct

users—the ship owners—do not contribute to the

maintenance of the port and it is only indirect users—

the export companies—that are required to pay the

HMT. Second, the Sperry Court, in distinguishing a

case holding registration and axle taxes unconstitu-

tional as a violation of the Commerce Clause, stated

that the standard applied under the Just Compensa-

tion Clause was less strict than that which would be

applied in a Commerce Clause analysis where one is

concerned about discrimination against interstate

commerce. Id. at 61 n.7. To this we would add that,

20a

per IBM, the Export Clause is still more restrictive.

See IBM, 116 S. Ct. at 1799 (“Our decades-long strug-

gle over the meaning of the nontextual negative

command of the dormant Commerce Clause does not

lead to the conclusion that our interpretation of the

Export Clause is equally fluid. At one time, the

Court may have thought that the dormant Commerce

Clause required a strict ban on state taxation of

interstate commerce, but the text did not require that

view. The text of the Export Clause, on the other

hand, expressly prohibits Congress from laying any

tax or duty on exports.”) (footnote omitted).

The government also relies on Alamo Rent- A Car

v. Sarasota-Manatee Airport Auth., 906 F. 2. 516

(11th Cir.1990), where the Eleventh Circuit coneluc ed

that an airport access fee enacted to provide funds to

maintain the airport and based on a rental car com-

pany’s gross business receipts was a valid user fee.

Alamo argued the fee was not a fair approximation

because it bore no relation to Alamo’s use of the air-

port and instead varied in proportion to the revenue

generated by Alamo’s customers. Id. at 520. Alamo

argued that its only use of the airport was to drive on

the airport roads to pick up customers and that its fee

should be limited to a pro rata road use fee. Id. at 519.

The court disagreed, reasoning as follows:

Although imprecise in particular applications,

the Authority’s decision to measure Alamo’s use

of the airport facility by the gross receipts

generated from Alamo’s airport customers is not

irrational. The Authority could reasonably con-

clude that the ten percent fee on average repre-

sents Alamo’s use of the airport facility. It

stands to reason that in general the more money

21a

Alamo makes from airport passengers, the more

trips Alamo has made to the airport.

Id. at 520 (emphasis added). Thus, while imprecise,

the fee was not unfair or irrational, but was instead a

“fair approximation.” Again, the payer of the fee in

Alamo was the direct beneficiary of the use of the

airport, unlike here where the exporter is not the

direct beneficiary and is not assured harbor mainte-

nance at the harbor where the exporter’s goods are

loaded. Moreover, in rejecting Alamo’s argument that

the fee was unreasonable because it was required to

pay a greater fee for a person who rented a car for

seven days than for a person who only rented a car for

one day even though each individual made equal use of

the airport, there the court found that the 10% fee

was acceptable because it represented, on average,

Alamo’s use of the airport. Jd. Here, there is no such

finding that the HMT represents, on average, an ex-

porter’s use of the port and, as discussed above, the

court concluded that the HMT was not based on a fair

approximation of use, thereby implicitly finding that

the HMT did not represent, on average, an exporter’s

use of the port.

The government also argues, without providing any

support, that by using the words “fair approximation

of use” the Supreme Court in Massachusetts intended

to refer to the value of the benefits received, rather

than the costs of the benefits received. The govern-

ment then asserts that the HMT is a fair approxima-

tion of the value of the benefits received because the

profitability of higher value cargo is higher than for

lower value cargo. We do not agree. First, the Mas-

sachusetts case itself suggests that the cost of the

benefits, rather than the value, is the appropriate

22a

measure in its statements that “Congress believed

that four measures, taken together, would fairly

reflect some of the cost of the benefits” and “the pres-

ent scheme nevertheless is a fair approximation of the

costs of the benefits each aircraft receives.” 435 U.S.

at 468 (emphasis added). Second, higher value mer-

chandise does not always correlate to a higher profit

margin and the government has failed to present any

facts that would suggest that, even on average, this is

the case. Thus, exporters of higher value goods do

not necessarily receive a greater benefit, even in

terms of value, than exporters of lower value goods.

Third, the exporters are forced to pay for harbor

maintenance across the entire country, even though

they receive no benefit from maintained harbors

at any port other than the one they actually use.

Fourth, the HMT does not pay for services, such as

police, fire or rescue units, that provide benefits to

the exporters by keeping the harbors safe whether

the exporters use those services or not. See Maine

v. Department of Navy, 973 F.2d 1007, 1014 (Ist Cir.

1992) (refusing to grant summary judgment that fee

used to pay for a hazardous waste spill response team

was not based on a fair approximation of use because,

even though the Navy had not yet needed the team, it

was available to minimize any future spill at the

shipyard).’ Therefore, even if the value of the benefits

received is an accurate measure, we hold that the

HMT is not a fair approximation of the value of the

benefits received by the exporters.

4 Notably, in this case the appellate court rejected the

Navy’s argument that the measure of the authorized fee for

services is the value to the recipient. See Maine, 973 F.2d at

1014.

23a

We therefore hold that the HMT is not based on a

fair approximation of use and, as such, is not a permis-

sible user fee. Although the decision to impose the

HMT on an ad valorem basis may have substantially

reduced administrative costs and burdens, it is never-

theless not based on a fair approximation of use.

Since the HMT is not a valid user fee, it must be a

tax.

The government also argues the HMT is not levied

against exported articles and, therefore, even if it is a

tax, it is not unconstitutional. Rather, according to

the government, the fee is imposed on the use of

federally maintained harbors by shippers,’ exporters“

and importers’ of commercial cargo, regardless of

destination, and is even imposed on the transportation

of passengers. Thus, according to the government,

the HMT is “an ordinary burden of taxation” rather

than a tax or duty imposed on “exported articles.”

We do not agree. The Constitution prohibits taxa-

tion of articles in the course of being exported. See

A.G. Spalding & Bros. v. Edwards, 262 U.S. 66, 69

(1923) (“The fact that the law under which the tax was

imposed was a general law touching all sales of the

5 Shippers, i.e., the persons or corporations that pay the

freight, are responsible for paying the HMT on commer-

cial shipments within the United States. See 19 C.F.R.

§ 24.24(e)(1)(i) (1996).

Exporters, i.e., the persons or corporations whose name

appears on the SED document or the equivalent document, are

— for the HMT on exports. See 19 C. F. R. § 24.24(e)(2)(i)

1996).

Ilmporters are liable for the HMT on imports. See 19

C. F. R. S 24.24(e)(3)(i) (1996).

24a

class, and not aimed specially at exports, would not

help the defendant if in this case the tax was ‘laid on

articles exported from any State,’ because that is

forbidden in terms by the Constitution.”). Thus,

while a tax may be constitutional if imposed on goods

during the manufacturing process, even if they are

intended for later export, a tax is not constitutional if

imposed on those very same goods after they are

loaded on a vessel for export or if imposed when

delivered to the carrier for export. See id. (holding

unconstitutional a tax on baseball bats and balls

imposed on “(t]he very act that passed the title and

that would have incurred the tax had the transaction

been domestic, [and that] committed the goods to the

carrier that was to take them across the sea, for the

purpose of export and with the direction to the foreign

port upon the goods.). Here, the HMT is imposed on

an ad valorem basis at the time the exported goods

are loaded on the vessel, rather than at some prior

point in time when the goods are not yet bound for

export. The exporter, rather than the manufacturer,

pays the tax. In the absence of the export act of load-

ing the goods, and in the absence of the exporter’s

documents required for that act, the HMT would not

be owed and no amount could be determined because

the HMT is incurred at the time of loading, 26 U.S.C.

§ 4461(c)(2)(A), and is based on the value of the goods

as determined by the standard commercial export

documentation, 26 U.S.C. § 4462(a)(5)(A). See also 19

C.F.R. § 24.24(e)(2\i) (“The fee is based upon the

value of the shipment loaded as required to be indi-

cated on the SED or equivalent documentation.”).

Thus, we conclude that the HMT, as applied against

U.S. Shoe, is imposed on exports.

25a

The government makes several additional argu-

ments in support of the constitutionality of the HMT.

First, the government argues that the Export Clause

is distinct from the Commerce Clause and, conse-

quently, Congress may impose a tax or duty pursuant

to its authority to regulate commerce, so long as the

purpose of the tax or duty is not to raise revenue for

the general welfare. See Armour Packing Co. v.

United States, 209 U.S. 56, 79 (1908) (“But it is to be

observed that the Constitution provides for a burden

only by the way of taxation or duty, and, unless the

alleged interference amounts to such taxation or

duty, it does not come within the constitutional pro-

hibition.”). Thus, according to the government, the

relevant inquiry is whether the HMT was enacted

pursuant to Congress’ authority to regulate com-

merce, not whether it imposes a burden on exports.

See New Orleans Steamship Ass’n v. Plaquemines

Port, Harbor and Terminal Dist., 874 F.2d 1018,

1021-22 (5th Cir. 1989) (holding that a port could

impose reasonable fees against ships to finance emer-

gency response services). Second, the government

argues that the trial court adopted an overly broad

interpretation of the Export Clause because it failed

to recognize that the sole purpose of the Export

Clause was to prevent the northern states from crip-

pling the export-dependent southern states—not to

restrict Congress’ authority to impose nondiscrimi-

natory fees designed to recoup costs.

We do not agree. The Supreme Court recently reaf-

firmed the breadth of the Export Clause in the face of

the argument that its historical purpose justified a

narrow construction. IBM, 116 S.Ct. at 1803 (“While

26a

the original impetus may have had a narrow focus, the

remedial provision that ultimately became the Export

Clause does not, and there is substantial evidence

from the Debates that proponents of the Clause fully

intended the breadth of scope that is evident in the

language.”). Moreover, the power to regulate com-

merce cannot completely override the effect of the

Export Clause. See North Am. Co. v. SEC, 327 U.S.

