Amicus Curiae Brief — American Trucking Assns., Inc. v. Michigan Pub. Serv. Comm'n

MOTION FILED (3)

APR 3 0 2008 No. 03-1220

IN THE

Supreme Court of the United States

AMERICAN TRUCKING AssociaTIons, INC., AND USF HoLtanp, INc.,

Petitioners,

V.

MICHIGAN PusBtic SErvice COMMISSION, ET AL.,

Respondents.

On Petition FoR A Writ oF CERTIORARI

TO THE MicHIGAN Court OF APPEALS

MOTION FOR LEAVE TO FILE AND BRIEF OF NATIONAL

PRIVATE TRUCK COUNCIL, ET AL. AS AMICI CURIAE IN

SUPPORT OF PETITION FOR WRIT OF CERTIORARI

RICHARD P. SCHWEITZER

1776 K Street, N.W.

Suite 800

Washington, D.C. 20006

(202) 223-3040

Counsel for Amici Curiae —

187203 ce

COUNSEL PRESS

(800) 274-3321 + (800) 359-6859

MOTION FOR LEAVE TO FILE

Pursuant to Rule 37.2(b) of the Rules of this Court, amici

curiae National Private Truck Council, Inc. (““NPTC’”),

American Pyrotechnics Association (“APA”), Chlorine

Institute (“CI”), Council on Safe Transportation of Hazardous

Articles (“COSTHA”), Dangerous Goods Advisory Council

(“DGAC”), Institute of Makers of Explosives (“IME”),

International Vessel Operators Hazardous Materials

Association (“YVOHMA”), International Warehouse Logistics

Association (“IWLA”), National Propane Gas Association

(“NPGA”), National Tank Truck Carriers, Inc. (“NTTC’”),

Nuclear Energy Institute (“NEI”), Petroleum Marketers

Association of America (“PMAA”), Reusable Industrial

Packaging Association (“RIPA”), and Truckload Carriers

Association (“TCA”) (collectively “amici curiae”), move that

the Court grant leave to file their brief in support of the

Petition for Writ of Certiorari. Amici curiae sought the

consent of Respondents to file the brief, but that consent was

denied. Petitioners have granted consent. In support of this

Motion, amici curiae state as follows:

Amici curiae are industry associations representing a

wide range of business interests who, as part of or incidental

to their business, ship or transport goods by motor carrier or

vessel in interstate commerce. Virtually all of the member

companies of these associations either operate truck fleets

or ship goods in interstate commerce via motor carrier.

Thus, they are subject to State motor carrier taxes and fees

imposed by each of those States, directly when they operate

their own truck fleets and indirectly when they ship goods

by truck. In addition to the Michigan tax at issue in this case,

they are subject to a multitude of State taxes and fees

applicable to interstate commerce by truck because they

individually transport goods by truck in a number of States,

and collectively in all 50 States and the District of Columbia.

To the extent that those taxes and fees, like the Michigan tax

here, are not properly apportioned by activity in the taxing

State, these companies must pay a disproportionate tax solely

because of the interstate nature of their operations.

Amici curiae have a legitimate interest in participating

~ in this litigation because they face a concrete and recognizable

harm if the Michigan Court of Appeals decision is permitted

to stand. Not only does the Michigan tax itself directly harm

a number of amici curiae s member companies, the decision

below offers a road map for other states to adopt similar taxes

that impede the free flow of interstate commerce. Thus, amici

curiae will be subject to additional state taxes and fees simply

because they engage in interstate commerce if the decision

is allowed to stand.

This Court’s rules permit “[a]n amicus curiae brief that

brings to the attention of the Court relevant matter not already

brought to its attention by the parties . . .” Rule 37.1. In this

case, amici curiae ’s brief is necessary to bring to the Court’s

attention the vast practical consequences of the Michigan

Court of Appeals decision. The decision below is clearly

contrary to this Court’s established precedent in American

Trucking Assns., Inc. v. Scheiner, 483 U.S. 266 (1987),

Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977),

and other cases which invalidated unapportioned flat taxes

like the Michigan tax. Unless overturned, the decision below

will call into question those precedents, and permit other

states to impose levies like Michigan’s. In addition to paying

the Michigan tax, industries represented by amici curiae’

member companies will be faced with a host of costly tax

measures aimed at maximizing State revenues at the expense

of interstate commerce. It is essential for this Court to be

aware of the broad implications of the decision below, and

amici curiae $s brief seeks to do that.

