Appendix — Lineas Aereas Costarricenses, S.A. v. Florida Department of Revenue
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No. 84- ——
IN THE
Supreme Court of the United States
OCTOBER TERM, 1984
LINEAS AEREAS COSTARRICENSES, S.A., et al.,
Appellants,
Vv.
STATE OF FLORIDA, DEPARTMENT OF REVENUE,
Appellee.
On Appeal from the Supreme Court
of the State of Florida
APPENDICES TO
JURISDICTIONAL STATEMENT
ROBERT D. PAPKIN
Counsel of Record, Member of the
Bar of the Supreme Court
of the United States
EDWARD W. SAUER
SQUIRE, SANDERS & DEMPSEY
' 1201 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
~ Telephone: (202) 626-6601
Counsel for Appellants
Lineas Aereas Costarricenses, S.A.,
et al.
SE PCT LTRS ET OTS fe
WILSON - EPES PRINTING Co., INC. - 7469-0096 - WASHINGTON, D.C. 20001
TABLE OF CONTENTS
APPENDICES
. Opinion of the Florida Supreme Court in this pro-
. Opinions of the Florida Supreme Court in compan-
ee re enced scr nant eakssaehcmmmadoeseaoasinusaiiets
. Order of the First District Court of Appeal certify-
ing this proceeding directly to the Florida Supreme
0 SRE LRN ATE NI Al LER RNs eM aeesed Maree eke
. Final Judgment of the Circuit (Trial) Court and
Order Amending that Judgment __..........-.....-...........
. Final Judgment of the Circuit (Trial) Court in a
I Ss aemraeneteass
. Motion for Rehearing in the Florida Supreme Court..
. Order of the Florida Supreme Court Denying Re-
RRR DRE re TAN Webs Ra Ren het Ye see tie, nee
SE RRP trate oe ne er ne
. List of the Appellants in this Proceeding Indicating
Their Parent Companies, Subsidiaries (Except
Wholly-Owned Subsidiaries), and Affiliates _..........
Fla. Stat. Ann. § 212.08(4) (West Supp. 1984)......
. Certain Provisions of Relevant Air Transport
Agreements Regarding Taxes on Aviation Fuel......
. Correspondence Between the Florida Department of
Revenue and the United States Department of State
Regarding Changes in Florida’s Fuel Tax Law,
Motions Seeking Consideration by the Florida Su-
preme Court of a Statement of Policy by the Avia-
tion Authorities of the United States, Response
Thereto of the State of Florida, Order of the Florida
Supreme Court Regarding this Issue, Brief of the
Foreign Airline Appellants on this Issue -.................
Page
la
APPENDIX A
SUPREME COURT OF FLORIDA
DEPARTMENT OF REVENUE,
Appellant/Cross Appellee
Ws
LINEAS AEREAS COSTARRICENSES, et al.,
Appellees/Cross Appellants
No. 63,989 (Fla. June 14, 1984), rehearing denied,
Sept. 12, 1984
ADKINS, J.
We have before us an appeal here by an order from
the First District Court of Appeal certifying the issue in
the case to be of great public importance. We have juris-
diction pursuant to article V, section 3(b) (5), Florida
Constitution.
This case arose when Lineas Aereas Costarricenses
(hereinafter LACSA) filed a complaint in circuit court
in Leon County seeking to enjoin Florida’s Department
of Revenue from collecting sales taxes, under a provision
of chapter 83-3, Laws of Florida, on aviation fuel pur-
chased by LACSA for use in foreign commerce. Trans-
portes Aereos Nacionales, S.A., Aerolineas Argentinas,
Aeronaves de Mexico, S.A., Aerovias Nacionales de
Columbia, [sic] S.A., Trinidad and Tobago (BWIA Inter-
national) Airways Corp., Empresa Ecuatoriana de Avia-
cion, S.A., Linea Aerea Nacional Chile, Compania Mexi-
2a
cana de Aviacion, S.A. de C.V., Viacao Aerea Rio-
Grandense, and Venzolana Internacional de Aviacion,
S.A. were granted leave to intervene as party plaintiffs.
The circuit court entered an order of final judgment
upholding the tax as constitutional but granting the in-
junction on the basis that the foreign airlines were ex-
empt under certain international agreements. The De-
partment of Revenue is appealing the exemption and
LACSA is cross-appealing the determination that the tax
is constitutional.
Inasmuch as the issues raised here have been addressed
by us in Delta Air Lines, Inc. v. Department of Revenue,
No. 63,915 (Fla. June 14, 1984): Department of Revenue
v. Wardair Canada Ltd., No. 64,036 (Fla. June 14,
1984) ; and Department of Revenue v. Air Jamaica Ltd.,
No. 64,035 (Fla. June 14, 1984), they will not be re-
addressed.
Accordingly, we affirm the circuit court’s order to the
extent that it upheld the tax as constitutional with the
exception of the portion regarding the corporate tax
credit to Florida-based airlines. In Delta we determined
that portion to be unconstitutional and ordered it stricken
from chapter 83-8. We reverse the circuit court’s order
to the extent that it recognized an exemption from the
excise tax for the foreign airlines.
It is so ordered.
ALDERMAN, C.J., BOYD and SHAW, JJ., Concur.
OVERTON, J., Dissents: “I dissent. See Department
of Revenue v. Wardair Canada Ltd., No. 64,036 (Fla.
June 14, 1984).”
McDONALD, J., Dissents.
3a
APPENDIX B
SUPREME COURT OF FLORIDA
NORTHEASTERN INTERNATIONAL AIRWAYS, INC., et al.,
Appellants
Vv.
DEPARTMENT OF REVENUE,
Appellee
No. 64,085 (Fla. June 14, 1984), rehearing denied,
Sept. 12, 1984
ADKINS, J.
We have before us an appeal which results from an
order by the Fourth District Court of Appeals certifying
the issues involved to be of great public importance. We
have jurisdiction. Art. V, § 3(b) (5), Fla. Const.
The case arose with the filing of a complaint in circuit
court in Broward County. Northeastern International
Airways, Inc., and Arrow Air, Inc., challenged the con-
stitutionality of chapter 83-3, Laws of Florida. The cir-
cuit court entered an order of final judgment upholding
the constitutionality of chapter 83-3. The plaintiffs chal-
lenged the constitutionality of chapter 83-3 but did not
argue for exemption on the basis of international agree-
ments entered into by the United States. The circuit
court granted a motion for summary judgment against
the plaintiffs thereby upholding the constitutionality of
the law.
We have dealt with the issues raised here in our deci-
sions in Eastern Air Lines, Inc. v. Department of Reve-
4a
nue, No. 63,949 (Fla. June 14, 1984) ; Delta Air Lines,
Inc. v. Department of Revenue, No. 63,915 (Fla. June
14, 1984) ; Department of Revenue v. Wardair Canada
Ltd., No. 64,036 (Fla. June 14, 1984) ; and Department
of Revenue v. Air Jamaica Ltd., No. 64,035 (Fla. June
14, 1984).
Accordingly we affirm in part and reverse in part the
order of the circuit court. We determined in Delta that
the portion of chapter 83-3 which provided a tax credit
to Florida-based airlines was unconstitutional. We also
determined that it was severable and that it was stricken
from the law. The remainder of the order is affirmed.
It is so ordered.
ALDERMAN, C.J., BOYD, OVERTON and SHAW,
JJ., Concur.
McDONALD, J., Dissents.
5a
SUPREME COURT OF FLORIDA
DEPARTMENT OF REVENUE,
Appellant
Vv.
AIR JAMAICA LTD., et al.,
Appellees
Reported at:
455 So.2d 324 (Fla. June 14, 1984), rehearing denied,
Sept. 12, 1984
ADKINS, Justice.
This case is before us on an order from the First Dis-
trict Court of Appeal which certified the issues in this
case to be of great public importance. We have jurisdic-
tion. Art. V, § 3(b) (5), Fla. Const.
This ease arose with the filing of a complaint in circuit
court in Leon County by the respondent Air Jamaica chal-
lenging the constitutionality of chapter 83-3, Laws of
Florida. By order of the trial court the complaint was
amended to include eleven other foreign airlines. The ac-
tion was consolidated with a case filed by Wardair Can-
ada for the purpose of trial. The parties stipulated to a
briefing schedule and an early hearing date was obtained.
A procedure was allowed which allowed the airlines to
self-accrue the sales tax imposed under chapter 83-3 dur-
ing the pendency of the proceedings subject to certain
conditions.
The circuit court entered an order of final judgment on
July 19, 1988, upholding the constitutionality of chapter
83-3 but ruling in favor of the airlines’ assertion that
6a
they should be exempt from the tax by virtue of certain
executive agreements between their countries and the
United States. The trial judge had previously upheld the
law in Delta Air Lines, Ine. v. Department of Revenue,
No. 83-761 (Leon County Cir.Ct.—Civ.Divy. May 23,
1983).
The Department of Revenue appealed the circuit court’s
holding recognizing an exemption for the foreign airlines.
The airlines cross-appealed. We will discuss only those
issues raised which have not been previously determined
by this Court in either Eastern Air Lines Inc. v. Depart-
ment of Revenue, 455 So.2d 311 (Fla. 1984); Delta Air
Lines, Inc. v. Department of Revenue, 455 So.2d 317 (Fla.
1984); or Department of Revenue v. Wardair Canada,
Ltd., 455 So.2d 326 (Fla. 1984).
The airlines challenge the law on the basis it uncon-
stitutionally invades the exclusive powers of the executive
and legislative branches to regulate foreign commerce by
taxing commerce through a prohibited impost on exports.
The airlines did not raise this issue in their pleadings or
at oral argument in the circuit court. The department
argues that the airlines are therefore precluded from rais-
ing the issue now. We agree. Nonetheless, we find that
the law is not prohibited by the export-import clause of
the federal constitution. The airlines attempt to apply
federal statutes which are inapplicable to the excise tax
in question. There is no basis for the airlines’ conclusion
that the tax violates the export-import clause. The aur-
lines attempt unsuccessfully to distinguish the case of
Shell Oil Company v. State Board of Equalization, 64
Cal.2d 713, 414 P.2d 820, 51 Cal. Rptr. 524 (1966); ap-
peal dismissed, 386 U.S. 211, 87 S.Ct. 973, 17 L.Ed.2d
870 (1967). Shell indicates, without question, that the
fuel at issue here is not an export because it is used to
propel that aircraft and is not delivered to another coun-
try. Furthermore, the tax in question is imposed on the
privilege of the Florida vendor selling motor fuel or spe-
7a
cial fuel with the legal incident being on the first use or
withdrawal from storage for use in the State of Florida.
Florida is not attempting to tax the instrument, that is,
the aircraft, of the foreign national while in Florida nor
is it attempting to tax the process of exportation nor any
fuel for export.
