Amicus Curiae Brief — United States v. United States Shoe Corp.

- = - P ed oy

No. 97-372

IN THE

Supreme Court of the

OCTOBER TERM, 1997

>

UNITED STATES OF AMERICA,

Petitioner,

a

UNITED STATES SHOE CORPORATION,

Respondent.

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE FEDERAL CIRCUIT

————— — — ——————_—_—_—_= ==

BRIEF FOR AMICI CURIAE

TOTES-ISOTONER CORPORATION, ET AL.

(SUCCESSOR TO ARIS-ISOTONER, INC.),

IN SUPPORT OF RESPONDENT

John M. Peterson*

George W. Thompson

Arthur K. Purcell

NEVILLE, PETERSON & WILLIAMS

Counsel for Amici Curiae

Totes-lsotoner Corporation, et al.

80 Broad Street, 34th Floor

New York, New York. 10004

(212) 635-2730

* Counsel of Record

al

)

BEST AVAILABLE COPY suaat

STATEMENT OF INTEREST OF AMICI CURIAE

Amici curiae are companies which export

merchandise through the ports of the United States, and

have paid the Harbor Maintenance Tax that is in issue in

this case, 26 U.S.C. § 4461. Amici have appeared in this

capacity before the courts below.

The following companies are represented as amici

curiae: Totes-Isotoner Corporation (successor to Aris-

Isotoner, Inc.); Berwick Industries, Inc.; Chevron Chemical

Company, Inc.; Chevron Chemical International Sales,

Inc.; Chevron International Oil Company; Chevron

Overseas Petroleum, Inc.; Chevron U.S.A., Inc.; Fieldston

Clothes, Inc.; General Glass International Corporation;

Microsoft Corporation; The Pillsbury Company; Rhone-

Poulenc, Inc.; Uniroyal Chemical Company, Inc.; Xerox

Corporation; Xerox Corporation, Americas Operations

Division; Xerox Corporation, Southern California

Manufacturing Operations Division; and Xerox

International Partners.

The parties to this action have consented to the

filing of this brief by amici curiae, in support of the

respondent.

QUESTION PRESENTED

Whether the Harbor Maintenance Tax (26 U.S.C.

§ 4461(a)), by imposing an ad valorem tax on articles

loaded at ports of the United States for exportation,

violates the Export Clause of the United States

Constitution.

(I)

criteria for a user fee set out

in Massachusetts and

Page

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EEA eieb es ceded beedeeocececcces 2

Constitutional and statutory provisions involved os

ST EUS UNEUD ok debécccccceccecécec: 2

EE Gosecescebebcecoccecces 3

Argument:

The Harbor Maintenance Tax Violates the

Export Clause of the United States

Dire eeheeescccecooceccees 4

TABLE OF AUTHORITIES

Cases:

A.G. Spalding & Bros. v. United States,

Se Cie GO GREED ccccccccccccccccecs 11

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

Airport Auth.,

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

cert. denied, 498 U.S. 1120 (1991)........ 14

Armour Packing Co., v. United States,

i 15,16

Brown v. Maryland,

25 U.S. (12 Wheat.) 419 (1827) ........... 8

Cornell v. Coyne,

Deb ccecsensesesececes 9

Evansville-Vanderburgh Airport Auth. Dist. v.

Delta Airlines, Inc.,

EE nccocccccceccecs 14,17

Fairbank v. United States,

. © aaa 5,8,12,19

Massachusetts v. United States,

435 U.S. 444 (1978) .........650058- 4,13,17

Monongehela Ni Co. v. United States,

De ED cccccccccccccccess 12

Michelin Tire Corp. v. Wages,

Gy IEE. wee cccadenccococces 9

Moon v. Freeman,

379 F.2d 382 (9th Cir. 1967) ............ 16

North American Co. v. SEC,

PP TT Kad dceccescoccoucs 15

Pace v. Burgess, 92 U.S. 372 (1876) ......... 4-5,9

Thames & Mersey Marine Ins. Co. v.