—————

For these reasons, amici curiae request that the Court

grant this Motion for Leave to File.

Respectfully submitted,

RICHARD P. SCHWEITZER

1776 K Street, N.W.

Suite 800

Washington, D.C. 20006

(202) 223-3040

Counsel for Amici Curiae

i

QUESTION PRESENTED

Whether Michigan’s unapportioned flat tax of $100 per

vehicle per year for the privilege of transporting property

between points within the State can be spared from

invalidation under the Commerce Clause on the ground that

it is used to pay for regulatory activities and/or because the

taxpayer did not adduce evidence quantifying the

discriminatory effect of the tax on interstate commerce.

il

TABLEOFCONTENTS |

SEED nccbcdicesocodsocebsneniecs

pI en rere we meee

Table of Cited Authorities ...................5.

Interest of the Amici Curiae ...................

Reasons for Granting the Petition ..............

Summary of the Argument ....................

1. Michigan’s Unapportioned Flat Tax Clearly

Violates American Trucking Assns., Inc. v.

GE ceccncecucesceavénseciseseccs

2. The Lower Court’s Categorization Of The

Michigan Tax As A “Regulatory Fee” Is

Contrary To This Court’s Mandate That State

Taxes Be Judged On Their Effect On

ED i wosecnuseccscesess

3. The Michigan Tax Has An Even Greater

Discriminatory Effect Than The Taxes

Involved In Scheiner Because It Applies

Solely To Intrastate Commerce ...........

Page

12

il

Contents

Page

4. States Continue To Look For Out Of State

Sources Of Revenue In Difficult Economic

es Ree ee ie ce nao 15

The Decision Below Fosters Uncertainty In

Commerce Clause Jurisprudence ......... 17

a a i ee 18

iv

TABLE OF CITED AUTHORITIES

Page

Cases:

American Trucking Assn 5., Inc. v. Scheiner, 483 U.S.

DEPEND ccocctoccesosesseonevesevesess passim

Armco Inc. v. Hardesty, 467 U.S. 638 (1984) ..... 10, 11

Bacchus Imports, Ltd. v. Dias, 468 U.S. 263 (1984)

pen éce eden oedaudeckeedsnsnddupedasases 10

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

a DPS ED 0 oon vccccccesevedaseseésest 10, 16

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

TEDUED occccccccsccccccccccocseeess access passim

Maryland v. Louisiana, 451 U.S. 725 (1981) ..... 10

Northwestern States Portland Cement Co. v.

Minnesota, 358 U.S. 450 (1950) ............. 10

Oklahoma Tax Comm'n v. Jefferson Lines, Inc., 514

es SGU dccoecsccccesceneseeseoceses 10

Tyler Pipe Indus. v. Washington State Dept. of

Revenue, 483 U.S. 232 (1987) .........50005. 10

Vv

Cited Authorities

Page

Westinghouse Electric Corp. v. Tully, 466 U.S. 388

Distr pendinhenesdeesdcstesneésesowee 10

Westlake Transportation, Inc. et al. v. Michigan

Public Service Comm'n, et al., 662 N.W.2d 784

ED occ cteacckeedecseaes 9,12, 13

Statutes:

I ae Dia i i as 7,9, 14

Miscellaneous:

National Governors Association and National

Association of State Budget Officers, Fiscal

Survey of States (Dec. 2003) .............4.. 16

l

INTEREST OF THE AMICI CURIAE

Amici curiae here consist of several industry associations

representing a wide range of business interests who, as part of

or incidental to their business, ship or transport goods by motor

carrier or vessel in interstate commerce. '

The National Private Truck Council, Inc. (“NPTC’’) is a

Virginia corporation operating as a trade association representing

the interests of over 500 companies that operate truck fleets in

furtherance of non-transportation primary businesses.

The members operate trucks in interstate and intrastate

commerce in all 50 states, and they range in size from Fortune

500 companies to smaller local distribution entities.

They transport both raw materials and finished goods in a wide

variety of businesses including food and beverages, heavy

manufacturing, electronics, retail distribution, chemicals and

petroleum products, and apparel.