The airlines can also find no support for their position
in Richfield Oil Corp. v. State Board of Equalization, 329
US. 69, 67 S.Ct. 156, 91 L.Ed. 80 (1946). That case in-
volved the shipment, of oil from this country “with the
intention of unitifg them to the mass of those belonging
to some fopefen country.” Id. 414 P.2d at 824, 51 Cal.
Rtpr. at’d28. The oil was specifically sold for shipment
abroad. At the time the tax was levied, the oil had clearly
entered the process of exportation. This is not true of the
present tax. The fuels intended to be used by the air-
lines. It is not being purchased by the airline with the
intent to transport it for sale-abroad. We tind no merit
to the airlines’ argument on this point.
The airlines have raised the argument that the tax is
a direct violation of agreements between the United States
and their respective countries. We faced a similar chal-
lenge to the law in our decision in Department of Revenue
v. Wardair Canada, Ltd., 455 So.2d 326 (Fla. 1984). In
the present case the airlines have not produced any facts
which would enable us te hold contrary to our holding in
Wardair where we found that the tax did not violate any
international agreement. In addition, we find that none
of the agreements expressly grant a most favored nation
status when dealing with the issue of fuel and taxes as
the airlines contend.
Accordingly, we affirm the order of the circuit court as
to the constitutionality of chapter 83-3 except that portion
of the law pertaining to a tax credit for Florida corpora-
tions. In Delta we determined that portion to be uncon-
stitutional and it was stricken from the law. We reverse
————
8a
the circuit court to the extent that it recognized an ex-
emption for foreign airlines.
It is so ordered.
ALDERMAN, C.J., and BOYD and SHAW, JJ., con-
eur.
OVERTON, J., dissenting:
I dissent. See Department of Revenue v. Wardair Can-
ada Ltd. [455 So.2d 326], (Fla. 1984).
McDONALD, J., dissents.
CSS
9a
SUPREME COURT OF FLORIDA
EASTERN AIR LINES, INC.,
Appellant
v.
DEPARTMENT OF REVENUE,
Appellee
Reported at:
455 So.2d 311 (Fla. June 14, 1984), rehearing denied,
Sept. 12, 1984
ADKINS, Justice.
The case is before us on an order from the First Dis-
trict Court of Appeal certifying the issues in the case to
be of great public importance. We have jurisdiction. Art.
V, § 3(b) (5), Fla. Const.
This case arose with the filing of a complaint by East-
ern Air Lines in the circuit court of Leon county seeking
declaratory and injunctive relief from the enforcement of
provisions of chapter 83-3, Laws of Florida, on the
grounds that the law was unconstitutional. Specifically,
Eastern alleged that the law violated the equal protection
and due process clauses of the Florida and United States
Constitutions, was an unconstitutional delegation of legis-
lative authority, and violated the commerce clause of the
United States Constitution. By stipulation, the parties
agreed to a procedure whereby Eastern was allowed to
self-accrue the sales tax imposed under chapter 83-3,
which became effective on April 1, 1983, during the pend-
|
10a
ency of the proceedings subject to certain conditions. The
trial judge entered his final judgment in this case on
May 27, 1983, incorporating the order he had entered in
a similar action filed by Delta Airlines and upholding the
constitutionality of chapter 83-3. On June 24, 1983, East-
ern filed its notice of appeal with the First District Court
of Appeal. On July 12, 1983, that court issued its order
certifying the case for immediate resolution by this Court.
Chapter 83-3 was enacted during a special session of
the Florida legislature which was called for the express
purpose of addressing road transportation and public
transit needs in the state. The law revises the tax struc-
ture of chapters 212 and 220 of the Florida Statutes.
The new law eliminates one-half (4 cents) of the excise
tax imposed by former chapter 206, Florida Statutes
(1981), on fuel purchased for road transportation use
and imposes a five percent sales tax on this fuel through
the new Part II of former chapter 212, chapter 83-3,
section 6. That section bases the five percent sales tax on
a predetermined price for fuel of $1.148 per gallon. The
new sales tax is imposed on all aviation jet fuel purchased
by interstate air common carriers, but is not imposed on
railroads and vessels due to the proration provision which
applies to railroads and vessels allowing taxation based
on cost and only on the carrier’s intrastate mileage. Ch.
83-3, §5 (amends § 212.08(4), Fla.Stat. (Supp. 1982) ).
Section 5 of the law provides:
(4) EXEMPTIONS, ITEMS BEARING OTHER
EXCISE TAXES, ETC.—Also exempt are water
(not exempting mineral water or carbonated water),
and; all fuels used by a public or private utility, in-
cluding any municipal corporation or rural electric
cooperative association, in the generation of electric
power or energy for sale. Fuel other than motor fuel
and special fuel is taxable as provided in this part,
except that fuel expressly exempt herein. Motor fuels
and special fuels are taxable as provided in part II,
lla
except that those used by vehicles, other than air-
craft, which are licensed as common earriers by the
Interstate Commerce Commission to transport per-
sons or property in interstate or foreign commerce
and vessels used to transport persons or property in
interstate or foreign commerce are taxable only to
the extent provided herein.
The first issue which we will address is Eastern’s con-
tention that the proration provisions, which do not apply
to airlines, violate concepts of equal protection by not
treating all common carriers alike. Eastern asserts that
all interstate carriers, whether they be airlines, railroads,
trucks or vessels, are similarly situated for fuel tax pur-
poses. The circuit court found that Eastern did not sus-
tain its burden of demonstrating that the classification is
hostile and oppressive and held that there “is no invidious
discrimination by the creation of an arbitrary classifica-
tion.” The court’s order states: “Classifying airlines dif-
ferently from vessels and railroads for fuel tax purposes
is not arbitrary. Airlines enjoy advantages and must
tolerate some disadvantages due to their distinctive na-
ture.” The court cited the example of the airlines being
exempt from ad valorem taxes on the lease of property
from the county or other governmental unit pursuant to
chapter 80-368, Laws of Florida, while vessels and rail-
roads are not. The court also noted that proration of
mileage for aircraft has proven difficult in the past be-
cause of flight patterns over the Gulf of Mexico and the
Atlantic Ocean to avoid the accumulation of intrastate
mileage.
When the state legislature, acting within the scope of
its authority, undertakes to exert the taxing power, every
presumption in favor of the validity of its action is in-
dulged. Only clear and demonstrated usurpation of power
will authorize judicial interference with legislative action.
Walters v. City of St. Louis, 347 U.S. 281, 74 $.Ct. 505,
98 L.Ed. 660 (1954). In the field of taxation particu-
12a
larly, the legislature possesses great freedom in classifica-
tion. The burden is on the one attacking the legislative
enactment to negate every conceivable basis which might
support it. Madden v. Kentucky, 309 U.S. 83, 60 S.Ct.
406, 84 L.Ed. 590 (1940); Just Valuation & Taxation
League, Inc. v. Simpson, 209 So.2d 229, 323 (Fla. 1968).
The state must, of course, proceed upon a rational basis
and may not resort to a classification that is palpably
arbitrary. Department of Revenue v. AMREP Corp., 358
So.2d 1343,.1349 (Fla. 1978). A statute that discrimi-
nates in favor of a certain class is not arbitrary if the
discrimination is founded upon a reasonable distinction
or difference in state policy. Allied Stores v. Bowers, 358
U.S. 522, 79 S.Ct. 437, 3 L.Ed.2d 321 (1959).
We agree with the circuit court’s conclusion that East-
ern has not met its burden in attacking the classification
made here. They have failed to demonstrate that a hostile
and oppressive discrimination has been made. There are
many obvious distinctions between public road and high-
way transportation of persons and property and air trans-
portation upon which the classification at issue could ra-
tionally be based. The modes of transportation are in-
herently and essentially different. The classification
drawn does not violate concepts of equal protection.
Eastern also argues that the statute, by adopting an
initially established fuel price of $1.148 per gallon upon
which to base the tax rate, violates concepts of equal pro-
tection and unconstitutionally restricts the rights of in-
dividuals to contract. The provision being challenged
reads as follows:
§ 212.70 Tax imposed on sale of motor fuel and
special fuel; tax upon ultimate consumer; determina-
tion by department; notification.—
(3) Prior to June 1 of each year, the department
shall determine the appropriate sales tax applicable
to the retail price per gallon of motor fuel and spe-
cial fuel as follows:
13a
(a) The department shall determine the appropri-
ate total motor fuel and special fuel retail price, in-
cluding any federal, state and local excise taxes on
such fuel, for the forthcoming 12-month period be-
ginning June 1, by adjusting the initially established
price by the percentage change in the average
monthly gasoline price component of the Consumer
Price Index, issued by the United States Department
of Labor, for the most recent 12-month period end-
ing March 31, compared to said average for the 12-
month period ending March 31, 1984. However, the
adjustment provided herein shall first be made for
the forthcoming 12-month period beginning June 1,
1985.
(b) The tax per gallon shall be computed as 5 per-
cent of said total retail price, rounded to the nearest
one-tenth of one cent.
(c) The initially established price is $1.148 per
gallon.
Eastern asserts that the price set is not related to the
actual price of aviation fuel and, therefore, is arbitrary
and unreasonable. We do not agree. The tax is levied on
first withdrawal of the fuel from the storage tanks and
is imposed on all consumers equally regardless of the na-
ture of transport. We find no merit in Eastern’s argu-
ment that the predetermined price structure invidiously
discriminates against airlines.
Eastern also contends that section 6 of the law consti-
tutes an improper delegation of legislative power by re-
lating the price adjustment for future periods to the per-
centage change in the average monthly gasoline price com-
ponent of the Consumer Price Index issued by the United
States Department of Labor. The Consumer Price Index
referred to in the law is authorized by 29 U.S.C. §§ 2, 2a
and 2b (1976). Under these code provisions, the Secre-
tary of Labor has broad powers to collect, collate and re-
14a
port statistics, and, to that end, has the power to use bu-
reaus provided for the department and is authorized to
call upon other departments of the federal government for
data and the results obtained by them. More importantly,
the Secretary of Labor may “collate, arrange, and publish
such statistical information so obtained in the same man-
ner as to him may seem wise.” 29 U.S.C. § 2. The Con-
sumer Price Index is widely used by the federal govern-
ment to determine such things as cost of living increases
in social security, retirement benefits for the military, and
other appropriations such as child care payments.
The circuit court in its final judgment determined that
the method of appropriation in chapter 83-3 is equivalent
to the method which allowed the Department of Education
to appropriate state funds to a state agency based on the
Florida Price Level Index and which was found to be
constitutional in Gindl v. Department of Education, 396
S0.2d 1105 (Fla. 1979). Eastern argues that the instant
case should be distinguished from Gindl because here the
Department of Revenue is delegated to determine the
price upon which the tax will be based by using a fed-
eral agency’s index to be adopted in the future and over
which no Florida agency has any control. Eastern argues
that since the department, in arriving at the tax appli-
cable to the price, must, of necessity, rely on an admin-
istrative act of the United States Department of Labor
which will first take place on March 1, 1984, the legisla-
ture has shifted its constitutional duties to that federal
agency contrary to the established rule of this state, citing
as authority this Court’s decision in State v. Welch, 279
So.2d 11 (Fla. 1973).