686, 704-05 (1946) (“This is not to say, of course, that

Congress is an absolute sovereign. It is limited by

express provisions in other parts of the Constitution,

such as section 9 of Article 1 and the Bill of Rights.”);

see also IBM, 116 S.Ct. at 1798 (rejecting govern-

ment’s request to “reinterpret the Export Clause to

permit the imposition of generally applicable, nondis-

criminatory taxes as [the Court has] under the

Commerce Clause. . . ). It is undeniable that Con-

gress may regulate commerce by means such as en-

couraging or discouraging certain actions using

regulatory charges to achieve compliance. See South

Carolina v. Block, 717 F.2d 874, 887 (4th Cir. 1983)

(imposition of a 50-cent deduction on proceeds of all

milk sold commercially is constitutional where It jhe

clear language and structure of the [statute] indi-

cates that its primary purpose is regulation” and the

“purpose is to reduce overproduction of milk and shift

some of the financial burden of the price support

system.”). Likewise, it is beyond dispute that Con-

gress may raise money to recover the expenses of a

regulatory program. See, e.g., New Orleans, 874 F.2d

at 1021-22 (“[Cjourts have consistently held that

ships may be made to pay for services they get.”).

It is, however, also beyond dispute that Congress

cannot merely impose a direct economic burden on

merchandise for export in the absence of regulation.

27a

See IBM, 116 S. Ct. at 1798-99 (rejecting the govern-

ment’s argument that the Commerce, Import-Export

and Export Clauses should be read in harmony to

permit the imposition of generally applicable, nondis-

criminatory taxes on exports). That is the case here.

The government has failed to point to any indication

that the HMT is intended to regulate commerce.

Indeed, it appears that the HMT regulates nothing. It

is not designed to reduce the overall use of the ports.

See Block, 717 F.2d at 887. Rather, the HMT merely

increases the cost of exporting by raising money to

maintain the harbors in a manner that is not reasona-

bly connected to the exporter’s use of the harbors, and

is therefore unconstitutional. Additionally, the gov-

ernment has not persuaded us that the HMT is de-

signed to simply recoup the costs of the services, e.g.,

port maintenance, provided by the government be-

cause the sums paid by the exporter have no reason-

able relationship to the cost or the value of the serv-

ices received by the exporters, and the exporters are

not even the direct beneficiaries of the services.

Moreover, the mere fact that Congress may have at-

tempted to exert its power under the Commerce

Clause, as opposed to the Tax Clause, as evidenced by

the fact that the HMT is not designed to raise money

for the general welfare, is not dispositive. See Moon

v. Freeman, 379 F.2d 382, 390-91 (9th Cir. 1967) (stat-

ing that the “test for determining when a monetary

imposition nominally imposed under the commerce

power should be considered an exercise of the power

to raise revenue and therefore [be] barred by the

export clause” is “to view the objects and purposes of

the statute as a whole and if from such examination it

is concluded that revenue is the primary purpose and

regulation merely incidental, the imposition is a tax

28a

and is controlled by the taxing provisions of the

Constitution.”). The HMT, in fact, does not regulate

or facilitate commerce and is, in effect, a tax. There-

fore, as to exporters at least, the HMT is not an

appropriate use of Congress’ power to facilitate and

regulate commerce.

New Orleans is distinguishable because there the

fees were not assessed based on the value of the goods

but were based on the benefit of services such as

pilotage, towage and wharfage as measured by the

size or weight of a vessel and paid by those benefiting

from the service. 874 F.2d at 1020 (fees based on the

number of days in port, the length of the vessel, and

whether the ships load or unload cargo). Thus, the

fees were based on the services received during port

use. Clyde Mallory Lines v. Alabama, 296 U.S. 261

(1935), also relied on by the government, is similarly

distinguishable. There, the State Docks Commission,

a state agency, imposed a fee on all vessels of a cer-

tain size that entered the port and vessel operators

alleged that the fee violated the constitutional provi-

sion prohibiting imposition of duties of tonnage by

states. Id. at 262-63. The fee was designed to reim-

burse the agency for the costs of policing the harbor.

Id. at 264. There, however, the parties agreed that

the fee was reasonable. Id. at 263. Here, the parties

have not reached any such agreement, and, as we con-

clude above, the fee is not reasonable. Moreover, there

the vessel operators—the direct beneficiaries of the

agency’s policing actions—paid the fee. Id. Further-

more, all such operators received the benefits for

which they paid. Id. at 266 (“It is not any the less a

service beneficial to appellant because its vessels

have not been given any special assistance. The bene-

fits which flow from the enforcement of regulations,

29a

such as the present, to protect and facilitate traffic in

a busy harbor inure to all who enter it.”). Finally, the

statute at question in that case also had a regulatory

effect “plainly devised to insure the safety of vessels

and to facilitate their use of the harbor.” Id. at 264.

Here, there is no such effect. The HMT does not

ensure vessel safety, but was designed to cover the

costs of dredging the harbors. See S. Rep. No. 99-126

at 9 (1986), reprinted in 1986 U.S.C.C.A.N. 6639, 6647.

Finally, certain of the amici, given leave to file

briefs here, argue that, because the HMT is unconsti-

tutional and therefore void ab initio, all monies

collected since the implementation of the HMT should

be refunded. As US Shoe does not seek such recov-

ery, there is no need for us to reach this issue.

Similarly, we do not reach the issue of whether the

HMT violates the Port Preference Clause because it

is not necessary to our disposition of this appeal.

CONCLUSION

We conclude that the trial court properly exercised

jurisdiction pursuant to 28 U.S.C. § 1581(i). Because

Customs merely receives the funds from the export-

ers and transfers the funds to the Trust Fund with-

out exercising any discretion, performing any analy-

sis, calculating any amounts or issuing any decision

or order, there was no Customs’ “decision” for US

Shoe to protest, and jurisdiction therefore could not

be proper under 28 U.S.C. § 1581(a). Moreover, be-

the HMT is a tax, as opposed to a user fee, di-

rectly imposed on goods in export transit, we con-

clude that the HMT statute, as applied to exports,

i the Export Clause and is therefore invalid to

the extent it applies to exports. Therefore, the trial

court properly (1) granted summary judgment that

30a

the HMT statute was unconstitutional, (2) enjoined

the government from collecting further HMT on ex-

ports, and (3) ordered it to refund the HMT amounts

paid by U.S. Shoe for the period assessed in the

complaint. Accordingly, the judgment of the Court of

International Trade is

AFFIRMED.

3la

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

No. 96-1210

UNITED STATES SHOE CORPORATION,

PLAINTIFF-APPELLEE

THE UNITED STATES, DEFENDANT-APPELLANT

MAYER, Circuit Judge, dissenting.

Because in my view the Harbor Maintenance Tax

(HMT) is a user fee, it does not violate the Export

Clause of the Constitution.

Statutes are presumed constitutional. Fairbank v.

United States, 181 U.S. 283 (1901). We must “not

lightly assume that Congress intended to infringe

constitutionally protected liberties or usurp power

constitutionally forbidden it.” Edward J. DeBartolo

Corp. v. Florida Gulf Coast Bldg. & Constr. Trades

Council, 485 U.S. 568, 575 (1988). Indeed, courts must

strive to avoid constitutional questions. See NLRB

v. Catholic Bishop of Chicago, 440 U.S. 490, 500-01

(1979) (courts are required to choose any reasonable

construction of a statute that would eliminate the

need to confront a contested constitutional issue);

Hooper v. California, 155 U.S. 648, 657 (1895) (courts

must resort to “every reasonable construction .. . in

order to save a statute from unconstitutionality”).

Thus, “where an otherwise acceptable construction of

a statute would raise serious constitutional problems,

32a

the Court will construe the statute to avoid such

problems unless such construction is plainly con-

trary to the intent of Congress.” DeBartolo, 485 U.S.

at 575.

In light of these mandates, the question is whether

the HMT is a tax or duty within the proscription of

the Export Clause or whether it is a permissible user

fee. Generally, a tax is enacted to raise revenue “to

go to the general support of the government,” see

Head Money Cases, 112 U.S. 580, 596 (1884), while a

user fee is designed as a specific charge for the use of

government facilities and services, see Common-

wealth Edison Co. v. Montana, 453 U.S. 609, 621

(1981). If it is the latter, we avoid the sticky question

whether the assessment violates the Export Clause.

So, we must construe the HMT as a user fee, if rea-

sonable to do so, unless it is “plainly contrary to the

intent of Congress.” DeBartolo, 485 U.S. at 575.

Congress thought it was enacting a user fee. It is

true that the statute calls the HMT a tax and that it

resides in the Internal Revenue Code. It is equally

true, however, that the HMT is levied on “port use.”

The label is not dispositive; we must dig deeper. See

Head Money Cases, 112 U.S. at 595-96 (The act is

not void because, within a loose and more extended

sense than was used in the Constitution, it is called a

tax.”); Pace v. Burgess, 92 U.S. 372, 375 (1875); see

also Fairbank, 181 U.S. at 304 (courts analyze things,

not names).

“In determining the meaning of the statute, we

look not only to the particular statutory language,

but to the design of the statute as a whole and to its

object and policy.” See Crandon v. United States, 494

U.S. 152, 158 (1990). The object and policy of the HMT

help to reveal its true identity. The Senate Report

33a

states: “The taxes and fees in this legislation are not

for the purpose of raising revenue. Rather, they are

to repay costs related directly to the servicing of

commerce. These fees and taxes offset services ren-

dered to vessels. The provision of a new, deeper chan-

nel is as much a service rendered to the shipper as

pilotage, dockage, or wharfage.“ S. Rep. No. 99-126,

at 7 (1985), reprinted in 1986 U.S.C.C.A.N. 6639, 6644.