The American Pyrotechnics Association (“APA”)

is the leading trade association representing the domestic

fireworks industry. It has three principle aims: (1) to encourage

safety in the design and use of all types of fireworks;

(2) to provide industry information and support to its members;

and (3) to promote responsible regulation of the fireworks

industry. Individual APA members are typically involved in one

or more aspects of the fireworks industry: sale and distribution,

1. As noted in the Motion for Leave to File, counsel for

Respondents has not consented to the filing of this brief. Petitioners

have consented.

Pursuant to Rule 37.6 of the Rules of this Court, amici state that

this brief was not authored in whole or in part by counsel for a party,

and no person or entity, other than amici or its members, made a monetary

contribution to the preparation or submission of this brief.

2

manufacturing, and public display. As part of their operations,

many APA members hold a motor carrier registration, maintain

a fleet of commercial motor vehicles, and transport shipments

of pyrotechnics in both interstate and intrastate commerce.

The Chlorine Institute, Inc. (“CTI”) is a 200 plus-member

worldwide association of producers, packagers, distributors,

users and suppliers of chlorine, sodium and potassium

hydroxides, hydrogen chloride in all forms, and sodium

hypochlorite. CI’s mission is the promotion of safety and the

protection of human health and the environment in the

manufacture, distribution and use of those chemicals.

The Council on Safe Transportation of Hazardous Articles

(“COSTHA”) is a not-for-profit organization representing

manufacturers, shippers, distributors, carriers, freight

forwarders, and container manufacturers involved in the

transportation of hazardous materials in interstate, intrastate and

foreign commerce. Some of COSTHA’s over 100 member

companies operate their own truck fleets, while others ship goods

via trucks throughout the United States.

The Dangerous Goods Advisory Council (““DGAC”) is a

non-profit association established in 1974 to promote the safe

transportation of dangerous good (known domestically as

hazardous materials) by supporting adoption of sound, effective,

and uniform safety standards, and by providing extensive

training programs. It is comprised of 140 large and medium-

sized companies engaged in shipping and transporting dangerous

goods, associated businesses, and 19 trade associations

representing thousands of air, highway, and rail transporters,

chemical producers and distributors, and packaging

manufacturers. As a part of or incidental to their business, many

of DGAC’s members transport or cause to be transported

3

hazardous materials into or through more than 30,000

jurisdictions in the United States.

The Institute of Makers of Explosives (“IME”) is the safety

and security association of the commercial explosives industry.

The IME represents manufacturers of high explosives and other

companies that distribute explosives or provide other related

services. Over 2.5 million metric tons of explosives are

consumed annually in the United States, of which IME member

companies produce over 95 percent. These products are

transported in every state in the Union and are distributed

worldwide. As a part of or incidental to their business, all of

IME’s members transport hazardous materials.

The International Vessel Operators Hazardous Materials

Association (“YVOHMA”) is a United States based international

association, with a membership comprised of thirty-eight ocean

common carriers, operating under the flags of several nations,

with the purpose of serving the domestic and international trades

in matters pertaining to vessel and intermodal transport of

hazardous cargoes. The primary goal of VOHMA is to advocate

and promote safe, consistent, and cost-beneficial transport of

such cargoes based upon discussion and evaluation of issues

impacting maritime operations and interconnecting feeder

systems, and to develop consensus positions on all issues which

may have a significant impact on transportation safety. Much

of the freight that is transported by VOHMA members on the

ocean is also transported by truck before or after the water

segment.

The International Warehouse Logistics Association

(“IWLA”) represents 3PLs (third-party logistics providers),

public and contract warehouse companies and their suppliers.

Since 1891, the IWLA has worked to promote and advance the

4

logistics outsourcing industry. The 550 IWLA members

worldwide ship more than three trillion pounds of goods

annually and operate more than 400 million square feet of public

and contract warehouse space, providing the most timely and

cost-effective global logistics solutions for their customers.

As such they are committed to protecting the free flow of goods

and services across borders.

The National Propane Gas Association (“NPGA”) is the

national trade association of the LP-gas (principally propane)

industry with a membership of over 3,600 companies, including

39 affiliated state and regional associations representing

members in all 50 states. Although the single largest group of

NPGA members are retail marketers of propane gas, the

membership includes propane producers, transporters and

wholesalers, as wel] as manufacturers and distributors of

associated equipment, containers and appliances. Propane gas

is used in over 18 million installations nationwide for home

and commercial heating and cooking, in agriculture, in industrial

processing, and as a clean air alternative engine fuel for both

over-the-road vehicles and industrial lift trucks.