In State v. Welch, this Court considered the constitu-
tionality of a portion of the former Florida Drug Abuse
Law, chapter 404, Florida Statutes (Supp. 1972), which
purported to prohibit certain acts by reference. Specifi-
cally, the law declared that it was the intent of the legis-
lature to include under that chapter “all drugs controlled
15a
by the drug abuse laws of the United States, now or in
the future,” in addition to those specified under Florida
law. § 404.515, Fla.Stat. (Supp. 1972). In Welch this
Court looked to the rule of law announced in Freimuti
v. State, 272 So.2d 473 (Fla. 1972). There, the Court
said that the legislature may adopt provisions of federal
statutes and administrative rules made by a federal ad-
ministrative body that are in existence and in effect at
the time the legislature acts, but it would be an uncon-
stitutional delegation of legislative power for the legisla-
ture to adopt in advance any federal act or the ruling of
any federal administrative body that Congress or an ad-
ministrative body might see fit to adopt in the future.
272 So.2d at 476. Accordingly, this Court held the statute
unconstitutional for attempting to incorporate by refer-
ence future legislative and/or administrative actions of
jurisdictions outside Florida. /d.
We believe that Eastern’s reliance on the aforemen-
tioned language is misplaced. The statute under attack
merely provides that an adjustment be made to the fuel
price which is based on the percentage change in the aver-
age monthly gasoline price component of the Consumer
Price Index. Here, the legislature is merely setting forth
the manner in which the department is to determine the
appropriate total motor fuel and special fuel retail price.
The department is directed with precision how to make
such a determination. We think the language of Welch
and Freimuth should be interpreted to apply to statutes
which incorporate federal statutes or administrative rules
which substantively change the law, and not to a statute
which incorporates a federal index to provide aid in mak-
ing a ministerial determination.
Furthermore, we do not agree with Eastern’s conten-
tion that the statute is also constitutionally infirm be-
cause the Department of Revenue will utilize a consumer
price index which is to be determined after the effective
date of the act. In Gindl we upheld a statutory provision
16a
which required a computation based on the most recent
publication of the Florida Price Level Index prepared by
the Department of Administration. The statute was to
take effect July 1, 1976. The Department of Education
intended to base the distribution on a survey which would
be started in October or November of 1976 and completed
during the early part of 1977. In other words, the effect
of the statute was to reach forward and allow distribu-
tion to be calculated on the most recent publication of the
Florida Price Level Index, an index which was not in ex-
istence when the law became effective. We agree with the
circuit court’s determination that the method of appro-
priation in chapter 83-3 is equivalent to the method ap-
proved in Gindl.
The final issue which Eastern has raised is whether
chapter 83-3 unconstitutionally discriminates against in-
terstate commerce since its tax credit provisions provide
a direct commercial advantage to local agriculture and
commercial fishing to the detriment of similar interstate
activities. The relevant section of the law provides:
§ 212.92 Refunds.—
(e) Refund to farmers and fishermen.—
1. [AJ]gricultural purposes means motor fuel or
special fuel used in any tractor, vehicle, or other
farm equipment which is used exclusively on a farm
or for processing farm products on the farm and no
part of which is used in any vehicle or equipment
driven or operated upon the public highways of this
state. This restriction shall not apply to the move-
ment of farm vehicles or farm equipment between
farms.
2. For the purposes of this paragraph, “commer-
cial fishing purposes” shall be construed to mean
motor fuel or special fuel used in the operation of
boats, vessels, and equipment used exclusively for the
taking of fish, crayfish, oysters, shrimp, and sponges
from the salt and fresh waters under the jurisdiction
17a
of the state for resale to the public but shall in no
way be construed to include fuel used for sports or
pleasure fishing, no part of which is used in any
vehicle or equipment driven or operated upon the
highways of this state.
3. Any person who uses. any motor fuel or special
fuel for agricultural purposes or commercial fishing
purposes on which the tax imposed by this part has
been paid shall be entitled to a refund of said tax.
The Department of Revenue questions Eastern’s stand-
ing to challenge chapter 83-3’s full refund provisions, sec-
tion 212.92(1)(e), 2. & 3., since Eastern is “neither in
the fishing or farming business and . . . Eastern does not
contend that farmers and/or fishermen are in direct or
indirect competition with their airline enterprise.” East-
ern does not compete with fishing or agriculture. We
agree that Eastern does not have standing to raise the
unconstitutionality of these full refund provisions. In
State ex rel. Clarkson v. Philips, 70 Fla. 340, 70 So. 367
(1915), this Court held that the constitutionality of a
provision of a statute cannot be tested by a party whose
rights or duties are not affected by it, unless the provi-
sion is of such a nature that it renders invalid a provi-
sion of the statute that does affect the party’s rights or
duties.
It is a fundamental principle that a statute, if con-
stitutional in one part and unconstitutional in another
part, may remain valid except for the unconstitutional
portion. However, this is dependent upon the unconstitu-
tional provision being severable from the remainder of
the statute. The severability of a statutory provision is
determined by its relation to the overall legislative intent
of the statute of which it is a part, and whether the
statute, less the invalid provisions, can still accomplish
this intent. Cramp v. Board of Public Instruction, 187
So.2d 828 (Fla. 1962).
18a
Additionally, if the valid portion of the law would be
rendered incomplete, or if severance would cause results
unanticipated by the legislature, there can be no severance
of the invalid parts; the entire law must be declared un-
constitutional. Kass v. Lewin, 104 So.2d 572 (Fla. 1958).
This Court succinctly summarized the general rules re-
garding severability in Presbyterian Homes of Synod v.
Wood, 297 So.2d 556 (Fla. 1974), wherein the Court
stated:
An unconstitutional portion of a general law may be
deleted and the remainder allowed to stand if the un-
constitutional provision can be logically separated
from the remaining valid provisions, that is, if the
legislative purpose expressed in the valid provisions
can be accomplished independently of those which are
void; and the good and bad features are not insepa-
rable and the Legislature would have passed one
without the other; and an act complete in itself re-
mains after the invalid provisions are stricken.
Id. at 559.
We believe that the legislature’s intent could still be
accomplished if the full refund provisions relating to local
commercial fishing and agriculture were to be eliminated
and the remainder of the statute left intact. Therefore,
we cannot say that these provisions, were we to declare
them unconstitutional, are of such a nature that they
would render invalid the portion of the statute that does
affect Eastern’s rights. Eastern has no standing to raise
this issue.
Accordingly, we affirm the order of the circuit court.
It is so ordered.
ALDERMAN, C.J., and BOYD, OVERTON, Me-
DONALD and SHAW, JJ., concur.
19a
SUPREME COURT OF FLORIDA
DELTA AIR LINES, INC., et al.,
Appellants
V.
DEPARTMENT OF REVENUE,
Appellee
Reported at:
455 So.2d 317 (Fla. June 14, 1984), rehearing denied,
Sept. 12, 1984
ADKINS, Justice.
This case is before us on an order from the First Dis-
trict Court of Appeal certifying the issue in the case to
be of great public importance. We have jurisdiction. Art.
V, § 3(b) (5), Fla. Const.
This case arose with the filing of a complaint by Delta
Air Lines in the circuit court of Leon County seeking
declaratory and injunctive relief from the enforcement
of provisions of chapter 83-3, Laws of Florida, on the
ground that the law was unconstitutional. Capitol Air,
Inc., Northwest Airlines, Inc., Ozark Air Lines, Inc., Pied-
mont Aviation, Inc., Republic Airlines, Inc., The Flying
Tiger Lines, Inc., United Airlines and USAir, Inc., were
granted leave to intervene as party plaintiffs. On May
27, 1983, the circuit court entered its final judgment in
favor of the Department of Revenue ruling the law con-
stitutional. Delta appealed to the First District Court of
Appeal which certified the case for immediate resolution
by this Court.
20a
We described the structure of chapter 83-3 and resolved
some of the issues raised by Delta in our decision in East-
tern Air Lines v. Department of Revenue, 455 So.2d 311
(Fla. 1984). There are two issues which Delta raises
which we were not faced with in that decision.
First, Delta raises the issue of whether chapter 83-3
violates the commerce clause of the United States Con-
stitution by providing a corporate income tax credit for
Florida-based airlines. Chapter 220, Florida Statutes
(1981), imposes an income tax on domestic corporations
and foreign corporations qualified to do business in Flor-
ida or actually doing business in Florida. Section 61 of
chapter 83-3 creates section 220.189, Florida Statutes
(1983), and provides a credit against the corporate in-
come tax for air common carriers who have a corporate
or business home office in Florida and also maintain a
work force of more than 1200 employees in the state. This
credit offsets up to one-half of the air carriers’ fuel tax
liabilities with a maximum credit of $5 million.
A state tax is not per ze invalid because it burdens
interstate commerce since interstate commerce may con-
stitutionally be made to pay its own way. Complete Auto
Transit, Inc. v. Brady, 430 U.S. 274, 97 S.Ct. 1076, 51
L.Ed.2d 326 (1977); Western Live Stock v. Bureau of
Revenue, 303 U.S. 250, 58 S.Ct. 546, 82 L.Ed. 823 (1938).
Taxes have been sustained against commerce clause chal-
lenges when the tax: 1) is applied to an activity with a
substantial nexus with the taxing state; 2) is fairly ap-
portioned; 3) does not discriminate against interstate
commerce; and 4) is fairly related to the services pro-
vided by the state. Complete Auto, 430 U.S. at 279, 97
S.Ct. at 1079. No state may, consistent with the com-
merce clause, “impose a tax which discriminates against
interstate commerce . . . by providing a direct commercial
advantage to local business.” Boston Stock Exchange v.
State Tax Commission, 429 U.S. 318, 329, 97 S.Ct. 599,
607, 50 L.Ed.2d 514 (1977) ; Northwestern States Port-
21a
land Cement Co. v. Minnesota, 358 U.S. 450, 457, 79 S.Ct.
357, 361, 3 L.Ed.2d 421 (1959). This principle follows
from the basic purpose of the commerce clause which is
to prohibit preferential trade areas destructive of the free
commerce anticipated by the United States Constitution.
Boston Stock Exchange, 429 U.S. at 329, 97 S.Ct. at 606;
Dean Milk Co. v. Madison, 340 U.S. 349, 356, 71 S.Ct.
295, 298, 95 L.Ed. 329 (1951).