The House Report similarly states that the HMT is

“a charge on use by a commercial vessel of a harbor or

channel (‘port’) in the United States for the loading or

unloading of commercial cargo on or from the vessel.”

H.R. Rep. No. 99-228, at 1 (1986), reprinted in 1986

U.S. C. C. A. N. 6705, 6706 (emphasis added). In fact, the

legislative history refers repeatedly to the HMT as

being based on use. See, e.g., id. at 1, reprinted in

1986 U.S.C.C.A.N. at 6706 (“Harbor (Port) User

Charges”); H.R. Conf. Rep. No. 99-1013, at 228 (1986),

reprinted in 1986 U.S. C. C. A. N. 6723, 6740 (“Port Use

Tax”); S. Rep. No. 99-126, at 2, reprinted in 1986

U.S.C.C.A.N. at 6640 (“user taxes”); id. at 135,

reprinted in 1986 U.S.C.C.A.N. at 6705 (additional

views of Sen. Lautenberg) (“user fee”).

Moreover, the HMT was enacted as part of the

Water Resources Development Act of 1986, Pub. L.

No. 99-662, 100 Stat. 4082 (Act), “comprehensive” leg-

islation that addressed myriad problems in the federal

water resources development program. See S. Rep.

No. 99-126, at 3, reprinted in 1986 U.S.C.C.A.N. at

6641. “Historically, the Federal Government hald] fi-

nanced the full cost of designing, constructing,

Charges for harbor services like pilotage, wharfage, and

dockage are permissible. See generally Clyde Mallory Lines v.

Alabama, 296 U.S. 261 (1935).

34a

rehabilitating, maintaining, and operating the

coastal harbors of the United States.“ Id. at 6,

reprinted in 1986 U.S.C.C.A.N. at 6643-44. Yet, the

law did not “impose Federal user fees or charges on

the beneficiaries of these expenditures.” H.R. Rep.

No. 99-228, at 5, reprinted in 1986 U.S.C.C.A.N. at

6709. Congress found that traditional harbor mainte-

nance policy would “not meet national needs” because

it was “unlikely that the Federal Government [would]

finance the construction of such port improve-

ments.” S. Rep. No. 99-126, at 8, reprinted in 1986

U.S.C.C.A.N. at 6646. As the House Report explains:

Additional Federal investment is needed for opera-

tions and maintenance of U.S. channels and harbors

(ports) in order to improve and maintain such ports

for waterborne commerce. Such additional invest-

ment in U.S. ports will facilitate economic develop-

ment and make the Nation’s water transportation

system more efficient.” H.R. Rep. No. 99-228, at 5,

reprinted in 1986 U.S.C.C.A.N. at 6709.

Importantly, Congress found that these needs were

“clearly commercial.” S. Rep. No. 99-126, at 6,

reprinted in 1986 U.S.C.C.A.N. at 6644 (emphasis

added). It decided “that a portion of Federal expendi-

tures needed for port operations and maintenance

should be borne by the direct beneficiaries of

such expenditures,” commercial users. H.R. Rep. No.

99-228, at 5, reprinted in 1986 U.S. C. C. A. N. at 6709

(emphasis added). Congress targeted commercial

users to help shoulder the fiscal burden of operations

and maintenance costs for harbors and inland water-

ways because they are the parties who enjoy their

benefits. The government “has an obvious interest in

making those who specifically benefit from its serv-

35a

ices pay the cost.” Massachusetts v. United States,

435 U.S. 444, 462 (1978).

One of Congress’ primary difficulties, however, was

deciding how to craft a user fee to “help defray the

costs of maintaining new harbors deeper than 45

feet.“ S. Rep. No. 99-126, at 10, reprinted in 1986

U.S.C.C.A.N. at 6647. “In recent years, the Commit-

tee considered a variety of proposals involving harbor

maintenance. These ranged from diverting a portion

of customs revenues for harbor work to port-by-port

maintenance fees to more studies. The debate in

some cases is between high maintenance harbors and

low maintenance harbors; in others it is between

large ports and small ports; or between bulk cargo and

containerized cargo ports.” Jd. at 9, reprinted in

1986 U.S.C.C.A.N. at 6646. In fact, the Senate Sub-

committee on Water Resources held twenty-six

hearings over three Congresses and more than four

years on the Act. Id. at 116, reprinted in 1986

U.S.C.C.A.N. at 6688. Ultimately, it opted to impose a

nationally-uniform fee on the “value of the cargo

passing through harbors.” Id. at 9, reprinted in 1986

U.S.C.C.A.N. at 6646; see also id. at 111-12, reprinted

in 1986 U.S.C.C.A.N. at 6684. The House Report ex-

plains that “the ad valorem basis of the charges is

2 Very few bays and estuaries have natural depths greater

than 20 feet. S. Rep. No. 99-126, at 7, reprinted in 1986

U.S.C.C.A.N. at 6645. Yet the size of vessels has so increased

that harbors forty-five feet deep are now “inadequate for many

fully loaded tankers.” Id. at 8, reprinted in 1986 U.S. C. C. A. N.

at 6645. Congress found that the constraints of these shallow

harbors “add to the costs of importing crude oil and petroleum

products,” and that “[djeeper draft harbors would facilitate the

export of U.S. coal and, eventually, other bulk commodities,

such as grain and ores.” /d.

36a

the only acceptable basis on which to impose such

charges. This national, uniform basis minimizes any

possible competitive disadvantages among cargo types

and U.S. ports which otherwise might result from

user charges.” H.R. Rep. No. 99-228, at 5-6, reprinted

in 1986 U.S.C.C.A.N. at 6710.

Critically, Congress mandated that fees collected

from the HMT be used only for commercial navigation

projects.’ Monies in the Harbor Maintenance Trust

Fund (HMTF) may be used only to pay (1) for the

operations and maintenance costs of the United

States portion of the St. Lawrence Seaway, and for

the eligible operations and maintenance costs “as-

signed to commercial navigation of all harbors and

inland harbors within the United States,” 33 U.S.C.

§ 2238(a) (1994) (emphasis added), referenced in 26

U.S.C. § 9505(c)(1) (1994); and (2) for all of the ex-

penses of administering the HMT incurred by the

Departments of Treasury and Commerce and the U.S.

Army Corps of Engineers, up to $5,000,000 per fiscal

year, 26 U.S.C. § 9505(c)(3).4 So, HMT charges, col-

lected from commercial users, may only be expended

for harbor operations and maintenance costs incurred

on their behalf.

The government has been true to this constraint.

In its initial report to Congress on the HMTF’s

Interest earned on monies in the Harbor Maintenance

Trust Fund (HMTF) also remains in the fund.

4 26 U.S.C. § 9505(c)(2) permits monies in the fund to be

used to pay rebates of tolls or charges levied for use of the St.

Lawrence Seaway, as required by 33 U.S.C. § 988a. Section

988a was amended in 1994, however, to waive the collection of

tolls or charges on commercia! vessels, instead of requiring

commercial users to pay the toll or charge and then obtain a

rebate. Pub. L. No. 103-331, § 339a), 108 Stat. 2496.

37a

status, the government explained that operations and

maintenance costs for commercial navigation were

accounted for in the “Corps of Engineers Manage-

ment Information System.” First Annual Report to

Congress on the Status of the Harbor Maintenance

Trust Fund for Fiscal Years 1987—1992 at 2, 1 6

{hereinafter First Report). In deciding which expen-

ditures were reimbursable, the government recog-

nized that some projects have both a “commercial

navigation” purpose and some other purpose, such as

recreation, hydropower, or flood control. Id. at 3, J 7.

All operations and maintenance expenditures made

for single purpose commercial navigation projects

were considered subject to reimbursement from the

HMTF. Id. In contrast, on joint purpose projects, the

government allocated costs to the project’s different

purposes in proportion to the benefits realized for

each purpose, recovering only the commercial naviga-

tion costs. Id.; see also Second Annual Report to

Congress on the Status of the Harbor Maintenance

Trust Fund for Fiscal Year 1993 at 1-2, J 4 (indicat-

ing continued compliance) [hereinafter Second Re-

port]. This ensures that HMT funds collected from

commercial users are spent for their benefit.

In sum, it surely does not violate Congress’ intent

to construe the HMT as a user fee. The question is

whether it is reasonable to interpret it that way. In

analyzing whether a particular charge constitutes a

user fee, the Court has asked whether it: (1) discrimi-

nates against the constitutionally-protected interest;

(2) is based on some fair approximation of the use of

some system; and (3) is structured to produce revenue

fairly apportioned to the total cost to the government

of the benefits conferred. Massachusetts, 435 U.S. at

38a

464; Evansville-Vanderburgh Airport Auth. Dist. v.

Delta Airlines, Inc., 405 U.S. 707, 716-17 (1972).

First, the HMT does not discriminate against ex-

porters. Indeed, the trial court did not hold to the

contrary; it simply bypassed the issue and ruled the

HMT a tax based on the second and third prongs of

the Massachusetts test. The HMT is levied against

commercial users of United States ports and harbors,

including exporters, importers, domestic shippers,

and passenger carriers (except ferries, as defined).

Congress found these groups to be the principal

beneficiaries of harbor operations and maintenance

projects. It also required that HMT monies be ex-

pended only for their benefit. That the statute ex-

empts some harbor users from payment does not

render the HMT discriminatory against exporters.

Some exempted users, like recreational users, do not

and would not benefit from operations and mainte-

nance projects funded by the HMT use those

projects are commercial in nature. Requiring such

users to pay the fee would be unfair. Congress made

reasonable policy decisions to exempt other users,

such as nonprofit organizations transporting humani-

tarian and development assistance cargo. 26 U.S.C.