United States, 237 U.S. 19 (1915) .......... 8

Turpin v. Burgess, 117 U.S. 504 (1886) ....... 9,10

United States v. Hvoslef,

(IIT)

Bee Gis BONED dbabicccccccccescecs 7-8

United States v. International Business

Machines Corp., 116 S. Ct. 1793,

Pree passim

United States v. Sperry Corp.,

DE csceccesceceseces 14,17

William E. Peck & Co. v. Lowe,

i in 7c ceeceeeeeeee se 10

Constitution, statues, and regulations:

U.S. Const.:

Art. I:

$ 8, Cl. 3 (Commerce Clause) ....... 4, 15-16

§ 9, Cl. 5 (Export Clause) ........... passim

§ 10, Cl. 2 (Import-Export Clause) ...... 8, 9

Internal Revenue Code (26 U.S.C.):

EE passim

DT ch rn otecceececececceses 11

ada dccsecccccecoetes 12

is cis éencecesueceese 12

ee 12

es cececccesodectécect 12

TT fins ode cdbeesecovcees 12

hs pec ceepeeseseeees 2

ee 11

Miscellaneous:

M. Farrand, Records of the Federal

Convention (rev. ed. 1966) ............. 5,6

M. Farrand, The Framing of the Constitution of

PE, o¢dcaccedaceec< 6-7

(Iv)

No. 97-372

IN THE SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1997

UNITED STATES OF AMERICA, PETITIONER

v.

UNITED STATES SHOE CORPORATION.

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

BRIEF FOR AMICI CURIAE

TOTES-ISOTONER CORPORATION, et al. (successor to

Aris-Isotoner, Inc.), IN SUPPORT OF RESPONDENT

OPINIONS BELOW

The decision of the court of appeals (Pet. App. 1a-45a)

is reported at 114 F.3d 1564. The decision of the United

States Court of International Trade (Pet. App. 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 petition for a writ of certiorari was

filed on August 29, 1997, and was granted on October 31,

1997 (118 S. Ct. 361). The jurisdiction of this Court is

based on 28 U.S.C. § 1254(1).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

The constitutional and statutory provisions set forth in

the brief of the parties are hereby adopted by amici curiae.

STATEMENT

Amici curiae Totes-Isotoner Corporation, et al.

respectfully file this brief’ on consent of all parties in

support of respondent United States Shoe Corporation,

urging affirmance of the decision below.

Amici curiae hereby concur with the Statement set

forth in the Respondent’s brief.

‘Pursuant to Rule 37.6 of the Rules of this Court,

amici curiae hereby represent that this brief was authored

by counsel for amici curiae, and was not, in whoie or in

part, authored by counsel for any party to this action. No

person or entity, other than amici curiae, its members, or

its counsel, made a monetary contribution to the

preparation or submission of this brief.

(2)

SUMMARY OF ARGUMENT

The appellate court properly concluded that the

Harbor Maintenance Tax (HMT), 26 U.S.C. § 4461,

violates the Export Clause of the United States

Constitution because it is an ad valorem tax on articles

exported from the United States.

a. The Export Clause expressly and absolutely forbids

the laying of taxes or duties “on Articles exported from

any State”.

b. The HMT is a constitutionally prohibited “tax” or

“duty” within the common meaning of those terms. It is

a revenue-raising measure which de jure burdens articles

in export transit. The HMT is directly tied to the act of

exportation and is assessed directly on the article

exported.

Because the Export Clause imposes an absolute

prohibition on Congress’ power to burden exported

articles, the stated purpose of any tax, duty,

or other fee laid on exported articles is irrelevant to the

question of whether the HMT is a prohibited “tax” or

“duty” in the first instance. Congress may not avoid a

constitutional restriction on its power through legislative

declaration. Therefore, Congress’ denomination of the

HMT as a "port use" charge does not erase or justify the

export-burdening effect of the tax. A statutory provision

defining the exportation of a class of articles as “port use”

may not be used to obscure the fact that the HMT directly

burdens articles in the course of their exportation by

assessing a value-based tax on the exported article itself.

(3)

c. Because the HMT directly burdens exported

articles within the meaning of the Export Clause, it cannot

be construed as a valid “user fee" imposed under Congress’

Commerce Clause powers. The Export Clause’s specific

and express prohibition on Congressional taxation of

exported articles may not be qualified by the regulatory

powers granted Congress under the Commerce Clause.