In Boston Stock Exchange the United States Supreme
Court found unconstitutional a state stock transfer tax
containing credit provisions which had the effect of dis-
criminating against interstate commerce to the direct
commercial advantage of local business. The transfer tax
was imposed if any one of five events ( sale, transfer, de-
livery, ete.) occurred within the state. The rate of tax
was based upon the price of the security. The total tax
was determined by the number of shares involved in the
taxable event. The imposition of the tax itself was found
to be constitutional. However, the credit structure of the
tax was found to be unconstitutional. The credit amend-
ments to the tax resulted in a scheme in which intrastate
sales received a preferential fifty percent reduction in
the rate of tax imposed and were given a maximum tax
ceiling of $350. Out-of-state sales, however, were subject
to the full tax rate without any ceiling. Because it im-
posed a greater tax liability on out-of-state sales than on
in-state sales, the New York transfer tax fell “short of
the substantially evenhanded treatment demanded by the
[c]ommerce [c]lause.” 429 U.S. at 332, 97 S.Ct. at 608.
Another tax statute whose discriminatory credits and
exemptions provided the basis for a finding of unconstitu-
tionality was the Louisiana statute reviewed in Maryland
v. Louisiana, 451 U.S. 725, 101 S.Ct. 2114, 68 L.Ed.2d
576 (1981). There, a tax was imposed on certain uses of
natural gas coming into the state. The tax was imposed
to equalize competition between locally produced gas sub-
ject to the state’s severance tax and gas coming into the
- |
22a
state from the outer continental shelf which was free of
the severance tax. The use tax provided an exemption for
gas consumed within the state. It also provided a tax
credit against severance taxes for all use taxes paid,
thereby encouraging investment in local mineral explora-
tion and development and discouraging investment and
development of the outer continental shelf and other
states. The Court found the statute unconstitutional in
light of the discriminatory effect produced by the pattern
of credits and exemptions which violated the principle of
equality. 451 U.S. at 759, 101 S.Ct. at 2135.
The circuit court here found that “the tax is on fuel
purchased in the state and all consumers are taxed
equally” and thus concluded that there is no burden on
interstate commerce similar to that found in Maryland v.
Louisiana. The court misconstrued the nature of the dis-
crimination wurked against interstate commerce by the
corporate tax credit. The question is not one of whether
Florida may impose this tax on fuel purchased in Florida
for use in interstate commerce. Rather the issue is
whether the tax with its attendant credit provision pro-
duces a discriminatcry effect on interstate commerce. The
credit provision of chapter 83-3 clearly discriminates
against interstate commerce because the corporate tax
credit provides a direct commercial advantage to Florida-
based air common carriers over non-F lorida-based car-
riers.
The circuit court also found Boston Stock Exchange in-
applicable stating that, in the present case, “the legisla-
ture is not trying to tax any out-of-state transactions.”
The circuit court misconstrued the holding in Boston
Stock Exchange. The United States Supreme Court in
Boston Stock Exchange was not concerned with whether
the transaction occurred in New York or outside the
State, but whether the credit structure of the tax favored
are a.
—
23a
in-state business and discriminated against interstate
commerce.
The circuit court also relied on Archer Daniels Midland
Co. v. State, 315 N.W.2d 597 (Minn. 1982). In Archer
Daniels the Supreme Court of Minnesota struck down a
tax credit statute similar to the Florida-based tax credit
provided in chapter 83-3. Minnesota imposed an excise
tax of thirteen cents per gallon on all gasoline sold in the
state including gasohol. The taxing statute was amended
in 1980 to provide a four cents per gallon partial exemp-
tion for gasohol made from Minnesota farm products and
blended with aleohol distilled in Minnesota. A non-
resident alcohol producer challenged the constitutionality
of this statute alleging that the higher taxes imposed on
non-resident producers discriminated against interstate
commerce. The court found that the exemption violated
the commerce clause noting that the act attempted to un-
fairly preserve local markets for local interests by con-
ferring an artificial economic advantage to local interests
under the state’s taxing power. Jd. at 599. The circuit
court ruled that Archer Daniels dealt with out-of-state
production or consumption and that chapter 83-3 in no
way affects out-of-state production or consumption. This
approach again overlooks the real issue in this case. Just
as the Minnesota statute favored in-state gasohol pro-
ducers, chapter 83-3 confers an artificial economic advan-
tage on those interstate air carriers who maintain cor-
porate or business home offices in Florida over those com-
peting air carriers who base their corporate headquarters
outside the state.
The circuit court continued its erroneous analysis un-
der the commerce clause by referring to Faircloth v. Mr.
Boston Distiller Corporation, 245 So.2d 240 (Fla. 1970),
as supporting the proposition that this Court has upheld
special tax exemptions to encourage Florida industry.
The court’s reliance on Faircloth is misplaced because
that case involved a challenge to a state excise tax based
’
24a
upon equal protection and due process arguments. The
commerce clause was not an issue in that case.
The circuit court has misconstrued the analysis neces-
sary to determine whether a statute discriminates against
interstate commerce. The test under the commerce clause
is, as we have noted, whether the statute discriminates
against interstate commerce by providing a direct com-
mercial advantage to local commerce. The corporate in-
come tax credit provides a direct commercial advantage
to select Florida-based air carriers and thereby violates
the commerce clause.
In Eastern, 455 So.2d 311 (Fla. 1984), we discussed
the proper analysis to determine whether a statutory pro-
vision was severable from the remainder of the statute.
We find that the corporate tax credit provision, now sec-
tion 220.189 (Florida Statutes 1983), can be logically
separated from the remaining valid provisions of chapter
83-3 without hampering the legislature’s intent to provide
a transportation fund for the state. Thus, we strike that
provision which extends a corporate income tax credit to
Florida-based air carriers. We believe this will still ac-
complish the legislature’s primary purpose—to tax corpo-
rations qualified to do business in Florida or actually
doing business in Florida.
Delta also challenges section 6 of the law as being a
road-user tax totally unrelated to the services provided
by the state and thus violative of the commerce clause.
Delta states in its brief that the first gas tax and the
corresponding first four cents of the special fuel tax
formerly imposed under chapter 206, Florida Statutes
(1981), levied an excise tax specifically on road-users.
Delta also refers to the new provision as “the new sales
tax.” However, the thrust of Delta’s argument is that
this tax is a user tax and, as such, fails the fourth prong
of the text [sic] enunciated in Complete Auto. Delta
argues that it and other interstate air common carriers
do not use the roads in Florida and, therefore, the meas-
25a
ure of the tax bears no relationship to Delta’s presence
or activities in the state.
We must disagree wit’ Delta’s argument. First, the
tax is not a road-user tax. It is an excise tax imposed
under part II of chapter 212, which is commonly referred
to as the sales tax law of the state of Florida. The tax is
imposed on the privilege of engaging in certain busi-
nesses, including the selling of motor fuels and special
fuels in the state. All purchasers of motor fuel or special
fuel are taxed on the incident of first withdrawal. The
funds generated are to be deposited in a state transporta-
tion fund and are not, as Delta has asserted, to be re
stricted to only road use.
Our interpretation of this statute as an excise tax is
consistent with prior United States Supreme Court deci-
sions which reviewed similar statutes dealing with taxes
on fuel used by airlines.
In 1933 the United States Supreme Court was faced
with a challenge to a Tennessee statute which imposed an
excise tax on the privilege of selling, storing, or distribut-
ing gasoline within the state. Nashville, Chattanooga, &
St. Louis Railway v. Wallace, 288 U.S. 249, 53 S.Ct. 345,
77 L.Ed. 730 (1933). The proceeds of the tax were to be
used solely in the construction and maintenance of a high-
way system in the state. The appellant rail carrier con-
tended that the tax was in effect a tax upon the use of
the gasoline in appellant’s business as an interstate car-
rier and, thus, an unconstitutional burden on interstate
commerce. /d. at 265, 53 S.Ct. at 349, 77 L.Ed. at 737.
The court noted that gasoline having come to rest in stor-
age is taxable by the state, notwithstanding its prospec-
tive use as an instrument of interstate commerce, much
the same as a right of way, rolling stock, or other instru-
ments of interstate commerce are subject to local property
taxes. Accordingly, the Court stated:
[T]here can be no valid objection to the taxation of
the exercise of any right or power incident to ap-
26a
pellant’s ownership of the gasoline, which falls short
of a tax directly imposed on its use in interstate
commerce, deemed forbidden in Helson v. Kentucky,
[279 U.S. 245, 49 S.Ct. 279, 73 L.Ed. 683 (1929) ],
supra. Here the tax is imposed on the successive ex-
ercise of two of those powers, the storage and with-
drawal from storage of the gasoline. Both powers are
completely exercised before use of the gasoline in
interstate commerce begins. The tax imposed upon
their exercise is therefore not one imposed on the use
of the gasoline as an instrument of commerce and the
burden of it is too indirect and remote from the
function of interstate commerce itself to transgress
constitutional limitations. ....
.. . [T]he levy is a tax, not a toll or charge for
use of the highways. ...
Id. at 268, 53 S.Ct. at 350.
In Eastern Air Trasport, Inc. v. South Carolina Tax
Commission, 285 U.S. 147, 52 S.Ct. 340, 76 L.Ed. 673
(1932), the Supreme Court upheld a state tax on the sale
of gasoline within the state. The suit was brought by an
interstate air carrier which argued that the tax placed a
direct burden on interstate commerce. The Court found
that the tax, which was described in the statute as a li-
cense tax, was for the privilege of carrying on the busi-
ness of selling gasoline. The Court emphasized that. un-
der the circumstances the validity of the tax would not be
affected by whether the tax was construed to be an excise
tax or a property tax. The Court stated:
There is no substantial distinction between the sale
of gasoline that is used in an airplane in interstate
transportation and the sale of coal for the locomo-
tives of an interstate carrier, or of the locomotives
and cars themselves bought as equipment for inter-
state transportation. A non-discriminatory tax upon
local sales in such cases has never been regarded as
27a
imposing a direct burden upon interstate commerce
and has no greater or different effect upon that com-
merce than a general property tax to which all those
enjoying the protection of the State may be sub-
jected.
Td. at 153, 52 S.Ct. at 341.
Similarly, the Court upheld a Wyoming law which
taxed all gasoline “used or sold” in the state and applied
to all gasoline imported for use upon its withdrawal from
storage tanks in Edelman v. Boeing Air Transport, Inc.,
289 U.S. 249, 53 S.Ct. 591, 77 L.Ed. 1155 (1933). The
Court described the tax in the following manner.
The tax is applied to the stored gasoline as it is
withdrawn from the storage tanks at the airport and
placed in the planes. No tax is collected for gasoline
consumed in respondent’s planes either on coming
into the State or on going out. It is at the time of
withdrawal alone that “use” is measured for the pur-
poses of the tax. The stored gasoline is deemed to be
“used” within the State and therefore subject to the
tax, when it is withdrawn from the tanks... .