§ 4462(h); see also id. § 4462(b) (exempting cargo

transported within Alaska, Hawaii, or any United

States possession, or between those locales and the

United States mainland “because of the high depend-

ence of these islands’ economies on waterborne com-

merce.” H.R. Rep. No. 99-228, at 6, reprinted in 1986

U.S.C.C.A.N. at 6710). These exemptions do not com-

promise the HMT’s non-discriminatory status.

Second, the HMT is based on a fair, if imperfect,

approximation of exporters’ use of, or privilege to use,

United States harbors and ports. When the govern-

39a

ment “applies user charges to a large number of

parties, it probably will charge a user more or less

than it would under a perfect user-fee system.”

United States v. Sperry Corp., 493 U.S. 52, 61 (1989).

“Perfect uniformity and perfect equality of taxation,

in all the respects in which the human mind can view

it, is a baseless dream.” Head Money Cases, 112 U.S.

at 595. Consequently, the amount of a user fee need

not be “precisely calibrated to the use that a party

makes of Government services.” Sperry, 493 U.S. at

60.

The government concedes that the HMT, like most

user fees, is imperfect, but contends that it is a fair

approximation of use. U.S. Shoe argues, and the

court held, that this is wrong for four primary rea-

sons: (1) all harbor users do not pay the fee, (2) there

is no correlation between the charges collected at a

particular port and expenditures for that port’s main-

tenance and operations, (3) low-value, bulk cargo im-

porters and exporters use the port facilities to a

greater extent than high-value, non-bulk cargo im-

porters and exporters yet pay lower fees, and (4) the

ad valorem nature of the fee does not accurately

measure use. The first three, of course, are the pre-

cise concerns with which the legislature wrestled

over three Congresses and more than four years. The

fourth challenge is to what Congress found to be “the

only acceptable basis on which to impose such

charges” because it was “uniform” and “minimizes

any possible competitive disadvantages among cargo

types and U.S. ports which otherwise might result

from user charges.” H.R. Rep. No. 99-228, at 5-6,

reprinted in 1986 U.S.C.C.A.N. at 6710. “This was

obviously the judgment of Congress and we [should]

40a

abide by it.” Sperry, 493 U.S. at 62, 110 S.Ct. at 395.

Notwithstanding, I address each issue in turn.

For the same reasons that the HMT is not dis-

criminatory, the fact that all users of our harbors and

ports do not pay the fee does not mean it is an unfair

approximation of use by those against whom the

assessment is levied. See Evansville, 405 U.S. at

717-18 (upholding a user fee as a fair approximation of

the use of the facilities for whose benefit they are

imposed even though “a majority of the actual number

of persons who use facilities of the airports involved”

were exempt, because the exemptions were not

“wholly unreasonable”). Nor is there merit to U.S.

Shoe’s second argument that because fees collected at

a particular port are not necessarily expended for

operations and maintenance at that port, the fee is not

a fair measure of use. This is an overly narrow view.

Users do not benefit only from access to the particu-

lar ports they use. Every exporter has all ports and

harbors available to it. Those that never use certain

ports benefit from them “in the sense that [they] are

available for their use if needed and in that” the provi-

sion of better harbor maintenance services “makes

the [ports] safer for all users.” Massachusetts, 435

U.S. at 468; see also Sperry, 493 U.S. at 63.

Finally, U.S. Shoe’s related third and fourth argu-

ments do not establish that the HMT is not a fair

approximation of use. Initially, there is great irony in

the argument that the charge is unfair because

high-value, non-bulk cargo carriers are assessed

higher fees than low-value, bulk cargo shippers, yet

allegedly “use” harbors to a lesser extent. Exporters

generally ship low-value cargo, such as grain and

coal, which is transported in bulk. See First Report

at 3,4 9. Importers, on the other hand, tend to ship

4la

high-value cargo, like electronics and automobiles,

which is not shipped in bulk. Id. Consequently, ex-

porters are generally assessed lower fees than im-

porters, yet they purportedly “use” the harbors to a

greater extent because of the bulk nature of their

shipments. Thus, it is the exporters themselves who

allegedly are not bearing their fair share.

In addition to the irony, U.S. Shoe’s argument is

unpersuasive. First, not all bulk cargo is of low value,

nor, undoubtedly, is all non-bulk cargo of high value.

For example, some “high value” commodities, such as

“petroleum,” are transported in bulk. Jd. Thus, to

say that the HMT is unfair because low-value cargo

carriers use ports to a greater extent than high-value

cargo carriers is not wholly accurate. Second, even if

a high-value cargo shipper never requires the use of

harbors deeper than forty-five feet, there is nothing

in the record to support the notion that the only

operations and maintenance projects undertaken with

HMTF monies are deep-harbor dredging. Indeed,

U.S. Shoe does not argue that projects financed with

HMTF monies are so limited. While projects are

limited to those that inure to the benefit of commer-

cial users, the government has discretion to decide

which projects those are. That some users, like ex-

porters, transport some bulk products of lower value

than some non-bulk products transported by other

users, does not make the HMT a tax. Nor does its ad

valorem structure.

It is beyond dispute that an ad valorem charge can

be a user fee. See Sperry, 493 U.S. at 59-64; Alamo

Rent-A-Car, Inc. v. Sarasota-Manatee Airport

Auth., 906 F.2d 516 (11th Cir. 1990); see also Alamo

Rent-A-Car, Inc. v. City of Palm Springs, 955 F. 2d 30

(9th Cir. 1992). Notwithstanding, U.S. Shoe attempts

42a

to distinguish Sperry and Alamo on the ground that

the parties assessed the user fees in those cases were

direct beneficiaries of the provided services. Here, it

argues, the direct beneficiaries are the vessel owners,

not the importers and exporters who pay the fee.

There are two problems with this argument. First, it

flies in the face of Congress’ finding that exporters

are the direct beneficiaries. Congress decided that a

portion of federal expenditures needed for port opera-

tions and maintenance should be borne by the direct

beneficiaries of such expenditures, among whom it

obviously included exporters and importers. Second,

the Court rejected a similar argument in Evansville.

There, it held that it is not “particularly important

whether the charge is imposed on the passenger him-

self, to be collected by the airline, or on the airline, to

be passed on to the passenger if it chooses.” 405 U.S.

at 714. Similarly, here it is unimportant whether the

fee be assessed against exporters and importers, the

ultimate beneficiaries of the harbor maintenance and

operations projects, or against the actual vessel

owner, to be passed on to the importers or exporters if

it chooses.

Finally, the HMT is structured to produce revenue

fairly apportioned to the total cost to the government

of the benefits conferred. The relevant inquiry is

whether Congress structured the HMT so that the

monies collected under it are “fairly apportioned” to

the government's cost of providing commercial harbor

maintenance services. U.S. Shoe argues, and the

trial court held, that the HMT fails this prong for two

primary reasons: (1) it funds projects yet to be com-

menced rather than reimbursing the government for

completed projects, and (2) the HMTF has accumu-

43a

lated a large surplus. The first objection is mis-

placed; the second, while troubling, is unavailing.

Regardless of the factual accuracy of U.S. Shoe’s

first concern,’ when viewed in light of the purposes

for which the HMT was enacted, it is of little rele-

vance that HMT monies might fund port operations

and maintenance projects not completed, or even

initiated, at the time of collection. The HMT is not a

short-term fix to the myriad problems that plague our

nation’s waterborne commerce. It is a long-term ve

hicle to improve and to maintain the harbors for the

continuing benefit of United States commerce. In-

deed, Congress expressly found that the fee will

facilitate economic development. A] surplus of reve-

nue over outlays in any one year can be offset against

actual deficits of past years and perhaps against

projected deficits of future years.” Massachusetts,

435 U.S. at 470 n. 25 (emphasis added). The Eleventh

Circuit has also recognized that user fees may be

expended on future projects. In Alamo, it held that

“given the long term nature of maintaining and

developing an airport, it was appropriate. to factor

in future development plans when setting user fees.”

906 F.2d at 522. Thus, it is of little moment that HMT

monies are purportedly expended to fund projects not

5 The First Report states that “the actual transfer of

funds from the [HMTF) is for expenditures made in the previ-

ous fiseal year. In other words, FY 1990 expenditures are

shown as transfers from the [HMTF] in FY 1991, and so forth.

Corps expenditures are never made directly from the

[Hur nor are transfers made on the basis of estimates or

projections.” First Report at 3. J 7. This indicates that FY

19xx projects are reimbursed from the HMTF with FY 19xx,

or perhaps surplus, funds in FY 19xx+1.

44a

yet started rather than to repay the government for

services that have already been rendered.

Similarly, the fact that the HMTF enjoys, or per-

haps suffers, a large surplus does not resolve whether

Congress structured the HMT as a tax or a user fee.

To be sure, the substantial surplus weighs against

finding the HMT a user fee. But this does not, of

itself, render it a tax. A closer look reveals that the

HMT’s structure was not ill-conceived. From 1987

through 1990, during which the HMT was only 0.04%

ad valorem and paid just 40% of eligible Corps costs,

revenues and expenditures were closely aligned. See

First Report at 6, J 13. For example, in FY 1988,

HMTF expenditures actually exceeded revenues by

approximately $6 million, and the ending balance was

just $9 million. Id.

Trouble began in 1991, when Congress increased

the ad valorem rate to 0.125% in order to fund 100%

of eligible Corps expenses and to reimburse the

National Oceanic and Atmospheric Administration

(NOAA) $45.5 million for its annual commercial

navigation costs. While the revenue generated under

the higher rate was only slightly less than projected,

expenditures were considerably less, resulting in

a growing HMTF surplus. Withdrawals from the

HMTF were less than anticipated due primarily to (1)

the absence of legislation authorizing NOAA to

receive its commercial navigation costs, (2) the fact

that the Corps’ operations and maintenance budget

was lower than had been projected in 1990 when the

new ad valorem rate was established, and (3) with-

drawals from the HMTF for improved administration

and enforcement, while authorized, remained unappro-

priated. See, e.g., Second Report at 5, J 10.