National Tank Truck Carriers, Inc. (““NTTC’”) is a trade

association composed of approximately 185 trucking companies

which specialize in the nationwide transportation of hazardous

materials, hazardous substances and hazardous wastes in cargo

tank motor vehicles. NTTC estimates that its members operate

approximately 50,000 such vehicles and utilize 45,000 drivers.

The Nuclear Energy Institute (“NEI”) is an industry policy

organization that fosters the beneficial uses of nuclear

technologies worldwide. The NEI’s members include leading

universities, research laboratories, radiopharmaceutical and

radioisotope manufacturers, as well as companies that operate

5

commercial nuclear power plants, their suppliers, labor unions

and others. The NEI’s members transport radioactive materials

to and from their facilities across the United States on a daily

basis. These companies are committed to the safe, efficient

transportation of these materials, and oppose state legislative

or regulatory actions like the Michigan flat tax that impose an

unreasonable burden on interstate commerce.

The Petroleum Marketers Association of America

(“PMAA”) is a federation of 42 state and regional trade

associations representing 8,000 small, independent petroleum

marketers. These marketers sell nearly half the gasoline, over

60 percent of the diesel fuel, and approximately 85 percent of

the home heating oil consumed in this country annually. PMAA

has members in Michigan who must pay the annual fee imposed

by the State.

The Reusable Industrial Packaging Association (“RIPA”)

is the trade association representing North American container

reconditioners, manufacturers, and distributors of reusable

industrial packaging. Membership in RIPA encompasses over

90% of the industrial packaging rece-nditioning industry in the

United States, many of the leading n.anufacturers of drums and

intermediate bulk containers, as well as many reconditioning

and manufacturing companies worldwide. RIPA members

design, manufacture, recondition and remanufacture a wide

range of reusable industrial packagings for reuse and recycling.

Truckload Carriers Association (“TCA”) is the national

trade association representing the truckload segment of the

trucking industry. Truckload carriers account for approximately

97 percent of the for-hire freight tonnage annually transported

6

by motor carriers in this country, and a portion of TCA’s

membership transport hazardous materials.

Virtually all of the member companies of these industry

associations either operate truck fleets or ship goods in interstate

commerce via motor carrier. The companies are therefore subject

to State motor carrier taxes and fees imposed by each of those

States, directly when they operate their own truck fleets and

indirectly when they ship goods by truck. Because they

individually transport goods by truck in a number of States,

and collectively in all 50 States and the District of Columbia,

they are subject to not only the Michigan tax in question but to

a multitude of State taxes and fees applicable to interstate

commerce by truck. To the extent that those taxes and fees are

not properly apportioned by activity in the taxing State these

companies must pay a disproportionate tax solely because of

the interstate nature of their operations.

For example, the $100 per vehicle Michigan tax applies

regardless of the number of miles operated in the State. If each

State and the District of Columbia imposed a similar tax, the

amici could end up paying $5,100 per vehicle in annual fees

while a vehicle that operated solely within Michigan would pay

only $100 per year in fees, regardless of the number of miles

operated annually by each vehicle.

Moreover, the amici have member companies that ship or

transport hazardous waste or hazardous materials in some form.

As noted by the Petitioners, States have imposed a significant

number of additional taxes and fees on transportation of

hazardous waste or hazardous materials, see Petition at 24-25,

n.12 and n.13, and often justify the non-apportioned and

discriminatory nature of those fees under their State regu !atory

power. Nothing in this Court’s Commerce Clause opinions,

7

however, justifies ignoring the requirements for apportionment

and non-discrimination by classifying a tax on interstate

commerce as a regulatory fee.

Thus, the decision below has consequences far beyond the

validity of the Michigan tax. If this Court allows the Michigan

Court of Appeals decision to stand, it will provide a road map

to other States on how to avoid Commerce Clause limitations

on State taxes. Companies that do business in the several States

will be without recourse when additional States seek to generate

revenue by taxing out-of-state entities.