A State’ may validly tax the “use” to which gaso-
line is put in withdrawing it from storage within the
State, and placing it in the tanks of the planes, not-
withstanding that its ultimate function is to generate
motive power for carrying on interstate commerce.
Such a tax cannot be distinguished from that con-
sidered and upheld in Nashville, Chattanooga & St.
Louis Ry. Co. v. Wallace, supra. There it was pointed
out that “there can be no valid objection to the taxa-
tion of the exercise of any right or power incident to
. . ownership of the gasoline which falls short of a
tax directly imposed on its use in interstate com-
merce, deemed forbidden in Helson v. Kentucky, 279
U.S. 245, 73 L.Ed. 683, 49 S.Ct. 279.” As the exer-
cise of the powers taxed, the storage and withdrawal
28a
from storage of the gasoline, was complete before
interstate commerce began, it was held that the bur-
den of the tax was too indirect and remote from the
function of interstate commerce, to transgress con-
stitutional limitations.
Id. at 252, 52 S.Ct. at 592 (emphasis supplied).
The Supreme Court of the United States has stated that
the constitutional power of a state to tax does not depend
upon the enjoyment of the taxpayer of any special benefit
from the use of the funds raised by taxation. Nashville,
Chattanooga & St. Louis Railway v. Wallace, 288 U.S.
249, 268, 53 S.Ct. 345, 350, 77 L.Ed. 730 (1933). A state
is free to pursue its own fiscal policies, “if by the prac-
tical operation of a tax the state has exerted power in
relation to opportunities which it has given, to protection
which it has afforded, to benefits which it has conferred
by the fact of being an orderly, civilized society.” Wis-
consin v. J.C. Penney Co., 311 U.S. 485, 444, 61 S.Ct. 246,
250, 85 L.Ed. 267 (1940). See also Commonwealth Edi-
son Co. v. Montana, 453 U.S. 609, 625, 101 S.Ct. 2946,
2957, 69 L.Ed.2d 884 (1981); General Motors Corp. v.
Washington, 377 U.S. 436, 440-41, 84 S.Ct. 1564, 1567-68,
12 L.Ed.2d 430 (1964). The relevant inquiry under the
fourth prong of the Complete Auto test is not, as Delta
seems to suggest, the amount of the tax or the value of
the benefits allegedly bestowed as measured by the costs
the state incurs on account of the taxpayer’s activities.
Commonwealth Edison, 453 U.S. at 625, 101 S.Ct. at 2957.
The first prong of Complete Auto clearly requires that
the interstate business (here the airlines) have a substan-
tial nexus with the state before any tax may be levied on
it. The fourth prong of the test is intended to impose the
additional limitation that the measure of the tax be rea-
sonably related to the extent of the contact. Jd. at 626,
101 S.Ct. at 2958; Western Live Stock v. Bureau of Rev-
enue, 303 U.S. 250, 254, 58 S.Ct. 546, 548, 82 L.Ed. 823
(1938).
ea oa
29a
This tax is unlike a true “user fee” or user tax. Per-
haps the best illustration of a true user tax is found in
Evansville-Vanderburgh Airport Authority v. Delta Air
Lines, Inc., 405 U.S. 707, 92 S.Ct. 1849, 31 L.Ed.2d 620
(1972). In Evansville-Vanderburgh the United States
Supreme Court reviewed a use tax imposed on airlines by
an Indiana municipality. All interstate air carriers were
charged a user service charge for each enplaning passen-
ger. The monies collected were to defray the cost of air-
port construction and maintenance. The tax was upheld
and found to be fairly related to the use of the facilities
by the airlines.
The present tax is more analogous to that found in Com-
monwealth Edison where the United States Supreme
Court upheld a Montana severance tax on coal. Coal pro-
ducers challenged the tax contending that the severance
tax had a discriminatory effect on interstate commerce
since ninety percent of Montana’s coal was shipped out-
of-state and, therefore, the tax burden was borne pri-
marily by out-of-state consumers. The Court found that
the coal producers’ claim hinged on an inquiry into the
fourth prong of Complete Auto. First, the Court con-
cluded that, contrary to appellant’s contention, the sever-
ance tax was a general revenue tax. 453 U.S. at 621, 101
S.Ct. at 2955. The Court also concluded that the fourth
prong of Complete Auto was satisfied by the Montana
tax. The Court stated:
Because it is measured as a percentage of the value
of the coal taken, the Montana tax is in “proper pro-
portion” to appellants’ activities within the State
and, therefore, to their “consequent enjoyment of the
opportunities and protections which the State has af-
forded” in connection with those activities.
Id. at 626, 101 S.Ct. at 2958 (citing General Motors
Corp. v. Washington, 377 U.S. at 440-41, 84 S.Ct. at
1567-68).
30a
We believe the imposition of this excise tax on the pur-
chase of motor fuel and special fuel in the state of Florida
is fairly related to those purchasers’ enjoyment of the
protections and benefits afforded by the state and the
privilege of doing business in an organized society. Delta
operates in at least nine of the major airports throughout
the state of Florida transporting persons and property
and engaging in the business of operating a commercial
airline for profit. The persons and property which are
transported through the air by airlines such as Delta do
not come to rest at the airports. Those persons and any
property generally must then use the public roads and
highways of the state in automobiles or trucks or some
other means of public transportation. We must disagree
with Delta’s contention that the tax is invalid because it
is not fairly related to the services provided by the state.
Accordingly, we affirm that portion of the circuit court’s
order which upheld section 6 of the law as not being vio-
lative of the commerce clause. But, we reverse the circuit
court’s order insofar as it upheld the corporate tax credit
to Florida-based airlines and strike that section of chap-
ter 83-3.
It is so ordered.
ALDERMAN, C.J., and BOYD, OVERTON, Mc-
DONALD and SHAW, JJ., concur.
» cee
3la
SUPREME COURT OF FLORIDA
DEPARTMENT OF REVENUE,
Appellant
V.
WARDAIR CANADA, LTD.,
Appellee
Reported at:
455 So.2d 326 (Fla. June 14, 1984), rehearing denied,
Sept. 12, 1984
ADKINS, Justice.
This case is before us on an order from the First Dis-
trict Court of Appeal certifying the issue in the case to
be of great public importance. We have jurisdicticn.
Art. V, § 3(b) (5), Fla. Const.
This case arose with the filing of a complaint in the
circuit court in Leon County by Wardair Canada, Ltd.
(hereinafter Wardair) challenging the constitutionality
of chapter 83-3, Laws of Florida. The court consolidated
this case with an action filed by Air Jamaica for the
purpose of trial. The parties stipulated to a procedure
whereby the airline was allowed to self-accrue the sales
tax imposed under chapter 83-3 during the pendency of
the proceedings subject to certain conditions. The circuit
ecuurt entered an order of final judgment on July 19,
1983, separate from its order in the Air Jamaica case.
The court upheld the constitutionality of the law dismiss-
ing three of Wardair’s counts in its complaint but ruled
in favor of the airline in recognizing an exemption to the
32a
airlines to the motor fuel and special fuel tax imposed by
the law by virtue of certain executive agreements with
the United States. The trial judge had previously upheld
chapter 83-3 in Delta Airlines, Inc. v. Department of Rev-
enue, No. 83-761 (Leon County Cir.Ct.—Civ.Div. May 23,
1983). The Department of Revenue filed its notice of ap-
peal from the trial court’s final judgment on July 21,
1983. Shortly thereafter, Wardair filed its notice of cross-
appeal. The First District Court of Appeal then certified
the case to this Court.
This Court has ruled on three of the four issues raised
by Wardair in its original complaint and on cross-appeal
in its decision in Delta Airlines, Inc. v. Department of
Revenue, 455 So.2d 317 (Fla. 1984). The department has
appealed the circuit court’s ruling recognizing an exemp-
tion to the excise tax for the foreign airlines. The cir-
cuit court found that chapter 83-3 was inconsistent with
a Non-scheduled Air Service Agreement between the
United States and Canada, May 8, 1974, T.I.A.S. 7826.
The circuit court’s order noted that article XII(1) of
the Air Services Agreement exempts both the United
States and Canada from national duties and charges on
fuels and article XIV provides that neither party will dis-
criminate against the other. The court then relied on its
holding in Lineas Aereas Costarricenses, S.A. v. Depart-
ment of Revenue, No. 83-761 (Fla. 2d Cir. June 21,
1983). In that case the court held that when the federal
policy is to exempt foreign airlines from fuel taxes and
prevent discrimination, the individual states are pre-
cluded from acting in that area.
The department argues that the agreement is inappli-
cable to estop the enforcement of chapter 83-3 for two
reasons: 1) the agreement is not self-executing; and 2)
the agreement specifically addresses only national cus-
toms, duties, excise taxes and charges with no application
to or restriction on state taxation schemes. The circuit
court did not expressly recognize a distinction between
33a
executory and non-executory agreement provisions in its
order.
The department asserts that the following provisions in
the agreement are executory and thus require an addi-
tional legislative enactment to effect implementation :
Each Contracting Party shall exempt the carriers of
the other Contracting Party to the fullest extent pos-
sible under its national law from import restrictions,
customs duties, excise taxes, inspection fees, and
other national duties and charges on fuel, lubricants,
consumable technical supplies . . . and other items
intended for use solely in connection with the opera-
tion, maintenance or servicing of aircraft of the car-
riers of the other Contracting Party. The exemptions
granted by this paragraph shall apply to items:
(a) introduced into the territory of one Contracting
Party by or on behalf of the carriers of the other
Contracting Party;
(b) retained on board aircraft of the carriers of one
Contracting Party upon arriving in or leaving
the territory of the other Contracting Party;
(c) taken on board aircraft of the carriers of one
Contracting Party in the territory of the other
Contracting Party and intended solely for use in
international air services; whether or not such
items are consumed wholly within the territory
of the Contracting Party granting the exemp-
tion.
Because we agree with the department’s conclusion that
the agreement is inapplicable because it specifically ad-
dresses only national customs, duties, and excise taxes
and charges, we find it unnecessary to determine whether
these provisions are executory or not. The Air Services
Agreement is not a treaty ratified by the United States
Senate. However, it is a formally executed international
agreement and, as such, is valid and binding as if ap-
34a
proved by act of Congress. United States v. Pink, 315
U.S. 203, 62 S.Ct. 552, 86 L.Ed. 796 (1942). The pur-
pose of the agreement is obviously to preserve, protect
and promote the continued development of a system of
air transport free from discriminatory practices and to
support equal commercial opportunity between the na-
tions,
The doctrine of preemption which is given effect through
the supremacy clause mandates that federal law overrides
any state regulation where there is an actual conflict be-
tween the two sets of legislation such that both cannot
validly stand. The United States Supreme Court has for-
mulated analytical standards for preemption. In Hines v.