45a

The surplus has certainly burgeoned in recent

years as a result of these unforeseen decreases in

projected expenditures, but that does not mean that

the HMT’s structure shows it to be a tax. Congress

is not prescient. In fact, the government recognizes

that this is a problem about which something must be

done. See Third Annual Report to Congress on the

Status of the Harbor Maintenance Trust Fund for

Fiscal Year 1994 at 7,4 16 (“The growing surplus in

the HMTF remains. This can only be corrected by

widening the authorized uses for HMTF monies, or

by reducing the HMF [sic] to a level consistent with

its annual expenditures.”). Congress has already

amended the HMT statute once. There is no reason to

believe that it will not correct the growing surplus.

Until then, commercial users know that all HMT

monies plus interest may only be expended for harbor

operations and maintenance projects with commercial

purposes. They may not be used for the general sup-

port of the government. See Northwest Airlines, Inc.

v. County of Kent, 510 U.S. 355, 371-72 (1994) (declin-

ing to decide whether an airport user fee, which had

accumulated “huge surpluses,” was excessive under

Evansville, in part because all fees collected had to be

expended for the airport’s capital or operating costs,

and the airlines challenging the fee had not suggested

that the surplus was being used for any purpose other

than airport-related expenses); Head Money Cases,

112 U.S. at 596 (charges imposed on shipowners for

each immigrant they brought into the United States,

which were deposited into an “immigrant fund” appro-

priated in advance for the temporary care of passen-

gers whom shipowners transported, was not a tax).

I would reverse the judgment of the Court of Inter-

national Trade.

46a

APPENDIX B

UNITED STATES COURT OF

INTERNATIONAL TRADE

Slip Op. 95-173

Court No. 94-11-00668

UNITED STATES SHOE CORP., PLAINTIFF

UNITED STATES, DEFENDANT

[Oet. 25, 1995]

OPINION

Before: DiCaRLo, Chief Judge and RESTANI and

MUSGRAVE, JJ.

DiCaRLo, Chief Judge:

i — I, 1 9, Clause 5 of the United States

onstitution (the “Export Clause”) provides

Tax or Duty shall be laid on Articles — 2 .—

any State.“ The question presented is whether the

Harbor Maintenance Tax, 26 U.S.C. 68 4461-62 (1988

& Supp. V 1993) (Internal Revenue Code) [hereinafter

2 imposed upon merchandise exported

m nited States, violates this prohibition.

court concludes that it does. -

47a

This case comes before the court on cross-motions

for summary judgment pursuant to USCIT Rule

56. The parties agree there are no material facts in

dispute. They also agree that the court has subject-

matter jurisdiction to determine the constitutionality

of the Tax.

Congress has given the Court of International

Trade jurisdiction over matters arising out of the

Tax: “For purposes of determining the jurisdiction of

any court of the United States or any agency of the

United States, the tax imposed by this subchapter

shall be treated as if such tax were a customs duty.”

treated as if they were customs duties, in other

words, as import transactions.

Congress’s purpose in centralizing jurisdiction

over import transactions in the Court of Inter-

national Trade was to dispel the jurisdictional con-

fusion existing as to the Court of International

Trade’s predecessor, the Customs Court, and to re-

the true scope of the court’s jurisdiction. See

R. Rep. No. 1235, 96th Cong., 2d Sess. 47 (1980),

inted in 1980 U.S.C.C.A.N. 3729, 3758-59. As the

ve history of the Customs Courts Act of 1980

—

xperienced by international trade litigants

past commenced suits in the district

to have those suits dismissed for want

matter jurisdiction.” H.R. Rep. No. 1235, at

U.S.C.C.A.N. at 3759. Accordingly, Congress

48a

granted the court exclusive jurisdiction over any

civil action against the United States arising out

of federal laws governing import transactions,

because of the court’s “already developed expertise in

international trade and tariff matters.” Conoco, Inc.

v. United States Foreign-Trade Zones Bd., 12

Fed.Cir. (T) ' , 18 F.3d 1581, 1586 (1994). This

authority includes the inherent responsibility to

review challenges to the constitutionality of a law

within that area of expertise. See 28 U.S.C. §§ 251,

1331, 1585 (1988) (providing this court with all powers

of U.S. district courts including original jurisdiction

over actions arising under Constitution); see, e.g., 28

U.S.C. § 255(a)(1) (1988) (permitting designation

of three-judge CIT panels to hear and determine

constitutional issues). In addition to the statutory

language, the legislative history of the Tax supports

this court’s jurisdiction. S. Rep. No. 228, 99th Cong.,

Ist Sess. 10 (1986), reprinted in 1986 U.S.C.C.A.N.

6705, 6715.

Finally, this is not the first case where the court

has taken jurisdiction over matters arising from the

Tax; the court recently exercised jurisdiction over

claims for restitution of taxes paid by passenger

liners pursuant to the Tax in Carnival Cruise Lines,

Inc. v. United States, 18 CIT ——, 866 F. Supp. 1437

(1994). In sum, in light of the Tax’s plain language,

its legislative history and the Court of International

Trade’s traditional role as the proper forum for re-

view of actions governing import transactions, the

court possesses jurisdiction to hear and determine

the constitutionality of the Tax.

49a

Congress established the Tax as part of the

Water Resources Development Act of 1986, Pub. L.

No. 99-662, 100 Stat. 4082 (codified as amended in

scattered titles of U.S.C.) [hereinafter the Act“.

While it named the charge imposed upon port users a

“tax,” 26 U.S.C. ch. 36, subch. A, this nomenclature is

not necessarily binding on the court, see Fairbank v.

United States, 181 U.S. 283, 304, 21 S.Ct. 648, 656, 45

L.Ed. 862 (1901) (“we must regard things rather than

names”). The provisions of the Act, including the Tax,

are severable. Water Resources Development Act

§ 949, 33 U.S.C. § 2304 (1988).

The Tax imposes an ad valorem tax on “any port

use” of federally-maintained navigable waterways. 26

U.S.C. §§ 4461, 4462(a)(2). The statute defines “port

use” as “the loading [and] unloading of commercial

cargo [on or] from[ ] a commercial vessel at a port,” 26

U.S.C. § 4462(a)(1), and “port” as any channel or

harbor open to public navigation that is not an inland

waterway, 26 U.S.C. § 4462(a)(2)(A). The Tax is

applied against imports and exports, and domestic

shipments, as well as passengers. 26 U.S.C.

§§ 4461(c)(1), 4462(a)(3)(A). Presently, the amount of

the Tax imposed is 0.125 percent of the value of

the commercial cargo involved. 26 U.S.C. § 4461(b)

(Supp. V 1993). This is without regard to the size of

the vessel, the manner or extent of use of port

facilities, or the condition of the particular port. For

passengers, the statute calculates value based on the

actual charge paid for the transportation. See 26

U.S.C. S 4462(a)(5)(B). Further, Congress does not

distinguish among port users or particular ports

50a

in expending funds for harbor maintenance or opera-

tions, even though some ports or users may contrib-

ute the majority of the fees paid.

The Tax exempts certain cargo and passengers

from its burden. These exemptions include fish or

other aquatic animals not previously landed on shore,

ferry passengers, bunker fuel, ships’ stores, or

equipment necessary for operation of a vessel, bonded

commercial cargo entering the United States for

transhipment to a foreign country, and any cargo

shipped between the continental United States and

Alaska, Hawaii or any U.S. possession for ultimate

consumption at its destination with the exception of

crude oil transported from Alaska. 26 U.S.C. § 4462.

The Tax also exempts intraport movement of cargo,

recreational and de minimis port use, port use by the

U.S. government, and humanitarian and development

assistance cargo. Id. Congress's stated purpose in

enacting the Tax was to have commercial shippers

fund the maintenance of U.S. harbors and ports.

See S. Rep. No. 228, at 5, 1986 U.S.C.C.A.N. at 6709;

S. Rep. No. 126, 99th Cong., Ist Sess. 7 (1985), re-

printed in 1986 U.S.C.C.A.N. 6639, 6644.

In enacting the Tax, Congress concurrently estab-

lished the Harbor Maintenance Trust Fund,

26 U.S.C. § 9505 (1988 & Supp. V 1993) [hereinafter

“Trust Fund”), to carry out the purposes of the Act.

Monies collected pursuant to the Tax are transferred

to the Trust Fund for disbursal upon further appro-

priation by Congress in accordance with the Trust

Fund's provisions. 26 U.S.C. § 9505(b), (e). Since 1991,

Congress has authorized appropriations from the

Trust Fund to offset up to 100 percent of the eligible

operation and maintenance outlays for harbors under

5la

the Act. Water Resources Development Act of 1990

§ 316, 33 U.S.C. § 2238 (Supp. V 1993). Congress did

not limit expenditure of Tax revenues to the U.S.

Army Corps of Engineers, the largest beneficiary of

the Trust Fund. Rather, the Departments of the

Treasury and Commerce, and the National Oceanic

and Atmospheric Administration are also potential

recipients of Tax revenues. 26 U.S.C. § 9505(c); see

Office of Management and Budget, Executive Office

of the President, FY 1996: Budget of the U.S. Govern-

ment, Appendix, 376, 802 (1995).