Therefore, even assuming arguendo that the HMT is non-

discriminatory, is based on some fair approximation of

use, and is not excessive with regard to any benefit

conferred, it nevertheless constitutes an unconstitutional

tax on exports.

d. The HMT does not meet the criteria for a user fee

under the test enunciated in Massachusetts v. United States,

435 U.S. 444 (1978), as it is not based upon a fair

approximation of use and is excessive with respect to any

benefit conferred.

ARGUMENT

THE HARBOR MAINTENANCE TAX VIOLAT>’ 5 THE

EXPORT CLAUSE OF THE CONSTITUTION

A. The Export Clause Imposes an Absolute Prohibition

on Taxes or Duties Laid on “Articles Exported"

The Export Clause expressly and absolutely forbids the

laying of taxes (or duties) “on Articles exported from any

State”. In Pace v. Burgess, 92 U.S. 372 (1875), this Court

held that:

the constitutional provision that “no tax or duty shall

be laid to articles exported from any State" absolutely

(4)

prohibits Congress from imposing a pecuniary charge

on them, whether it consists of a tax or a duty. . . even

if it has been asserted that these charges are only for

the regulation of trade, and are not a tax or duty for

the purpose of revenue.

(emphasis added). Further evidence that the Export

Clause denies Congress the power to burden exported

articles through taxes, duties, or assessments of any kind

is revealed by examining the historical context in which

the Clause was drafted.

The Export Clause was "one of the compromises which

entered into and made possible the adoption of the

Constitution." Fairbank v. United States, 181 U.S. 283, 290

(1901). Its supporters were concerned that, absent a ban

on export taxation, exporting States would tax the produce

of neighboring States. See 2 M. Farrand, Records of the

Federal Convention (rev. ed. 1966) (Mr. Williamson,

speaking of Virginia’s taxes on exports of North

Carolina’s tobacco: “Should it take place, it would destroy

the last hope of adoption of the plan") Jd. at 360; (Mr.

Butler was "strenuously opposed to a power over exports:

as unjust and alarming to the staple States"). Jd.

The Framers were equally concerned that the national

government be denied the power to tax exports. See M.

Farrand, Records of the Federal Convention, supra, at 307

("Mr. Gerry thought the legislature could not be trusted

with such a power. It might ruin the Country. It might be

exercised partially raising one and depressing another part

of it"); (Mr. Sherman: “The complexity of the business in

America would render an equal tax on exports

impracticable", and “A power to tax exports would

(5)

shipwreck the whole”.); Jd. at 360 (Mr. Elseworth: “The

produce of different states is such as to prevent uniformity

in such taxes. there are indeed but a few articles as could

be taxed at all; as Tobo. Rice & indigo, and a tax on these

alone would engender incurable jealousies.”); Jd. at 361

(Mr. Sherman: “It is best to prohibit the National

lepslature in all cases”.).

While some delegates to the Federal Convention

believed taxation of exports to be an appropriate and in

some cases essential governmental , the Export

Clause which emerged was a broad and absolute

prohibition on export taxation. Thus, as this Court

2 See 2 M. Farrand, Records of the Federal

Convention, supra, at 307, 360 (Mr. Govr. Morris

“considered the taxing of exports to be in many cases

highly politic” (p. 307)), and expressed concern that “If no

duty can be laid on exports, an embargo cannot be laid,

though in time of war such measure may be of critical

importance” (p. 360)).

* As the completion of the Convention's work

neared, a late effort to permit export taxes in certain

circumstances was defeated:

The influence of the southern members in the work

on the committee of detail has already been

referred to in the provision[], that there should be

no tax on exports ....

(continued...)

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recently noted, there is “substantial evidence from the

Debates that proponents of the [Export] Clause fully

intended the breadth of scope that is evident in the

language”. United States v. International Business

Machines Corp., 116 S. Ct. 1793, 1803, 135 L. Ed. 124

(1996) ("IBM").