Davidowitz, 312 U.S. 52, 61 S.Ct. 399, 85 L.Ed. 581
(1941), the Court construed the Federal Alien Registra-
tion Act of 1940 to override Pennsylvania’s Alien Regis-
tration Act of 1939. The Court noted that if state law
“stands as an obstacle to the accomplishment and execu-
tion of the full purposes and objectives of Congress,”
federal regulation must preempt state regulation to give
effect to the desired national policy. Jd. at 67, 61 S.Ct. at
404.
Fifteen years later the validity of a Pennsylvania state
regulation was again before the Court in Pennsylvania v.
Nelson, 350 U.S. 497, 76 S.Ct. 477, 100 L.Ed. 640 (1956).
The Court held that federal anticommunist legislation
superseded the state’s sedition act and enunciated a three-
prong test to determine the supremacy of a federal regu-
latory scheme over state regulation in the same or similar
area. The test involves an analysis of: 1) the pervasive-
ness of the federal regulatory scheme; 2) federal occupa-
tion of the field as necessitated by the need for national
uniformity; and 3) danger of conflict between state laws
and the administration of the federal program,
The provisions in the agreement between the United
States and Canada clearly express an intent to apply to
only national taxes and duties. We do not believe that
the scheme of this agreement is so pervasive so as to per-
35a
mit the reasonable inference that Congress intended to
preclude the state’s power to tax. Also, the competitive
equality between the two nations would be destroyed if
the United States air carriers had to pay state excise
taxes on fuel purchases and the Canadian carrier did not.
We determined in our decision in Delta Air Lines, Inc.
v. Department of Revenue, 455 So.2d 317 (Fla. 1984),
that the tax imposed by chapter 83-3 met the four-prong
test of Complete Auto Transit v. Brady, 430 U.S. 274, 97
S.Ct. 1076, 51 L.Ed.2d 326 (1977), and thus did not vio-
late the commerce clause. In 1979, the United States Su-
preme Court decided the case of Japan Line, Ltd. v.
County of Los Angeles, 441 U.S. 434, 99 S.Ct. 1813, 60
L.Ed.2d 336 (1979), setting forth two additional require-
ments to be met when foreign commerce is involved. The
Court stated:
[A]n inquiry more elaborate than that mandated by
Complete Auto is necessary when a State seeks to
tax the instrumentalities of foreign, rather than in-
terstate commerce. In addition to answering the
nexus, apportionment, and nondiscrimination ques-
tions posed in Complete Auto, a court must also in-
quire, first, whether the tax, notwithstanding appor-
tionment, creates a substantial risk of international
multiple taxation, and, second whether the tax pre-
vents the Federal Government from “speaking with
one voice when regulating commercial relations with
foreign governments.” If a state tax contravenes ei-
ther of these precepts, it is unconstitutional under the
Commerce Clause.
Id. at 451, 99 S.Ct. at 1823.
The trial court correctly found that the first require-
ment of Japan Line was rot a concern because there had
been no de facto showing of multiple taxation or sub-
stantial risk of the same. Moorman Manufacturing Co.
v. Bair, 437 U.S. 267, 98 S.Ct. 2340, 57 L.Ed.2d 197;
Shell Oil Co. v. State Board of Equalization, 64 Cal.2d
713, 51 Cal.Rptr. 524, 414 P.2d 820 (1966).
36a
For the reasons previously discussed, we also hold that
the tax meets the second requirement of Japan Line. The
agreement provides for efforts at exemption from national
excise taxes, inspection fees and other national charges
but does not provide for exemptions from state excise
taxes. We must presume this has been done intentionally.
We do not believe this legislation prevents our federal
government from speaking with one voice.
Accordingly, we affirm the order of the circuit court as
to the constitutionality of chapter 83-3 except that portion
of the law pertaining to a tax credit for Florida corpora-
tions. In Delta we determined that portion to be uncon-
stitutional and it was stricken from the law. We reverse
the circuit court to the extent that it recognized an ex-
emption for foreign airlines.
It is so ordered.
ALDERMAN, C.J., and BOYD and SHAW, JJ., concur.
OVERTON, J., dissents with an opinion in which Mc-
DONALD, J., concurs.
OVERTON, Justice, dissenting.
I dissent. I find that the State of Florida has no au-
thority to ignore valid air service agreements between
the United States Government and the governments of
other countries which exempt airlines based in partici-
pating nations from duties and charges on fuels. In my
view, the individual states of this country are precluded
by those agreements from taxing fuel used by foreign
airlines. To accept the majority’s view means that all
United States airlines could, in turn, be subject to local
government taxation on fuel in foreign countries. We are
one country and our constitution requires us to speak
with one voice when the federal government enters into
agreements and treaties with foreign governments. See
U.S. Const. art. I, § 8; art. VI. This state is precluded
from enforcing this tax against this airline.
McDONALD, J., concurs.
~
37a
APPENDIX C
DISTRICT COURT OF APPEAL
FIRST DISTRICT
TALLAHASSEE, FLORIDA 32361
Telephone No. (904) 488-6152
Date July 19, 1983
Case No. AT-305
DEPARTMENT OF REVENUE,
Appellant/Petitioner
VS.
LINEAS AREAS [sic] COSTARRICENSES, S.A.
Appellee/ Respondent
ORDER
Upon consideration of appellant’s Suggestion for Cer-
tification of Appeal and Rule 9.125, the Court certifies
that the Final Judgment rendered by the trial court on
June 14, 1983 requires immediate resolution by the Su-
preme Court.
[SEAL]
By Order of the Court
RAYMOND E. RHODES
Clerk
38a
APPENDIX D
IN THE SECOND CIRCUIT COURT
IN AND FOR LEON COUNTY
FLORIDA
Case No. 83-964
LINEAS AEREAS COSTARRICENSES, S.A.,
a Costa Rican corporation,
Plaintif,
vs.
STATE OF FLORIDA, DEPARTMENT OF REVENUE,
Defendant.
FINAL JUDGMENT
This cause is before the Court on final hearing on the
pleadings, evidence and arguments of counsel for the re-
spective parties and the intervenors, and on the briefs of
counsel for the parties, and the Court having considered
all of same and being otherwise advised in the premises,
it is
ORDERED AND ADJUDGED
1. The Plaintiff asserts that Senate Bill No. 8-A, Chap-
ter 83-3, Laws of Florida, title “an act relating to trans-
portation finance and administration” :
COUNT I: discriminates against foreign airlines in
violation of Congress’ exclusive power over foreign com-
merce, pursuant to Article I, Section 8, Clause 3 of the
United States Constitution,
COUNT II: is inconsistent with the Air Transport
Services Agreements lawfully entered into by the Presi-
dent of the United States,
39a
COUNT III: denies foreign airlines equal protection
of the laws under the United States Constitution,
COUNT IV: violates Article I, Section 9, of the Flor-
ida Constitution because there is no reasonable relation-
ship between the taxes imposed and the services provided
to foreign airlines, and
COUNT V: is a special law in violation of Sections
10 and 11 of Article III of the Constitution of the State
of Florida.
Plaintiff prays for a permanent injunction to prevent
Defendant Department of Revenue (DOR) from assess-
ing and collecting fuel taxes pursuant to Senate Bill 8-A.
2. In light of this Court’s recent decision in Delta Air
Lines, Inc. v. State of Florida, Department of Revenue,
Case No. 83-761, (Leon County Circuit Court—Civil Divi-
sion, May 23, 1983), the assertion [sic] in Counts I, III,
IV, and IV [sic] are without merit. However, the Court
finds merit in the assertion in Count II and hereby grants
a permanent injunction for the reasons subsequently dis-
cussed. This Court upholds the constitutionality of Sen-
ate Bill 8-A but recognizes an exemption for foreign air-
lines based on the bilateral agreements entered into
between the federal government and Plaintiffs and inter-
venors in this case.’
1 Commercia! Air Transport Agreement, January 8, 1947, United
States-Ecuador, T.I.A.S. 1606; Aviation Transport Services Agree-
ment, October 24, 1956, United States-Colombia, T.I.A.S. 5338; Air
Transport Services Agreement, April 13, 1953, United States-
Venezuela, T.I.A.S. 2813; Air Transport Services Agreement, Au-
gust 15, 1960, United States-Mexico, T.I.A.S. 4675; Air Transport
Services Agreement, May 10, 1947, United States-Chile, T.I.A.S.
1905; Air Transport Services Agreement, September 22, 1977,
United States-Argentina, T.I.A.S. 8978; Air Transport Services
Agreement, February 11, 1946, United States-United Kingdom,
T.I.A.S. 1507; Aviation Agreement, November 22, 1961, United
States-United Kingdom, T.1.A.S. 4955; Memorandum of Consulta-
tions, April 25, 1982, United States-Brazil; Memorandum of Under-
standing, August 17, 1979, United States-Costa Rica.
40a
DISCUSSION
The Commerce Clause of the United States Constitu-
tion, Article I, Section 8, Clause 3, vests with Congress
the exclusive power to regulate foreign commerce. The
Supremacy Clause, Article 4, Section 2, states that the
Constitution and the laws made pursuant thereto are the
supreme law of the land. Therefore, when Congress tra-
ditionally regulates in a certain area such as in the pres-
ent case by extending reciprocal agreements to foreign
airlines to “strengthen even more the cultural welfare
and economic bonds. . . and ensure continued development
in the common welfare on bases of equality and recipro-
city”, Air Transport Services Agreement with Mexico,
p. 1, the states are preempted or superseded from acting
in this area. Further, Congress has extended federal tax
exemption from custom duties, inspection fees, excise
taxes, and other national duties or charges to foreign air-
lines “in order to prevent discriminatory practices and to
assure equality of treatment.” Air Transport Services
Agreement with Mexico, Article 7,° and that the respective
authorities will attempt to facilitate maximum efficiency
“with a fair and equal opportunity” for the airlines to
operate on the designated routes. Mexico Agreement,
Article 8.*
Defendant contends that the “fair and equal oppor-
tunity” refers only to routes and does not affect excise
2 Similar or equal provisions appear in the Air Transport Serv-
ices Agreements listed in footnote 1 as follows: Venezuela Agree-
ment—aArticle 4; Chile Agreement—Article 3; Ecuador Agreement
—Article 3; United Kingdom Agreement—Article 3; Costa Rica
Memorandum—Article 9; Brazil Agreement—Article 9; Colombia
Agreement—aArticle 7; Argentina Agreement—Section 2(F).
3 Similar or equal provisions appear in the Air Transport Serv-
ices Agreements listed in footnote 1 as follows: Venezuela Agree-
ment—-Annex IV(b); Chile Agreement—Annex A.A; Ecuador
Agreement—Annex Section 1.A; Costa Rica Memorandum—Article
9(5); Brazil Memorandum—Section IX; Colombia Agreement—
Article 8; Argentina Agreement—Section 2(F).
wT
—_
4la
tax imposition. Fuel is an essential factor in an air-
lines’ [sic] operation, and if its price is increased, the
cost to fly to a specific destination is likewise increased.