Despite the number of agencies eligible to receive

funds, the Trust Fund has been running a yearly

surplus since its inception. This surplus burgeoned

with the increase in the Tax from 0.04% to 0.125%,

(Br. of Amicus Amoco Chem. Co., Ex. A (Second

Annual Report to the Congress on the Status of the

Harbor Maintenance Trust Fund For Fiscal Year

1993 5 (1994))) [hereinafter “Second Annual Rep.”],

and is “on budget.” The practice of listing trust fund

revenues on budget permits them to be included in

calculations of the federal budget deficit. Thus, any

monies contributed by such funds to the budget

decreases the Treasury’s need to borrow in order to

finance the federal deficit. See H.R. Rep. No. 251 pt.

III, 99th Cong., Ist Sess. 19 (1985) (At he increase in

net budget receipts [provided by the Tax] will reduce

the potential Federal budget deficit by a like amount

by providing a new source of user-related revenues

rather than relying completely on general fund

appropriations”). As of 1994, the government had

collected over 500 million dollars from exports alone.

(See Br. of Amicus Polaroid Corp., Ex. A (First An-

nual Report to Congress on the Status of the Harbor

52a

Maintenance Trust Fund Fiscal Years 1987- 1992

4 (1993))) [hereinafter “First Annual Rep.“ Second

Annual Rep. at 3.

Plaintiff paid the Tax on articles exported for the

period April 1 through June 30, 1994. It now sues for

recovery of those monies, claiming imposition of the

Tax violates the Export Clause.

An act of Congress is presumed to be consti-

tutional. Fairbank, 181 U.S. at 285, 21 S. Ct. at 649.

Any excess in the exercise of legislative power or

conflict with the restrictions imposed by the funda-

mental law should be clear before the court overturns

an enactment of the legislature. Jd. Yet, as Chief

Justice Marshall expounded in Marbury v. Madison,

5 U.S. (1 Cranch) 137, 2 L.Ed. 60 (1803), “the parti-

cular phraseology of the constitution of the United

States confirms and strengthens the principle, sup-

posed to be essential to all written constitutions, that

a law repugnant to the constitution is void; and that

courts, as well as other departments, are bound by

that instrument.” Id. at 180.

Defendant contends that the Tax is a valid exercise

of Congress’s constitutional authority to regulate

foreign and interstate commerce, and does not

implicate its taxing powers. According to defendant,

although the Export Clause restrains those powers,

the Clause cannot circumscribe Congress’s unlimited

capacity to regulate commerce.

53a

The court concludes the power to regulate com-

merce does not eclipse the Export Clause. Although

Congress can adopt the methods it deems necessary

to accomplish its goals pursuant to the regulation

of commerce, this authority is limited by other

provisions of the Constitution. United States v.

Lopez, — US. , , 115 S.Ct. 1624, 1627, 131

L.Ed.2d 626 (1995) (providing that commerce power “is

complete in itself, may be exercised to its utmost

extent, and acknowledges no limitations, other than

are prescribed in the constitution”) (quoting Gibbons

v. Ogden, 22 U.S. (9 Wheat.) 1, 196, 6 L.Ed. 23 (1824));

North Am. Co. v. S.E.C., 327 U.S. 686, 704-05, 66 S.Ct.

785, 795-96, 90 L.Ed. 945 (1946) (noting Congress’s

commerce powers are limited by express provisions

in other parts of Constitution); Rodgers v. United

States, 138 F.2d 992, 994-95 (6th Cir. 1943). Accord-

ingly, even if the court were to find the Tax to be a

charge imposed under the commerce power, such a

charge is still subject to the restrictions of the

Export Clause if it in fact serves as a tax or duty.

For example, a charge upon exports imposed under

the Commerce Clause as a user fee, or to regulate

commerce, would not be immune from the restrictions

of the Export Clause if the court found the charge

actually to be a tax or duty on exports. The court

looks to substance over nomenclature.

The origin of the Export Clause indicates it is to

have broad effect. Two amendments seeking to limit

it were rejected. The first would have limited the

Clause by adding “for the purpose of revenue” to the

prohibition against taxes or duties on exports. II The

Records of the Federal Convention of 1787 363 (Max

Farrand ed., 1937). The second amendment would

54a

have permitted export taxes if approved by a two-

thirds majority in both Houses of Congress. Note,

Constitutionality of Export Controls, 76 Yale LA.

200, 203 (1966). The Constitutional Convention delib-

erately chose to leave exports unburdened; and, in

so doing, persuaded the South to join the new union.

See id. at 204. For the Southern States, the Export

Clause addressed concerns that a Congress con-

trolled by the North would impose burdensome levies

on southern exports. International Business Machs.

Corp. v. United States, 13 Fed. Cir. (T) , 59

F.3d 1234, 1236 (1995) [hereinafter IBM].

The Export Clause serves to keep all exportation

free of any tax burden. Fairbank, 181 U.S. at 290, 21

S.Ct. at 651. As the Court in Fairbank explained, Ai

all exports must be free from national tax or duty,

such freedom requires not simply an omission of a tax

upon the articles exported, but also a freedom from

any tax which directly burdens the exportation.” Id.

at 293, 21 S.Ct. at 652.

The court finds the Harbor Maintenance Tax as it

applies to exports constitutes a tax prohibited by the

Export Clause and does not fall under Congress’s

Commerce Clause powers. Defendant contends the

Water Resources Development Act does not establish

a tax upon exports in violation of the Export Clause,

because enhancement of the general revenue is not

its primary purpose, but is merely one aspect of a

comprehensive legislative program providing for

conservation and development of the nation’s water

resources infrastructure. According to defendant,

the value of the benefit provided by the program,

55a

maintenance of safe and efficient ports and harbors,

reasonably relates to the charges imposed and ac-

crues, at least in part, to an identifiable private bene-

ficiary. In considering the Act as a whole, defendant

contends Congress simply imposed a user fee “for the

of making effective the congressional enact-

ment.” (Def.’s Mem. in Opp’n to Amici at 54) (quoting

Moon v. Freeman, 379 F.2d 382, 391 (9th Cir. 1967)).

For defendant to succeed on this argument, the

court must find that regulation is the primary

purpose of the Tax, see South Carolina ex rel. Tindal

v. Block, 717 F. 2d 874, 887 (4th Cir. 1983), cert. denied

465 U.S. 1080, 104 S.Ct. 1444, 79 L.Ed.2d 764 (1984), or

alternatively, that Congress sought to raise money to

recoup the costs of services provided to the payer

pursuant to a regulatory scheme, see Pace v. Burgess,

92 U.S. 372, 375-76, 23 L.Ed. 657 (1876). The Tax

serves neither purpose.

First, the Act neither discourages nor regulates

use of a harbor; neither does it so intend. In Moon,

the court upheld an export certificate program for

wheat farmers. 379 F.2d at 391-93. It found the

program’s monetary imposition for overproduction,

essentially a penalty for non-compliance with the

Secretary of Agriculture’s production controls, did

not violate the Export Clause. Id. The court held

where regulation is the primary purpose of the

statute as a whole and revenue also is obtained

incidentally through imposition of sanctions, the Con-

stitution will not necessarily prohibit the charge. Id.

at 391 (quoting Rodgers, 138 F.2d at 994). Here, the

Act does not have regulation as its primary purpose.

For example, it does not seek to control the amount or

manner of port use. Further, the Act does not seek

56a

to influence commercial practices, or seek to enforce

compliance with a legislative goal as did the Agri-

cultural Adjustment Act of 1938, as amended by the

Agriculture Act of 1964, considered in Moon, or the

Agricultural Act of 1949, as amended, considered

in Block. Congress instead sought funding for the

extensive maintenance projects envisioned under the

Act. S. Rep. No. 126 at 7, 1986 U.S.C.C.A.N. at 6644

(noting Congress intenced Harbor Maintenance Tax

as new tax to cover portion of Federal spending on

harbor maintenance).

Second, there is little indication that Congress

intended to establish a user fee. Rather, Congress

found an alternative way to fund expenditures it

intended to make. When Congress enacted the Tax, it

intended to use the Tax to pay the costs of developing,

operating, and maintaining port projects. H.R. Rep.

No. 251, at 19; S. Rep. No. 228, at 5, 1986 U.S.C.C.A.N.

at 6709. The Act permitted disbursement of Tax pro-

ceeds to the U.S. Army Corps of Engineers for re-

covery of up to 40 percent of its eligible operation and

maintenance outlays. Water Resources Development

Act of 1986 § 210(a)(2), 33 U.S.C. § 2238(a)(2) (1988);

see First Annual Rep. at 1 (noting Iflederal expendi-

tures for [port and harbor maintenance] were deter-

mined to be synonymous with expenditures made

by the Army Corps of Engineers”). The Water

Resources Development Act of 1990 increased the

rate of the Tax and allowed the Corps of Engineers to

recover up to 100 percent of its “eligible operations

and maintenance costs.” 33 U.S.C. § 2238(a)(2) (Supp.

V 1993). Since its inception, the Trust Fund has

accumulated significant surpluses. See 141 Cong.

Rec. E519 (daily ed. Mar. 6, 1995) (statement of Rep.

57a

McDermott). Accordingly, we take note of the

warning in Moon, “(cjertainly if the record in any

way indicated that substantial amounts of revenue

had been generated by the sale of export certificates,

we would hesitate before deeming the program an

exercise of the commerce power.” 379 F. 2d at 392.

The court finds the primary purpose of the Tax is

to raise revenue, as Congress has imposed “a duty

under the pretext of fixing a fee,” Pace, 92 U.S. at 376.

For a charge to withstand constitutional challenge

under the Export Clause, it must defray costs of

services rendered pursuant to the regulation of com-

merce, and the taxes collected may not be excessive.