Given the history of the Export Clause, this Court has

taken pains to ensure that the broad prohibition of the

Clause -- part of the cement binding our nation together

-- is strictly protected from encroachments.

Thus, in United States v. Hvoslef, 237 U.S. 1 (1915), the

Court noted that the Export Clause:

... iS a restriction on the power of Congress; and as in

accordance with the rules heretofore noticed the grants

of power should be construed as to give full efficacy to

those powers and enable Congress to use such means

5(...continued)

When these questions came before the convention,

the prohibition on export taxes was objected to, but

more strenuously by the middle states than by New

England. Madison suggested as a betterment of

the situation that export taxes might be laid by a

two-thirds vote. The proposal was lost and

Massachusetts then supported the provision of the

printed draft. The prohibition.on export taxes was

accordingly adopted and by a vote of seven to four.

M. Farrand, The Framing of the Constitution of the United

States, at 148 (1913).

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as it deems necessary to carry them into effect, so in

like manner a restriction should be enforced in

accordance with its letter and spirit and no legislation

can be tolerated which, although it may not conflict

with the letter, destroys that spirit and purpose of the

restriction imposed. ... “If mere discrimination

between the States was all that was contemplated it

would seem to follow that an ad valorem tax upon all

exports would not be obnoxious to this constitutional

can impose an export tax neither on one article [of]

export, nor on all articles of export. In other words,

the purpose of the restriction is that exportation, all

exportation, shall be free from national burden."

237 U.S. at 15 (citing Fairbank, 181 U.S. at 290) (emphasis

added).

Recently, in JBM, this Court reaffirmed its consistent

view that the Export Clause strictly prohibits amy tax or

duty falling on articles in the course of exportation. 116

S. Ct. at 1797. IBM confirmed that even taxes which

indirectly fall on goods being exported are prohibited

where they are in “in effect" or "in substance” a tax on

exports because of their close relation or connection to

the articles exported. Jd. at 1804. See Hvoslef, 237 U.S.

at 16 (taxes on ship charters); Thames & Mersey Marine

Ins. Co. v. United States, 237 U.S. 19 (1915) (taxes on

marine insurance). Such indirect impositions violate the

Export Clause because they burden exportation in the

same way as taxes which are laid directly on the goods

themselves. JBM, 116 S. Ct. at 1797 (citing Hvoslef, 237

U.S. at 27); Brown v. Maryland, 25 U.S. (Wheat.) 419, 445

(1827).

(8)

In contrast to the Import-Export Clause [U.S. Const.,

art. I, Section 10, cl. 2] (prohibiting States from imposing

"Imposts or Duties on Imports or Exports, except what

may be absolutely necessary for executing its Inspection

Laws"), the Export Clause broadly prohibits all "taxes" or

“duties” on exports. JBM, 116 S. Ct. at 1801-02; See

Michelin Tire Corp. v. Wages, 423 U.S. 276, 290-93 (1976).

The term "tax" as it appears in the text of the Export

Clause is broad and unambiguous, making no allowance

for non-discriminatory taxes or “user fees". In this regard,

"the Framers sought to alleviate their concerns by

completely denying to Congress the power to tax exports

at all.” JBM, 116 S. Ct. at 1803.

B. The HMT is a "Tax" Which is Imposed on, and

Burdens, Articles in Exportation

The HMT is a revenue-raising measure which de jure

burdens articles in the course of exportation. Because it

is directly related to the export process and burdens

exported articles by adding to the cost of their exportation,

the HMT is unconstitutional under the Export Clause.

In JBM, this Court examined the meaning of the term

“Articles exported”, as used in the Export Clause. Citing

Pace v. Burgess and other decisions,‘ the Court

* Turpin v. Burgess, 117 U.S. 504 (1886) (federal excise

tax on tobacco products); Cornell v. Coyne, 192 U.S. 418

(1904) (federal excise tax on filled cheese manufactured

under contract for export).

(9)

acknowledged that the Export Clause does not insulate

from taxation all goods which might eventually be

exported. 116 S. Ct. at 1796-97° Certain

"nondiscriminatory pre-exportation assessments do not

violate the Export Clause, even if the goods are eventually

exported." Id. (emphasis added). However, such goods

simply are not within the scope of the Export Clause

because they are not “Articles exported”.