REASONS FOR GRANTING THE PETITION

SUMMARY OF THE ARGUMENT

The Michigan tax on motor carriers carrying goods to, from

or between points in that State, MCL § 478.2(1), is an

unapportioned flat tax on companies that carry goods in interstate

commerce. As such, it is a violation of this Court’s precedents

prohibiting such levies, most notably American Trucking Assns.,

Inc. v. Scheiner, 483 U.S. 266 (1987). Such taxes have an adverse

economic impact on amici curiae s member companies by

erecting a financial barrier around Michigan. The tax is therefore

unconstitutional because it violates the Commerce Clause of

the Uniied States Constitution. This Court’s intervention is

necessary to overturn a state court decision antithetical to this

Court's precedents.

The lower court’s error is no more glaring than in its rigid

insistence on classifying the Michigan tax as a “regulatory fee”

designed to pay for the administration of the Michigan Motor

Carrier Act. This Court’s established decisions in Complete Auto

Transit, Inc. v. Brady, 430 U.S. 274 (1977) and Scheiner require

that courts look to the practical effect of state taxes on interstate

commerce. When any type of state fee imposes on out-of-state

companies a cost disproportionate to the amount of miles those

companies travel in the state, the Commerce Clause is violated.

The lower court’s tax versus fee distinction is inapplicable in

Commerce Clause analysis 2nd led to an erroneous ruling.

Amici curiae’ participation in this case is a testament

to the broad implications of the Michigan court’s opinion.

Many of amici curiae s member companies will be hurt by the

Michigan tax. Beyond that, however, permitting the lower

court’s decision to stand will encourage other states to adopt

similar measures. Amici curiae and other industries would be

open to a potential flood of fees and taxes aimed at interstate

goods. This Court should grant review of the lower court's

decision to prevent other states from following Michigan’s

example.

The Michigan tax is even more discriminatory than the taxes

at issue in the Scheiner case. In Scheiner, the tax burden fell on

a larger category of interstate motor carriers, thus spreading out

the harmful effects over a wider range of taxpayers. In this case,

the harmful effects fall on a smaller group of carriers, i.e., those

interstate carriers who have a limited amount of intrastate trips.

Under these circumstances, if the Pennsylvania taxes in Scheiner

could not pass constitutional muster, surely the Michigan tax

must fall.

Unlike the federal government, many states are required to

adopt balanced budgets. In the last several years, states have

faced a serious budget crunch that has made that task even more

difficult. To address these budget problems, states naturally look

to impose taxes on out-of-state business interests which have a

limited voice in creating state policy. The Michigan tax is a

way for the state to tap into an out-of-state revenue source while

9

protecting instate business. Allowing the decision below to stand

will encourage other states to make similar end runs around the

Commerce Clause and cause greater economic hardship to amici

curiae and other interstate business.

Finally, this Court’s intervention is needed to provide a

greater degree of certainty to Commerce Clause jurisprudence.

The Michigan Court of Appeals decision is another in a long

line of state policies and court decisions that challenge the

Commerce Clause. As noted, states continue to find new ways

to tax interstate commerce as a way to increase revenues and

protect instate interests. A ruling by this Court repudiating the

lower court’s decision will provide more certainty in Commerce

Clause jurisprudence and discourage state courts and lawmakers

from eroding the federal Constitution’s guarantee of a free flow

of commerce among the states.

ARGUMENT

1. MICHIGAN’S UNAPPORTIONED FLAT TAX

CLEARLY VIOLATES AMERICAN TRUCKING

ASSNS., INC. v. SCHEINER

The Michigan Court of Appeals decision? to uphold the

Michigan flat tax, MCL § 478.2(1), is yet another in a long line

of state actions that, if allowed, would unfairly restrict the ability

of thousands of business interests to conduct business freely

across state lines. The decision below is clearly contrary to this

Court’s precedents rejecting such state action as violative of

the Federal Constitution’s Commerce Clause, most notably in

American Trucking Assns., Inc. v. Scheiner, 483 U.S. 266

2. Westlake Transportation, Inc. et al. v. Michigan Public

Service Comm'n, et al., 662 N.W.2d 784 (Mich. Ct. App. 2003)

(App. la-32a).

10

(1987).’ Nothing in Scheiner suggests that the approach taken

by the Michigan Court of Appeals is constitutionally valid.