This will adversely affect the economic feasibility of flying
to that destination. The foreign airlines involved in this
suit fly only between their country and specified cities in
the United States. In Florida that city is Miami. They
engage in no intrastate or interstate flights, but are con-
fined to flights between their country and the specific city.
If a particular state imposes a substantial increase in the
cost of flying to a certain city, it is only logical that this
disadvantage would inhibit the airlines’ desire to continue
flying to that city. Therefore, tax imposition does sub-
stantially affect the established route and denies the air-
lines a fair and equal opportunity to serve that route.
It is noteworthy that in the Argentina Agreement, Sec-
tion 2(F) (3), the wording is that the civil aeronautics
authorities will endeavor to ensure “exemption from
taxes”, without specifying exemption only from national
taxes. Most of the agreements specify the referral is to
national taxes and Defendant emphasizes this point in its
brief as indicating Congress intentionally did not exempt
state or local taxes. Consistent with this reasoning, how-
ever, Argentina could submit that the failure to specify
would imply the federal government would make efforts
to ensure exemption from all taxes—state, local, ete. In
fact, the memorandum agreement with Costa Rica, Arti-
cle 9(5) does in fact state that “each party shall use its
best efforts to secure for the designated airlines of the
other Party, on the basis of reciprocity, an exemption
from taxes, duties, charges and fees imposed by State,
regional and local authorities”’.
In arguing that Congress’ failure to specifically exempt
state taxes in the majority of the agreements [sic] De-
fendant cites Finland v. Town of Pelham, 290 N.Y.S.2d
(1966), to demonstrate an express statement of Congress
in a treaty as compared to the non-express statements in
42a
the present agreements. However, it cannot be concluded
that whenever Congress does not speak to an issue that
the intent is to affirm state regulation in that area by
negative implication. Congress cannot be expected to
speak to all aspects of a given situation. The United
States Supreme Court spoke directly on this situation in
Japan Line, Ltd. v. County of Los Angeles, 441 U.S. 434,
451 (1979):
“The premise of Appellees’ argument is that a State
is free to impose demonstrable burdens on commerce,
so long as Congress has not preempted the field by
affirmative regulation. But it long has been ‘ac-
cepted constitutional doctrine that the commerce
clause, without the aid of Congressional legislation
. affords some protection from state legislation
inimical to the national commerce, and that in such
cases, where Congress has not acted, this Court, and
not the state legislature, is under the commerce clause
the final arbiter of the competing demands of state
and national interests.’” Southern Pacific Company
v. Arizona ex rel. Sullivan, 325 U.S. 761, 769
(1945).
Similarly, Defendant argues that the agreements be-
tween the United States and Costa Rica, Brazil, Trinidad
and Tobago, and Honduras are executory and require af-
firmative legislative action to validate them. United
States v. Postal, 589 F.2d 862 (5th Cir. 1979). The court
in Postal states at page 875:
“it was early decided that treaties affect the mu-
nicipal law of the United States only when those
treaties are given effect by congressional legislation
or are, by their nature, self-executing.”
but goes on to say at page 876:
“The question whether a treaty is self-executing is a
matter of interpretation for courts when the issue
el De Lack DRE VS 2. Se been
43a
presents itself in litigation .. . and, as in the case of
ail matters of interpretation, the court’s attempt to
discern the intent of the parties to the agreement so
as to carry out their manifest purpose.” [sic]
The agreements involved here have no express language
that further legislation is necessary, and because, as will
be discussed, the federal government recognizes these
agreements as effective, this court discredits any argu-
ment that these agreements are ineffective because fur-.
ther legislative action is needed. As Plaintiff informs the
Court, the challenged agreements are in effect pending
exchange of ratification, and the Civil Aeronautics Board
recognizes these agreements as effective by having granted
Foreign Air Carrier Permits to Costa Rica and by recog-
nizing the validity of the Brazil agreement in decisions.
The T.I.A.S. agreements 1507, 4955, and 5209 govern air
transportation with Trinidad and Tobago, such agree-
ments made between the United Kingdom and United
States. Although no T.I.A.S. agreement exists for Hon-
duras, TAN, the national carrier, has been authorized by
the Civil Aeronautics Board. C.A.B. Order 82-6-98 (June,
1982). Even if there were a valid distinction between
the effectiveness of an executory agreement as opposed to
an executed agreement, the Court here is examining the
federal policy considerations behind the agreements and
these considerations strongly indicate lenient tax burdens
on foreign carriers. The agreements, executory or exe-
cuted, are evidence of this policy as the Supreme Court
stated in United States v. Pink, 315 U.S. 203, 231
(1941): as “superior Federal policy evidenced by a treaty
or international compact or agreement.”
Defendant argues in its brief that Plaintiff is trying
te elevate the agreements to the status of treaties and
appears to discredit this elevation; yet Defendant’s cites
involve treaties which implies Defendant’s recognition of
that status. Pink appears to treat international agree-
ments with the same to status of treaties, so the distinc-
tion is irrelevant.
44a
Regarding the non-express language in the agreements,
Defendant cites Guarantee Trust Co. v. United States,
304 U.S. 126, 143 (1938) :
“Even the language of a treaty wherever reasonably
possible will be construed so as not to override state
laws or to impair rights arising under them.”
In the present case, it seems to be the state who is trying
to override the privileges extended to foreign carriers by
the federal government, not vice versa. All the bilateral
agreements were in effect before Senate Bill 8-A, dating
back to 1947 (Ecuador), 1948 (Chile), 1953 (Venezuela)
etc. This would seem to indicate that the federal govern-
ment had established their policy of reciprocal tax exemp-
tions before the State acted. It is, therefore, the state who
is impairing a federal right, not vice versa. Defendant
also cites United States v. Pink at 230:
“It is of course true that even treaties with foreign
nations will be carefully construed so as not to der-
ogate from the authority and jurisdiction of the
States of this nation unless clearly necessary to effec-
tuate the national policy.”
However, Pink goes on to say at p. 231:
“But state law must yield when it is inconsistent
with or impairs the policy or provisions of a treaty
or of an international agreement.”
Using the Pink analysis, derogation from the State’s au-
thority in this case is in fact necessary because the ap-
parent policy expressed in the bilateral agreements is for
reciprocal tax advantages. This precludes the state from
acting in a manner to “frustrate the achievements [sic]
of federal uniformity.” Japan Line, p. 450. The federal
concern for equal commercial opportunity between nations
supports the policy of Congress to exempt foreign airlines
from excise taxes.
ee
_———— ae = . 7
45a
The Supreme Court of the United States in United
States v. Belmont, 301 U.S. 324, 331 (1947), has rather
clearly stated the applicable principle as follows:
“in the case of all international compacts and agree-
ments . . . that complete power over international
affairs is in the national government and is not and
cannot be subject to any curtailment or interference
on the part of the several states.”
The test to be used when a state attempts to regulate
foreign commerce was articulated in Japan Line, page
451:
“an inquiry more elaborate than that mandated by
Complete Auto is necessary when a State seeks to tax
the instrumentalities of foreign, rather than of in-
terstate, commerce. In addition to answering the
nexus, apportionment, and non-discrimination ques-
tions posed in Complete Auto, a court must also in-
quire, first, whether the tax, notwithstanding appor-
tionment, creates a substantial risk of international
multiple taxation, and second, whether the tax pre-
vents the Federal Government from ‘speaking with
one voice’ when regulating commercial relations with
foreign governments.”
The first requirement is not a concern in the present
case because there has been no de facto showing of multi-
ple taxation, and, as the court stated in Moorman Manu-
facturing v. Bair, 4837 U.S. 267 (1978), the court will
not invalidate a statute where the risk of multiple taxa-
tion is merely “speculative.” It is the second requirement
which concerns the court in the present case. It is not
overlooked that in Japan Line the tax was an ad valorem
levy on certain containers used in seagoing vessels of
Japan, where as in this case the tax is upon the with-
drawing of expendable fuel from storage. However, the
principle of both seems applicable. The levy on the fuel,
which is a sine qua non to movement of the aircraft,
46a
seems to be within the class of burdens which the interna-
tional agreements seek to prevent.
The United States, consisting of fifty individual state
governments united under one flag, must present a united
front when dealing in economic affairs with other na-
tions. Over the years the federal government has nego-
tiated these bilateral agreements to prevent price dis-
crimination toward U.S. carriers in other nations, these
being reciprocal agreements. There have been continuing
efforts of the Civil Aeronautics Board to eliminate fuel
taxes imposed by other nations. Also, in 1974 Congress
enacted the International Air Transportation Fair Com-
petitive Practices Act, 88 Stat. 2102, to protect U.S. car-
riers from discrimination. By allowing the fifty states to
impose individual state taxes, it would thwart the purpose
of these federal efforts and infringe on the federal power
to regulate foreign commerce.
Concern for Florida’s fuel tax was expressed by the
United States Department of State in a letter to the Flor-
ida Department of Revenue on September 29, 1982 from
Matthew V. Scocozza, Deputy Assistant Secretary of State
for Transportation and Telecommunication. This letter
stated that the United States afforded an exemption from
federal taxes and this [sic] if individual states imposed
taxes it would “frustrate the international system of re-
ciprocal tax exemptions and thereby significantly increase
the cost of international air transportation.” After reas-
surances from the Florida DOR in their letter of October
25, 1982, that airlines continued to enjoy “generous tax
advantages”, Senate Bill 8-A was enacted. The Depart-
ment of State reacted by sending their letter of March 17,
4 Civil Aeronautics Board (“CAB’’), Fiscal Year (“FY’’) 1982/
1981 Report to Congress at 94-96; CAB, FY 1980 Report to Con-
gress at 84; CAB, FY 1979 Report to Congress at 103; CAB, FY
1978 Report to Congress at 96; CAB, FY 1977 and Transition
Quarter Report to Congress at 106-109, 114-115; CAB, FY 1976
Report to Congress at 103-104.
47a
1982 (date is a typographical error and should read
“1983”) that the Department was “surprised and dis-
tressed” to hear of the changes in the Florida fuel tax as
applied to airlines. Mr. Scocozza’s first letter spoke of a
“senerally-accepted and long-standing international prac-
tice of reciprocally exempting such items from taxes”.
In Japan Line at page 448 the Court talks of state
taxes in reference to the second “national-uniformity” re-
quirement:
“a state tax on the instrumentalities of foreign com-
merce may impair federal uniformity in an area
_ where federal uniformity is essential. Foreign com-
merce is pre-eminently a matter of national concern.”