On the other hand, this Court has never wavered from,

and recently affirmed, the bedrock principle that “taxes

levied on goods in the course of exportation and taxes

directed specifically at exports" violate the Export Clause.

IBM, 116 S. Ct. at 1797 (citing Turpin v. Burgess, 117 U.S.

504, 507 (1886) (emphasis added). The HMT violates the

Export Clause on both counts. Moreover, “the Export

Clause has been construed to strictly prohibit any tax or

duty, discriminatory or not, that falls on exports during the

course of exportation." JBM, 116 S. Ct. at 1797. The

prohibition also extends to certain services and activities

that are "closely related” to the export process. JBM, 116

S. Ct. at 1798.

Articles held to be "in the course of exportation"

include those which have been delivered to the exporting

5 For example, a non-discriminatory tax laid on the

net income of a company engaged in the export business

has been found not to violate the Export Clause because

the articles taxed were neither “in the course of

exportation” nor were they inherently or commercially

export-related. William E. Peck & Co. v. Lowe, 247 US.

165, 174 (1918).

(10)

carrier. In A.G. Spalding & Bros. v. United States, 262 U.S.

66, 70 (1923), the taxation of certain baseball equipment,

to which title was transferred upon delivery to the export

carrier, was found to violate the Export Clause. In short,

once goods have moved from the manufacturing or

inventory stage, and have entered the stream of export

commerce, they cease to be “pre-export” articles and may

not be taxed.

The HMT is levied on articles in the course of their

exportation, according to the articles’ value. It follows

inexorably that the HMT is directed specifically at

exported articles after they have entered the stream of

export commerce, and hence violates the Export Clause.°

The statute imposes the HMT, "in the case of

commercial cargo to be exported from the United States by

water, at the time of loading"’ on the exporting carrier.

Congress has therefore targeted for ad valorem taxation

articles “to be exported". The “taxable event", within the

meaning of Spalding and IBM, is the loading of goods

* It is particularly telling that, under Customs’

implementing regulations [19 C.F.R. § 24.24(e)(2)(i)], the

person liable for the payment of the export HMT is the

person listed on the Shipper’s Export Declaration or

exportation (i.e., sale, consignment) are irrelevant. All that

matters is that "commercial cargo" is exported, and that

the “exporter” thereby incurs liability for the HMT.

7? 26 U.S.C. § 4461(c)(2)(A).

(11)

Export Clause’s absolute

legislative

283, 301 (1901) (discussing M ;

United States, 148 U.S. 312 (1893))°. Congress should not

the: the HMT directly burdens those articles in the course

of their exportation, in violation of the Export Clause.

® In this connection, it is significant that the HMT

Act excludes from its definition of “port use” numerous

activities which clearly constitute the use of port facilities

in common meaning. The tax-exempted activities include

lading of bunker fuels, ship's stores, sea stores or vessel

equipment [26 U.S.C. § 4462(a)(3)(B)(i)], the landing of

fish and aquatic animal life [/d., § 4462(a)(3)(B)(ii)], the

transport of cargoes by non-commercial vessels [Id., §

4462(a)(4)(A)], ferry transportation [/d. § 4462(a)(4)(B)],

and recreational port use. Indeed, in the absence of

"commercial cargo”, no tax is ever assessed. This illustrates

that the HMT is nothing more than a tax which falls on a

class of exported merchandise, to wit, “commercial cargo".

Id., $ 4462(a)(3)(A).

(12)

related to the goods

sufficiently or

Export Clause." 116 S. Ct. at 1801 n. 3 (emphasis added).