In a decision that crystallized a “‘quagmire’ of judicial

responses to specific state tax measures,” id. at 280 (quoting

Northwestern States Portland Cement Co. v. Minnesota,

358 U.S. 450, 457-58 (1950)), Scheiner affirmed precedents

invalidating taxes that favor in-state business at the expense of

out-of-state business, Scheiner, 483 U.S. at 286 (citing with

approval Tyler Pipe Indus. v. Washington State Dept. of Revenue,

483 U.S. 232 (1987); Bacchus Imports, Ltd. v. Dias, 468 U.S.

263 (1984); Armco Inc. v. Hardesty, 467 U.S. 638 (1984);

Westinghouse Electric Corp. v. Tully, 466 U.S. 388 (1984),

Maryland vy. Louisiana, 451 U.S. 725 (1981); Boston Stock

Exchange v. State Tax Comm'n, 429 U.S. 318 (1977)) and

rejected decisions upholding such levies, Scheiner, 483 US. at

292-97.

The Court in Scheiner followed its earlier decision in

Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977), which

established a four-part test to determine whether state taxes

violate the Commerce Clause.‘ Of particular importance in this

case is Complete Auto Transit 's requirement that a state tax be

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

(1977); Tyler Pipe Indus. v. Washington State Dept. of Revenue,

483 U.S. 232 (1987); Oklahoma Tax Comm'n v. Jefferson Lines, Inc.,

514 U.S. 93 (1995).

a A state tax is unconstitutional unless it ““(1] is applied to an

activity with a substantial nexus with the taxing State, (2) is fairly

apportioned, [3] does not discriminate against interstate commerce, and

[4] is fairly related to the services provided by the State. Oklahoma

Tax Comm'n v. Jefferson Lines, Inc., 514 U.S. 93, 183 (1995) (quoting

Complete Auto Transit, 430 U.S. at 279).

ll

“fairly apportioned.” Jd. at 279. To be considered fairly

apportioned, a tax must meet the “internal consistency” test, to

wit, “a state tax must be of a kind that, ‘if applied by every

jurisdiction, there would be no impermissible interference with

free trade.”” Scheiner, 483 U.S. at 284 (quoting Armco Inc. v.

Hardesty, 467 U.S. at 644. While amici here will forgo a

repetition of the cogent and comprehensive analysis of Complete

Auto Transit and Scheiner found in the Petition, Scheiner's

bottom line is worth repeating: “imposition of the flat taxes for

a privilege that is several times more valuable to a local business

than to its out-of-state competitors is unquestionably

discriminatory and thus offends the Commerce Clause.”

Id. at 296.

The only instance in which Scheiner anticipated that an

unapportioned flat tax may be permissible is that in

which collection of the tax is administratively impracticable.

Id. at 296-97 (Earlier precedents upholding flat taxes are still

valid in that “the Commerce Clause does not require the States

to avoid flat taxes when they are the only practicable means of

collecting revenues from users and the use of a more finely

gradated user fee schedule would pose genuine administrative

burdens.”). But the Court even then recognized that “({tJhe

administrative machinery of revenue collection for highways is

now obviously capable of taking into account at least the gross

variations in cost per unit of highway usage ...” Jd. at 297

(emphasis added). There is no question that Michigan may

administer an apportioned motor carrier tax without undue

burden. States routinely apportion motor carrier taxes by mileage

or by fuel consumption within a State. Thus the Michigan tax

on interstate motor carriers falls outside the narrow category of

administratively impracticable flat taxes. If anything, the

technological advances since Scheiner was decided, permitting

a greater volume of information sharing at a faster rate, make it

12

even easier for Michigan to administer an apportioned tax on

interstate motor carriers.

The member companies and organizations represented by

amici here number in the thousands and do business in every

state of the Union. They face a steady barrage of actions by

state and local taxing authorities across the country seeking to

maximize revenues for their individual jurisdictions. The Court’s

“internal consistency” test is not merely an academic exercise

for these companies. It is an essential safeguard against a

potential phalanx of individual state levies that would threaten

to increase transportation costs virtually without limit. The

decision below has serious implications not just in Michigan,

but in every other jurisdiction with the power to tax interstate

carriers. The Court’s intervention is necessary to preserve the

principles plainly enunciated in Scheiner and repudiate a state

court’s decision to uphold a state action that impedes the free

flow of interstate commerce.