In the Head Money Cases (Edye v. Robertson), 112

U.S. 580, 595-96, 5 S. Ct. 247, 252, 28 L.Ed. 798 (1884),

the Supreme Court upheld a per capita charge on

non-U.S. citizens arriving in the United States by

ship. The Court found the statute in question imposed

the fee to defray costs appropriated in advance for

inspection of immigrants before landing, and for their

care and provision afterward. Id. at 590, 5 S.Ct. at 249.

The Secretary of the Treasury was to distributle!

the fund in accordance with the purpose for which it

was raised, not exceeding in any port the sum

received from it.” Jd. As such, the charges imposed

were incidental to the regulation of commerce and

directly reimbursed the costs of services rendered to

Similarly, in Pace, the Supreme Court concluded

that a fee for stamps used to distinguish tobacco

intended for export—and thus to alleviate it from

the heavy exactions placed upon tobacco sold

domestically—was not a tax on exports. See 92 U.S.

at 375-76; see also Turpin v. Burgess, 117 U.S. 504, 6

58a

S. Ct. 835, 29 L.Ed. 988 (1886) (sustaining, on similar

grounds, constitutionality of charge imposed to

identify tobacco packages intended for export).

Rather, the Court characterized the stamp as a fee

“accruing in the due administration of the laws and

regulations,” serving simply as “compensation given

for services properly rendered.” Pace, 92 U.S. at 375.

The Court found the payment for the services

rendered, through identification of tobacco exported,

was no different than “the fee for clearing the vessel

in which [the tobacco] was transported, or for making

out and certifying the manifest of the cargo.” Id. The

amount of the fee never exceeded the costs to produce

the stamps and the cost of services necessary to give

the exporter the benefit of the exemption from

taxation; identification of the tobacco provided the ex-

porter the direct benefit of a domestic tax exemption.

In contrast, little nexus binds the imposition of

the ad valorem tax on cargo to the costs of port

maintenance and regulation of shipping. As the

exaction is tied to value and there is no mechanism to

ensure that the fees collected will be used “only or

primarily for the cost of” port maintenance associated

with the shipping that is taxed, the Tax is not a user

fee imposed under the commerce power. The fees

collected, rather, yield funds for the purpose of main-

taining and developing American ports and harbors

for all uses, commercial and recreational. Further,

the Tax funds projects yet to be commenced, or even

envisioned, rather than services already rendered.

Application of the Tax has produced a substantial

surplus in excess of the costs incurred. The court

therefore finds the Tax raises revenue, and is not

59a

a user fee imposed pursuant to the regulation of

commerce.

The Supreme Court recently has used another test

to distinguish between an impermissible tax and a

user fee. In Massachusetts v. United States, 435 U.S.

444, 98 S.Ct. 1153, 55 L.Ed.2d 403 (1978), the Court

considered whether an aircraft registration fee levied

on state police aircraft violated the judicially-implied

intergovernmental tax immunity doctrine first set

forth in Collector v. Day, 78 U.S. (11 Wall.) 113, 20

L.Ed. 122 (1871). In concluding that it did not, the

Court relied on three criteria derived from Evans-

ville-Vanderburgh Airport Authority District v.

Delta Airlines, Inc., 405 U.S. 707, 92 S.Ct. 1349, 31

L.Ed.2d 620 (1972). To constitute a user fee, as

contrasted with a tax, the Court held: (1) the charge

must not discriminate against the constitutionally-

protected interest; (2) the implementing authority

must base the charge upon a fair approximation of the

use of some system; and (3) the charge must be

structured to produce revenue fairly apportioned to

the total cost to the government of the benefits

conferred. Massachusetts, 435 U.S. at 466-70, 98 S. Ct.

at 1166-68.

The Tax fails classification as a user fee under the

test presented in Massachusetts. Although the

Export Clause clearly is designed “to protect

constitutionally valued activity from undue burden”

that could result from certain taxing measures, see

id. at 462, 98 S. Ct. at 1164, the court need not decide

the issue of whether the tax is discriminatory. Even

assuming, arguendo, that the Tax is nondiscrimina

tory, the court finds the Tax fails the remaining two

prongs of the Massachusetts test.

60a

First, the charge is not based upon some fair

approximation of the cost of the benefits port users

receive from harbor maintenance and development

projects. Low value bulk cargo importers and

exporters use port facilities to a much greater extent

than high value non-bulk cargo importers and

exporters. Yet, the cost to the latter is greater than

that to the former. Further, most large ports

paying the majority of the costs receive no more than

30% back in maintenance expenditures. (See, e.g.,

Br. of Amicus Amoco Chem. Co., Ex. G (Army

Corps of Engineers, Estimated Receipts of Harbor

Maintenance Fee from Cargo Transiting Major

Ports (1992))) (draft document) (noting of $78,711,000

estimated collected 1992 taxes on exports and imports

from Port of Los Angeles, only $162,000 returned

in port operation and maintenance expenditures).

Additionally, although only certain commercial users

must pay the tax, they are not the sole users of the

ports nor the only beneficiaries of the maintenance

and development projects. Based on the foregoing, the

court does not find the charge imposed under the Tax

is based on a fair approximation of the costs of

benefits received by port users.

Second, the charge is excessive in relation to the

cost to the government. The Tax is used to fund

projects yet to be commenced, or even envisioned,

rather than to repay the government for services

rendered. The Tax has produced a substantial sur-

plus, that is rapidly expanding, in excess of costs

incurred. Second Annual Rep. at 5.

In sum, the Tax neither seeks to regulate

Commerce nor repay the costs of services rendered;

moreover, the Tax fails the alternative test provided

6la

by Massachusetts. Accordingly, the Tax is subject to

the prohibitions of the Export Clause.

Defendant questions whether the Harbor Mainte-

nance Tax is a tax levied upon “exported articles”

within the meaning of the Export Clause. According

to defendant, a tax or fee only violates the Export

Clause if it is levied on goods by reason of their expor-

tation, e.g., if such goods have entered the export

stream. Defendant contends the broad prohibition of

the earlier cases against a tax upon goods having

entered the export stream was curtailed by Michelin

Tire Corp. v. Wages, 423 U.S. 276, 96 S. Ct. 535,

46 L.Ed.2d 495 (1976), and further constrained in

Department of Revenue v. Association of Wash-

ington Stevedoring Cos., 435 U.S. 734, 98 S.Ct. 1388,

55 L.Ed.2d 682 (1978).

Further, according to defendant, imposition of the

Tax upon loading of freight is merely intended to

ensure that those who actually use the ports would

pay. As such, the time when the Tax attaches has no

other significance for purposes of assessment of the

fee upon exports. The motivation behind imposing

an ad valorem charge, defendant insists, was to

minimize possible competitive disadvantages among

cargo types and U.S. ports that would have arisen

from a user charge.

In any case, defendant argues the Michelin and

Washington Stevedoring tests now examine the

nature of the tax at issue, rather than the status

of the article. Those cases explored whether the

taxes were upon “exports as such” and whether they

offended the policies protected by the framers of

62a

the Constitution. Those policies, defendant argues,

include promoting uniformity among the former

colonies and preventing the North from crippling the

export-dependent Southern States pursuant to the

Import-Export Clause. U.S. Const. art. I, § 10, cl. 2

(“No States shall . . lay any Imposts or Duties

on Imports or Exports. . . . ). Specifically, defendant

contends Michelin established that a nondiscrimina-

tory ad valorem property tax did not violate the

Import-Export Clause simply because it applied to

recently imported goods—there, tires maintained at

a wholesale distribution warehouse. 423 U.S. at

286, 96 S. Ct. at 541. Similarly, defendant contends

Washington Stevedoring held that a nondiscrimina-

tory local tax that compensates the state for services

rendered also failed to implicate the concerns of the

Import-Export Clause. 435 U.S. at 755, 98 S. Ct. at

1401.

Integral to these tests, defendant contends, is the

court’s examination of whether the charge discrimi-

nates in imposing its burden. According to defendant,

a nondiscriminatory charge for a service. that facili-

tates export activity does not violate the Export

Clause. Defendant maintains the Tax is such a

charge. The court disagrees.

In examining whether the Tax burdens “exported

articles,” the court limits its inquiry to the Export

Clause, for there is a distinct difference in language

between the Import-Export Clause and the Export

Clause. See IBM, 13 Fed. Cir. (T) at -

59 F.3d at 1238-39. The decisions in Michelin and

Washington Stevedoring attached significance to the

distinction between “Imposts and Duties,” and the

Export Clause’s broader prohibition. See Michelin,

63a

423 U.S. at 290, 96 S. Ct. at 543; Washington Steve-

doring, 435 U.S. at 759-60, 98 S.Ct. at 1404. As the

Supreme Court in Michelin noted, the Import-Export

Clause only bans “Imposts or Duties” and is not

“a broad prohibition of every ‘tax.’ “ 423 U.S. at 290,

96 S. Ct. at 543. According to the Federal Circuit, a

difference in policy intended by the framers of the

Constitution underlies the difference in language:

While the Import-Export Clause was intended to

prohibit States from imposing a ‘transit fee’ on

goods moving in foreign commerce, the Export

Clause served the broader purpose of ‘forbid[{ding]

federal taxation of exports.’ The Supreme Court’s

current narrower view of the prohibition in the

Import-Export Clause thus does not dictate that

the Export Clause be given a similarly narrow

construction.

IBM, 13 Fed. Cir. (T) at ——, 59 F.3d at 1239

(citations omitted). Defendant’s citations of Michelin

and Washington Stevedoring are, thus, inapplicable.

Moreover, even if this court were to assume

Michelin and Washington Stevedoring apply to the

Export Clause, the cases remain distinguishable.