This Court need not decide that question here,

as the HMT by its terms, is triggered by the very act of

|

Finally, no case cited by petitioner supports its

proposition that amy federal tax, charge or assessment on

the exported article itself is permissible under the Export

Clause. The cases cited by appellant addressed charges or

assessments on the use of commercial facilities, as in

Massachusetts v. United States, supra (tax on use of federal

aviation facilities only), rather than a tax on “Articles

® Even assuming arguendo that the HMT’s ad

valorem assessment scheme is in some way related to “port

use", it is no less a tax on “articles exported". Moreover,

this case does not implicate the concerns, voiced by the

dissenting Justices in JBM, that the term "Articles

exported” not be defined in an overbroad or vague

manner, and thereby complicate a taxing agency’s task of

determining when an article has entered the stream of

exportation, and whether the tax “burdens the exporting

process". 116 S. Ct. at 1808 (Kennedy, J., dissenting). The

HMT by definition applies to articles in the stream of

exportation and burdens exports by taxing them directly.

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exported”. See also Evansville-Vanderburgh Airport

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

on use of airport facilities); Alamo Rent-A-Car, Inc. v.

Sarasota-Manatee Airport Auth., 906 F.2d 516 (11th Cir.

1990), cert. denied, 498 U.S. 1120 (1991) (fee on use of

an “article exported”, it proves nothing that certain courts

the “article exported” (or is not closely related to the

exportation process), then the Export Clause is not

implicated, and the method of calculating the tax is

irrelevant for purposes of this case.

© To the extent the Court of Appeals determined that

the HMT is tax on exports because it does not satisfy the

criteria for a valid user fee set forth in Massachusetts v.

United States, supra, its reasoning was faulty. The

requirements for Export Clause protection are mutually

exclusive from the Massachusetts user fee criteria. For

instance, a non-discriminatory, indirect tax which burdens

articles in the course of exportation cannot be a valid user

fee, even if the user fee criteria are satisfied.

" See, e.g., United States v. Sperry Corp., 493 U.S. 52,

60 (1989). The Sperry case arose under the Constitution’s

Just Compensation Clause, not the Export Clause.

(14)

C. Congress’ Regulatory Powers under the Commerce

Clause do not Trump the Express Prohibitions of the

Export Clause

The Export Clause expressly and unconditionally

denies Congress the power to tax "Articles exported”.

Congress may not arrogate to itself the prohibited power

by invoking its Commerce Clause power to regulate

ne Cone See IBM, 116 S. Ct. at

Congress has power, under the Commerce Clause, to

enact laws with the purpose of fostering and regulating

powers are subordinate to limitations contained in other

parts of the Constitution. As noted in North American Co.

v. SEC, 327 U.S. 686, 704 (1946) (citation omitted):

For nearly one hundred and twenty-five years, this

Court has recognized that the power of Congress over

interstate commerce “is the power to regulate. .

This is not to say, of course, that Congress is an

absolute sovereign. It is limited by express provisions

>. eaqunendgndne name cmuertenpstieeparmael

The Commerce Clause cannot create an exception to

the Export Clause’s absolute prohibition, irrespective of

purpose. A charge or fee may.be acceptable under the

Commerce Clause, but only if it does not fall on exported

articles. For example, in Armour Packing Co. v. United

States, 209 U.S. 56 (1908), this Court upheld as a valid

(15)

exercise of the Commerce Clause a law requiring that

common carriers charge all shippers, including export

shippers, a uniform published rate. The law had a valid

regulatory purpose (requiring that all shippers be treated

alike). The Export Clause was not implicated because the

law imposed a criminal penalty rather than a tax or duty.

Nothing in the Court’s decision suggests that the

Commerce Clause limited the Export Clause prohibition

in the name of federal regulation. Armour Packing, 209

U.S. at 79. Moreover, there was no federal assessment or

charge placed on the article exported in that case. See also

Moon v. Freeman, 379 F.2d 382 (9th Cir. 1967) (export

certificate program regulating wheat prices did not

implicate the Export Clause because there was no tax on

articles in the course of exportation).

Finally, it is noteworthy that the framers of the

Constitution, after adopting the Export Clause, amended

the Import-Export Clause to permit the States to impose

fees on exports for limited regulatory purposes. That such

a power of taxation for the purpose of defraying regulatory

costs was denied to the Federal government underscores

the framers’ intent to prohibit the Federal taxation of

exports in all cases, regardless of regulatory purpose.”