2. THE LOWER COURT’S CATEGORIZATION OF

THE MICHIGAN TAX AS A “REGULATORY FEE”

IS CONTRARY TO THIS COURT’S MANDATE

THAT STATE TAXES BE JUDGED ON THEIR

EFFECT ON INTERSTATE COMMERCE

The Michigan Court of Appeals erroneously reasoned that

Complete Auto Transit and Scheiner do not apply in this case

because the principles enunciated in those cases apply to “the

constitutionality of state-taxation statutes that tax interstate

commerce itself, i.e., taxes for the privilege of doing business

in the state . . . not regulatory statutes.” Westlake Transportation,

Inc. et al. v. Michigan Public Service Comm'n, et al.,662 N.W.2d

784, 803 n.15 (Mich. Ct. App. 2003) (App. 29a). This error

stemmed from an earlier part of the decision involving the

13

question of whether the Michigan tax was a registration fee or a

regulatory fee for the purposes of deciding whether the fee was

preempted by federal law. /d. at 790-96 (App. 6a-18a). After an

exhaustive look at the historical and current state and federal

law governing registration of motor vehicles and the Michigan

tax at issue, the court determined that the $100 levy is a

“regulatory fee” designed “for the administration of the

[Michigan Motor Carrier Act], particularly covering the costs

of enforcing safety regulations.” /d. at 795 (App. 15a). Having

made this conclusion in the context of its preemption analysis,

the court never wavers in categorizing the tax as a “regulatory

fee.”

The lower court’s rigid insistence on classifying the tax as

a “regulatory fee” is contrary to this Court’s mandate that, for

Commerce Clause purposes, the proper focus should be on the

effect the levy has on interstate commerce, and not on the

classification assigned by lawmakers. Scheiner, 483 U.S. at

294-95 (“In 1977, while we recognized that we had invalidated

privilege taxes on instate activity deemed to be part of interstate

commerce, we also noted that we had ‘moved toward a standard

of permissibility of state taxation based upon its actual effect

rather than its legal terminology. ... These decisiors have

considered not the formal language of the tax statute but rather

its practical effect... .’” (quoting Complete Auto Transit,

430 US. at 281, 279)).

If the decision below is allowed to stand, any state could

avoid Commerce Clause requirements by allocating tax revenues

by category to specific spending accounts and ceremoniously

dub them “regulatory fees.” The effect of such an outcome would

be to make the dormant Commerce Clause the Maginot Line of

constitutional protection of interstate commerce, easily

14

circumvented by state taxing authorities. This Court should grant

the petition to affirm its precedent in Scheiner and Complete

Auto Transit.

3. THE MICHIGAN TAX HAS AN EVEN GREATER

DISCRIMINATORY EFFECT THAN THE TAXES

INVOLVED IN SCHEINER BECAUSE IT APPLIES

SOLELY TO INTRASTATE COMMERCE

The Michigan tax requires any motor carrier carrying goods

to, from, or between points in Michigan to pay the $100 levy,

whether they engage solely in intrastate trips or do a combination

of intrastate and interstate hauls. MCL § 478.2(1). The tax,

therefore, applies solely to transportation that has some intrastate

component. Interstate trips that merely pass through Michigan

and neither drop off nor pick up goods there are immune from

the levy. Thus, 100 percent of the revenue generated is derived

from trips with some portion of the haul originating or ending

in Michigan.

The burden of generating that revenue, therefore, falls on a

more limited number of carriers than would be the case if

Michigan had taxed all motor carrier transportation, including

trips that merely pass through the state. In this light, the example

provided by Petitioners — a truck “topping off” its interstate

haul with cargo transported between two points within Michigan

— is even more troublesome. Those interstate carriers must pay

the full $100 fee but travel far less miles annually in Michigan

than solely intrastate carriers who pay the same fee. At the same

time, interstate hauls that merely pass through the state pay

nothing, yet receive some benefit from the regulatory regime

purportedly financed by the fee.