Michelin concerned imported tires that had already

lost their identity as a unit and as an import after

being unloaded and stored within a warehouse. See

423 U.S. at 280, 96 S.Ct. at 538. At the warehouse,

workers unloaded the containers in which the tires

were shipped, sorted the tires by size and style, and

stacked them on wooden pallets, without segregation

by place of manufacture. Id. The tires required no

further processing to ready them for sale and delivery

to franchised dealers. Jd. In this sense, the Court

found the warehouse operated “no differently than

64a

a distribution warehouse utilized by a wholesaler

dealing solely in domestic goods.” Id. at 302, 96 S. Ct.

at 548. Accordingly, the holding in Michelin turned

on the fact that the goods were no longer in import

transit. Jd. at 286, 96 S.Ct. at 541.

As distinguished from the unloaded and unpacked

imports in Michelin, the cargo taxed in this case has

entered the stream of exports. The cargo, as it is

loaded on board the vessel, is in transit, and the Tax

falls upon the merchandise itself. As such, it is an

article protected by the Export Clause. Michelin is

inapplicable.

In Washington Stevedoring, the Supreme Court

upheld a business and occupation tax imposed by

the State of Washington upon the value of certain

services rendered—the loading and unloading of

cargo. Id. at 737, 758, 98 S.Ct. at 1392, 1403. The

Court distinguished the stevedoring services from

maritime insurance policies covering such goods. /d.

at 756 n. 21, 98 S.Ct. at 1402 n. 21. The Court found

placing a tax upon the insurance policies was more

suspect, and likely unconstitutional as a violation of

the Import-Export Clause, because “the value of

goods [bore] a much closer relation to the value of

insurance policies on [those goods] than to the value

of loading and unloading ships.” Jd. As the amount of

the Tax ad valorem is tied directly to the value

of the goods, Washington Stevedoring is equally

inapplicable.

Two distinct tests have evolved from case law for

determining whether the Export Clause will immu-

nize an article from taxation. First, the court must

examine the immediacy of exportation. Second, the

court considers the proximity of the tax imposed to

65a

the value of the articles exported. Here, neither test

supports the constitutionality of the Tax.

In delineating a zone where an article in the stream

of commerce melds into the export stream, the court

looks to see whether the article is in the actual

process of exportation, and whether it “has begun its

voyage or its preparation for the voyage.” Cornell v.

Coyne, 192 U.S. 418, 428, 24 S. Ct. 383, 385, 48 L.Ed.

504 (1904). For instance, where exported articles

were delivered to the carrier and title passed, the

Supreme Court found those articles had entered the

process of exportation. A.G. Spalding & Bros. v.

Edwards, 262 U.S. 66, 68-70, 43 S. Ct. 485, 485-86, 67

L.Ed. 865 (1923). Thus, taxing such articles would

have been unconstitutional. Although other actions

may have been necessary before the goods would have

been in transit, “so long as [these actions] were only

the regular steps” taken to export such goods, the

effect of the sale was to start the goods upon their

voyage abroad. See id. at 69-70, 43 S.Ct. at 486.

Constitutional freedom from the taxation of exports

involves more than mere exemption from taxes laid

directly upon the articles exported. In Fairbank, the

Court held that a stamp tax imposed on a foreign bill

of lading was equivalent to a tax upon the articles

listed, and therefore contrary to the Export Clause.

181 U.S. at 312, 21 S. Ct. at 660. The Court noted

exports almost always require bills of lading. See id.

at 294, 21 S. Ct. at 652 (citing Almy v. California,

65 U.S. (24 How.) 169, 174, 16 L.Ed. 644 (1861)) (noting

necessities of foreign commerce always require

association with bill of lading or similar written

instrument). By placing a tax on the bill of lading, the

Court reasoned, Congress had violated the letter and

66a

spirit of the Export Clause. See id. at 290-291, 300,

312, 21 S.Ct. at 651-652, 655, 660.

Similarly, in Thames & Mersey Marine Insurance

Co. v. United States, 237 U.S. 19, 35 S.Ct. 496, 59

L.Ed. 821 (1915), the Supreme Court found a tax upon

policies of marine insurance on exports prohibited by

the Constitution. In reaching its determination,

the Court inquired whether the tax imposed was

so directly and closely related to the process of

exportation that the tax was in substance a tax upon

the exports themselves. Id. at 25, 35 S.Ct. at 498. The

Court found its answer within the dynamics of trade

and commerce: where commerce requires an item

for exportation—such as a written instrument neces-

sarily and always associated with the export of

articles of commerce—taxation of that item serves as

taxation of the exported article. Id. at 26-27, 35 S. Ct.

at 498-99. This prohibition of the Export Clause also

has been applied to taxes upon charter parties,

contracts for the carriage of full cargo lots, United

States v. Hvoslef, 237 U.S. 1, 16-17, 35 S.Ct. 459, 464,

59 L.Ed. 813 (1915) and, more recently, to excise taxes

on premiums paid to foreign insurers, IBM, 13 Fed.

Cir. (T) ——, 59 F.3d 1234.

Here, Congress imposed the Tax directly upon

exports well along the stream of exportation. The

Tax is assessed at the time of loading the cargo. 26

U.S.C. S 4461(c)(2). As a tax imposed upon delivery of

cargo to a carrier violates the Export Clause, see

A.G. Spalding, 262 U.S. at 68-70, 43 S. Ct. at 485-86, a

tax imposed on the further step of loading such cargo

onto the vessel also falls within the prohibition of the

Clause.

67a

The Tax is assessed ad valorem directly upon

the value of the cargo itself, not upon any services

rendered for the cargo, or upon any instruments of

commerce that accompany the goods. Further, an

ad valorem tax is levied in direct proportion to an

article’s value. Congress could not have imposed the

Tax any closer to exportation, or more immediate to

the articles exported.

Accordingly, the court concludes the Tax is pro-

hibited by the Export Clause and it need not address

amici’s (claimants in other cases) contentions

pertaining to whether the Tax also violates the Due

Process Clause or the Port Preference Clause of the

Constitution.

As indicated, the parties agree that this court has

subject matter jurisdiction, see supra p. 410, but

disagree as to the specific basis upon which exporters

may make claims. Two subsections of the court’s

jurisdictional statute may provide the parties a route

for judicial review. See 28 U.S.C. § 1581(a), (i) (1988 &

Supp. V 1993). Subsection 1581(a) provides for review

of a denial by the Customs Service of a protest

of certain duties, charges, exactions, or drawbacks.

28 U.S.C. § 1581(a); 19 U.S.C. § 1515 (1988 & Supp. V

1993). A party must protest a Customs decision

within 90 days of the date of the decision to be pro-

tested. 19 U.S.C. § 1514(c)(3)(B) (Supp. V 1993). On

the other hand, subsection 1581(i) gives the court

broad residual authority over civil actions arising out

of federal statutes governing import transactions.

Conoco, 12 Fed. Cir. (T) at ——, 18 F.3d at 1586.

Subsection 2636(i) of the same title requires a party

See SS

68a

to commence an action under subsection 1581(i)

“within two years after the cause of action first

accrues.” 28 U.S.C. § 2636(i) (Supp. V 1993). The

court’s decision as to the appropriate jurisdictional

basis relates to the amount of plaintiff’s recovery.

Defendant argues jurisdiction is only proper under

subsection 1581(a). According to defendant, the court

may review challenges to the constitutionality of the

Tax only where an exporter properly protests its

payment, and seeks review of the denial of that

protest. Although defendant concedes that “neither

jurisdictional provision may fit exactly,” (Tr. of Oral

Argument at 24 (June 27, 1995)) [hereinafter “Tr.”],

defendant contends permitting this case to rest upon

any other jurisdictional ground would greatly expand

the government’s liability and would disregard the

only congressionally- mandated avenue to challenge

the Tax.

According to defendant, Congress intended this

Court to entertain a tax challenge only after an

exporter had protested its payment of the tax.

Defendant garners support for this interpretation

from the statutory language directing the court to

treat the tax as a customs duty for the purpose of

jurisdiction. If the court properly is to treat the tax

as a customs duty, defendant contends, the protest

procedures under subsection 1581(a) must govern.

Further, defendant argues, there is a Customs

decision for the parties to protest—Customs’ decision

to accept payment. (Tr. at 25.) Defendant contends

administration of the Tax is not merely ministerial,

because subsection 4462(i), title 26, United States

69a

Code authorizes Customs, through the Department of

the Treasury, with administering the assessment

of the Tax. Defendant claims Congress has delegated

substantial authority to the Secretary of the

Treasury (1) to determine the method of payment

and collection of the Tax; (2) to exempt certain

transactions from the Tax where collection would

be impracticable; and (3) to provide for mitigation of

penalties and the settlement of claims. Defendant

claims this grant of power gives the Secretary of the

Treasury “near plenary authority to ‘carry out the

purposes’ of the Act.” (Def.’s Mem. in Opp’n to Amici

at 34.) Accordingly, defendant contends, Customs’

power to administer the Tax transcends a ministerial

role.

Defendant cites a number of authorities in support

of its position. In Norfolk & Western Railway Co. v.

United States, 18 CIT ___, 843 F. Supp. 728 (1994),

defendant asserts the court found the assessment of a

user fee similar to the Tax constituted a protestable

decision, and the period for filing the protest began

when Customs decided the plaintiff would have had

to pay the fee. In General Motors Corp. v. United

States, 10 CIT 569, 643 F. Supp. 1139 (1986), defendant

contends the court held administrative procedures,

where available, had to be exhausted even before

Customs issued its decision. According to the de-

fendant, although the court found the obligation to

pay the charges was derived from statute, payment of

the duties was pursuant to section 1514, and therefore

protestable. The fact that Customs took no affirma-

tive action to collect the duties but only accepted or

rejected certain offers, defendant argues, did not

alleviate the need for protest.

70a

These arguments are unpersuasive. Section 1581(a)

permits review of protest denials by Customs for only

certai

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