D. The HMT Does Not Meet the Criteria for a User Fee

Set Out in Massachusetts and Evansville-Vanderburgh

2 In any event, as the Court of International Trade

aptly noted below, the export HMT has no regulatory

purpose; it “neither seeks to regulate commerce nor repay

the costs of services rendered”. Pet. App. 60a.

(16)

Even assuming, arguendo, that the export HMT could

be characterized as a “user fee", it would still not meet the

criteria required of a valid fee under the test enunciated

in Massachusetts v. United States, 435 U.S. 444 (1978), and

Evansville-Vanderburgh Airport Auth. Dist. v. Delta Airlines,

Inc., 405 U.S. 707 (1972), as it is not based upon a fair

approximation of use and is excessive with respect to any

benefit conferred.

A user fee need not be "precisely calibrated" to the

extent of a party’s private use of government-provided

facilities, but need only be based on a “fair approximation"

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

That the HMT is based on the value of exported articles,

rather than on some approximation of port use, is

manifest from the fact that the statute exempts from

taxation numerous activities, both commercial (e.g.,

bunkering, ship fitting, fishing) and noncommercial

(recreation), which in common understanding clearly

involve the use of port and harbor facilities.

Further, the HMT is not calibrated with respect to the

government’s costs of providing harbor services to

exporters. As the Federal Circuit aptly noted (Pet. App. at

21a-22a), the "Massachusetts case itself suggests that the

cost of the benefits, rather than the value is the

appropriate measure . .” However, even within the

limited range of “commercial cargo” subject to taxation,

the HMT is assessed without regard to the degree of port

use. A large cargo of relatively inexpensive bulk ores,

requiring a large ship and a deep draft port, will be

assessed with less tax than a small cargo of more valuable

precious metals or jewels, which make minimal use of port

facilities. The HMT statute makes no distinction between

(17)

process; it falls on a purely ad valorem basis. Such an

assessment is more representative of a “tax” or “duty” than

of a charge recouping costs of port facilities.

which relate to future projects, rather than to repay the

government for services actually rendered to the exporter.

See Pet. App 60a. Indeed, the exporter paying the HMT

may have received no services, if it has used a port where

Federal maintenance funds have not been expended.

Moreover, the fast-building surplus in the Harbor

Maintenance Trust Fund, is indicative of the fact that the

HMT is a tax, by Congress’ own admission designed to

ae ea

exporters the costs of services rendered to them.

3 It is also significant, amici assert, that export

HMT revenues are covered over into the national

Treasury before being remitted to the Trust Fund, and the

tax is considered to be “on budget", meaning that HMT

collections may be counted for deficit reduction purposes.

Pet. App. Sia.

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CONCLUSION

The Export Clause makes possible a “freedom of

exportation . . . guaranteed by the Constitution", which,

this Court has recognized, “cannot be disturbed by any

form of legislation which burdens that exportation. The

form in which the burden is imposed cannot vary the

substance". Fairbank v. United States, 181 U.S. at 295. The

broad sweep of the Export Clause makes clear that any

form of taxation which falls upon exported articles in the

course of their exportation is strictly prohibited.

The HMT taxes "Articles exported" during the course

of their exportation more blatantly than any tax this Court

has considered before. The tax violates the letter of the

Export Clause and works the very results the Framer’s

sought to avoid. That the HMT may be nominally

imposed for the avowed purpose of defraying the

government's costs of “port use" (or of raising a sum of

money corresponding to the government’s port

maintenance expenditures) cannot, and does not, alter the

purpose of the Export Clause, as conceived by the framers

and consistently interpreted by this Court. Taxes and

duties on exports, such as those imposed by the HMT, are

strictly prohibited. In this case, the Congress has wielded

a power of taxation which the Constitution expressly

forbids.

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Amici submit that this Court should uphold the

Federal Circuit’s decision striking down the export HMT

as repugnant to the Export Clause of the Constitution.

Respectfully submitted,

John M. Peterson

Counsel of Record

George W. Thompson

Arthur K. Purcell

Neville, Peterson & Williams

Counsel for Amici Curiae

Totes-Isotoner Corporation, et al.

80 Broad Street, 34th Floor

New York, New York 10004

(212) 635-2730

January, 1998

(20)