15

The Michigan fee is far more pernicious than the

Pennsylvania fees that this court invalidated in Scheiner. In this

Case, an even greater burden is placed on interstate carriers with

limited intrastate hauls because the benefit received in relation

to the tax paid is far less than the other categories of motor

carriers. The disparity of benefit received as a proportion of the

fees paid is stark. Imposing a greater cost per mile on interstate

trucks is exactly the kind of discrimination prohibited by this

Court. Scheiner, 483 U.S. at 286 (“In practical effect, since they

impose a cost per mile on appellants’ trucks that is approximately

five times as heavy as the cost per mile borne by local trucks,

the taxes are plainly discriminatory.”). In this case, the cost per

mile to interstate carriers which make limited intrastate hauls is

even greater than that in Scheiner. Thus, the Michigan tax has

an even greater discriminatory effect that the unconstitutional

levies imposed by Pennsylvania.

4. STATES CONTINUE TO LOOK FOR OUT OF

STATE SOURCES OF REVENUE IN DIFFICULT

ECONOMIC TIMES

Despite the Court’s unequivocal opinions in Complete Auto

Transit and Scheiner, states continue to impose revenue raising

measures that adversely impact interstate commerce.

The Petition notes six separate cases in which courts have

invalidated flat state taxes or fees. Petition at 11 n.6. Amici are

aware of over two dozen actions filed by the American Trucking

Associations in 15 states challenging flat state taxes and fees

imposed on interstate trucking.

The reason for these continued attempts to circumvent the

dormant Commerce Clause is clear: states must find new sources

of revenue to offset budgetary pressures, especially in hard

economic times. The nation’s economic climate in the past

16

several years illustrates the point. The latest Fiscal Survey of

States issued by the National Governors Association and the

National Association of State Budget Officers reported that

“states continue to grapple with short-term cyclical and long-

term structural problems. Plagued by budget shortfalls for the

past three years, states still face uncertainty in the current fiscal

year and difficult budgetary choices in the years ahead.” Fiscal

Survey of States, Executive Summary, p. ix (Dec. 2003). Faced

with the “familiar” struggle of having to balance their budgets,

states have reported the lowest increases of expenditures since

1979, while revenue collections remain stagnant. Jd.

The most politically expedient way for states to remedy

these shortfalls is to impose taxes on entities whose clout with

state and local government is limited, i.e., out-of-state business.

Taxes such as the Michigan levy are doubly attractive to state

lawmakers. Revenue generated disproportionately from

interstate commerce only hurts out-of-state interests,

while providing an economic benefit to instate businesses.

Scheiner recognized this. Scheiner, 483 U.S. at 284 (the

“inevitable effect [of unapportioned flat taxes] is to threaten

the free movement of commerce by placing a financial barrier

around the State. . .). Local economies thus are benefited at the

expense of companies doing interstate business. This situation

is plainly contrary to “the central tenet that the Commerce Clause

‘by its own force created an area of trade free from interference

by the States.” Scheiner, 483 U.S. at 280 (quoting Boston Stock

Exchange, 429 U.S. at 328). Permitting the decision below to

stand will only exacerbate many states’ willingness in the face

of budgetary emergencies to impose taxes that benefit local

economies at the expense of interstate business.

17

5. THE DECISION BELOW FOSTERS UNCERTAINTY

IN COMMERCE CLAUSE JURISPRUDENCE

Seventeen years ago, this Court seemingly solidified a

““quagmire’ of judiciai responses to specific state tax measures

...” Scheiner, 483 U.S. at 220. Despite the Court’s clear

language and indisputable reasoning, dormant Commerce

Clause jurisprudence continues to be uneven. State taxing

authorities continue to search for ways to burden interstate

carers with taxes that benefit their intrastate competitors. Many

industries, only some of which are represented by amici, are

continually confronted with taxes like the one at issue here, and

face extensive and costly litigation to defeat state efforts to

disproportionately tax interstate commerce.

The Court should grant the Petition to provide a greater

degree of certainty in Commerce Clause jurisprudence. To allow

the decision below to stand would permit states to declare any

tax a “regulatory fee” as an easy way to escape from

constitutional scrutiny. The Court must repudiate the Michigan

Court of Appeals’ erroneous decision and put th Commerce

Clause on firm footing for the benefit of the free flow of

commerce among the states guaranteed by the United States

Constitution.

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CONCLUSION

For these reasons the Petition for a Writ of Certiorari should

be granted.

Respectfully submitted,

RICHARD P. SCHWEITZER

1776 K Street, N.W.

Suite 800

Washington, D.C. 20006

(202) 223-3040

Counsel for Amici Curiae