At page 449 of Japan Line the Court cites Michelin Tire
Corp. v. Wages, 423 U.S. 276, 285 (1976) as follows:
“the Federal Government must speak with one voice
when regulating commercial relations with foreign
governments.”
The Japan Line court then discusses several ways a state
tax may “frustrate the achievements [sic] of federal uni-
formity”, page 450. Among these concerns are asym-
metry in international tax structure and retaliatory taxes
against American-owned instrumentalities present in
other nations:
“Such retaliation of necessity would be directed at
American Transportation equipment in general, not
just that of the taxing State, so that the Nation as a
whole would suffer.” Page 430. [sic; p. 450]
ACCORDINGLY, IT IS FURTHER ORDERED AND
ADJUDGED:
A. This Court finds and determines that Chapter 83-3,
Laws of Florida, also referred to as Senate Bill 8-A, is a
valid enactment and is not in conflict with the Equal Pro-
tection clauses of the United States Constitution (14th
a
48a
Amendment) nor the Florida Constitution (Article I,
Section 2); nor with the Commerce Clause of the United
States Constitution (Article I, Section 8, Clause 3) for
the Reasons stated in Delta Air Lines, Inc. v. State of
Florida, Department of Revenue, Case No. 83-761 (Leon
County Circuit Court—Civil Division, May 23, 1983).
B. It is further found that Senate Bill 8-A is incon-
sistent with the undertakings of the United States gov-
ernment in international bilateral agreements with Plain-
tiff and intervenor foreign airlines.
C. Plaintiff’s Counts I, II, IV, and V are hereby dis-
missed finally.
D. Plaintiff and Intervenors are granted a permanent
injunction against Defendant DOR assessing and collect-
ing fuel taxes pursuant to Senate Bill 8-A. Count II of
Plaintiff’s Complaint is meritorious.
E. This court upholds the constitutionality of Senate
Bill 8-A, but recognizes an exemption from the fuel tax
for Plaintiff and Intervenor foreign airlines who have
entered executive agreements with the United States prior
to the enactment of this Bill.
DONE AND ORDERED, at Tallahassee, Leon County,
Florida, this 1st day of June, 1983.
/s/ Ben C. Willis
BEN C. WILLIS
Circuit Judge
49a
IN THE CIRCUIT COURT
OF THE SECOND JUDICIAL CIRCUIT
IN AND FOR LEON COUNTY, FLORIDA
GENERAL JURISDICTION DIVISION
Case No. 83-964
LINEAS AEREAS COSTARRICENSES, S.A.,
a Costa Rican corporation,
Plaintiff,
vs.
STATE OF FLORIDA, DEPARTMENT OF REVENUE,
Defendant.
ORDER
THIS CAUSE having come before the Court upon
Plaintiff and Intervening Plaintiffs’ Motion to Amend
Final Judgment, and the Court having reviewed the file
and being otherwise duly advised in the premises, it is
ORDERED AND ADJUDGED as follows:
1. Plaintiff and Intervening Plaintiffs’ Motion to
Amend Final Judgment is granted;
2. Paragraph C, on the final page of the Judgment,
shall read as follows:
“Plaintiff's Counts I, III, IV, and V are hereby dis-
missed finally.”
3. Paragraph E, on the final page of the Judgment,
shall read as follows:
“This, court upholds the constitutionality of Senate
Bill 8-A, but recognizes an exemption from the fuel
tax for Plaintiff and Intervenor foreign airlines
ee
50a
whose governments have entered into executive agree-
ments with the United States prior to the enactment
of this Bill, or who have been granted Foreign Air
Carrier Permits by the United States on a basis of
reciprocity and comity.”
DONE AND ORDERED in Chambers, Tallahassee,
Leon County, Florida, this 14th day of June, 1983.
/s/ Ben C. Willis
BEN C. WILLIS
Circuit Court Judge
\ 5la
APPENDIX E
IN THE CIRCUIT COURT
OF THE SECOND JUDICIAL CIRCUIT
IN AND FOR LEON COUNTY, FLORIDA
Case No. 83-761
DELTA AIR LINES, INC.,
a Delaware Corporation, et al.,
Plaintiffs,
V.
STATE OF FLORIDA, DEPARTMENT OF REVENUE, et al.,
Defendants.
FINAL JUDGMENT
This cause is before the Court on final hearing on the
pleadings, evidence and argument of counsel for the re-
spective parties, and on the briefs of counsel for the par-
ties, intervenors and amicus curiae, and the Court having
considered all of same and being otherwise advised in the
premises, it is
ORDERED AND ADJUDGED:
1. The Plaintiff asserts that Senate Bill No. 8-A,
Chapter 83-3, Florida Statutes, titled “an act relating to
transportation finance and administration” violates
a) its constitutional right to equal protection under the
United States and Florida Constitutions,
b) the Commerce Clause of the United States Constitu-
tion,
c) Article III, Sections 10 and 11 of the Florida Con-
stitution.
52a
Intervenor Eastern Airlines also asserts Senate Bill 8-A
is an improper delegation of legislative authority. Plain-
tiff prays for declaratory and injunctive relief to prevent
Defendant Department of Revenue (DOR) from assessing
and collecting such tax.
2. Senate Bill 8-A was signed into law on March 8,
1983 to become effective April 1, 1983. It revises the tax
structure of Chapters 206, 212, and 220, Florida Statutes.
Prior to the enactment of said Bill motor fuel was taxed
pursuant to Part I, Chapter 206 at the rate of 8 cents
per gallon as follows:
a) a “first gas tax” of 4 cents to be used for mainte
nance and construction of state road [sic],
b) a “second gas tax” of 2 cents to be used by counties
to secure bond obligations,
c) a “seventh-cent tax’ used by counties for public
transportation, and
d) an “eighth-cent tax” used by municipalities for
transportation-related expenditures.
Prior to the enactment of Senate Bil! 8-A, special fuel
was taxed pursuant to Part II, Chapter 206 at the rate
of 8 cents per gallon with distribution the same as Part
I, Chapter 206. Aviation fuel was exempt from Part II.
Prior to the enactment of Senate Bill 8-A, pursuant to
Chapter 212, common carriers paid a sales tax of 5% of
the sales price of fuel, such tax accruing and being col-
lected upon first withdrawal from the storage facility.
This tax was prorated according to the ratio of the inter-
state mileage of the carrier to its total mileage for the
previous fiscal year.
Prior to the enactment of Senate Bill 8-A, Chapter 220
imposed an income tax on corporations without credit for
motor or special fuel taxes paid.
53a
8. Senate Bill 8-A eliminates the “first gas tax” of
Part I, Chapter 206 in 206.41 and reduces the special fuel
tax in Part II from 8 cents to 4 cents. Distribution is the
same as prior to enactment. Thus, under both Part I and
Part II of Chapter 205 the tax is reduced from 8 cents to
4 cents per gallon.
Under Chapter 212, the Bill now imposes a 5% sales
tax on motor and special fuel based on a predetermined
price of $1.148, or 5.7 cents, per gallon until June 1,
1985, at which time the DOR will determine the price
according to the most recent Consumer Price Index. Dis-
tribution is for “transportation purposes” per Section
206.46 from a Transportation Trust Fund. The Chapter
212 tax upon common carriers will continue to be pro-
rated by intrastate mileage; however airlines will be taxed
on all aviation fuel purchased in Florida, regardless of
use in interstate or intrastate travel. Chapter 220 now
affords a 50% or $5 million (the lesser) credit to Florida-
based corporations with 1,200 or more employees.
4. Plaintiff objects to Senate Bill 8-A on the grounds it
violated [sic] equal protection by subjecting them to dif-
ferent tax treatment than other common carriers, creates
a classification which is discriminated against by higher
tax rates, subjects them to a predetermined price not re-
lated to the actual price of aviation fuel, and discrimi-
nates against foreign corporations by allowing the Chap-
ter 220 tax credit only to corporations with their corporate
or home office in Florida.
Plaintiff alleges Senate Bill 8-A violates the United
States Constitution Commerce Clause by exceeding the
state limitations in taxing interstate commerce because
the apportionment is unfair and not based on intrastate
use, agricultural and fishing interests are favored by total
fuel tax exemption, the tax credit is an attempt to force
corporations to establish corporate offices in Florida, there
is no nexus between the tax on airlines and the use of
54a
funds for roads, and the tax is not fairly related to serv-
ices provided to interstate airlines.
Plaintiff originally claimed Senate Bill 8-A violated Ar-
ticle III, Sections 10 and 11 of the Florida Constitution
because it was a special law. However, in light of the
recent Supreme Court decision in Department of Legal
Affairs, State of Florida, et al. v. Sanford-Orlando Kennel
Club., Inc., 8 F.L.W., (Fla. April 14, 1983), in which the
Court stated it did not matter that the legislature was
aware the bill would benefit a certain business, Plaintiff
has abandoned this allegation. Plaintiff had originally
prayed for attorneys fees pursuant to 42 U.S.C. 1983 and
1988, which issue this court ruled against in a hearing
May 11, 1983.
5. Plaintiff Delta Airlines is a Delaware corporation
registered to do business in Florida and certified by the
Civil Aeronautics Board. They operate from 9 airports
in Florida and employ approximately 4,000 employees.
Intervenors are various airlines subject to the fuel tax
whose aggregate employees number approximately 1,800.
None of the intervenors are qualified to receive the Chap-
ter 220 tax credit either because of size or location out-
side Florida. Delta claims irreparable injury of $9.7
million per year without retroactive interest if Senate
Bill 8-A is declared unconstitutional [sic], prolonged legal
proceedings, individious discrimination without remedy,
and competitive advantage to other classes of common
carrers and Florida-based corporations. For these rea-
sons, Plaintiff requests an immediate temporary injunc-
tion followed by a permanent injunction and declaratory
relief.
6. Defendant DOR contends Senate Bill 8-A is a valid
tax measure reasonably related to the legitimate state
purpose of stabilizing tax structures and therefore is not
subject to the constitutional infirmities urged by Plain-
tiff. Defendant contends that it has long been established
that sales and use taxes imposed for the privilege of en-
55a
gaging in business in the state are valid. Gaulden v.
Kirk, 47 So.2d 567 (Fla. 1950); Kirk v. Western Con-
tracting Company, Inc., 216 So.2d 503 (Fia. 1 DCA
1968), cert. den. 225 So.2d 535, app. dism. 226 So.2d
815; Florida Revenue Commission v. Maas Brothers, Inc.,
226 So.2d 849 (Fla. 1 DCA 1969), cert. den. 237 So.2d
177. Plaintiff elaborates on the point that Senate Bill 8-A
is a user fee and not fairly related to the airlines’ use of
public facilities or roads. However, as Defendant points
out, this is an excise tax, not a user fee, and ‘“‘the con-
stitutional power to levy taxes does not depend upon the
enjoyment of the taxpayer of any special benefit from the
use of the funds.” Nashville, Chattanooga, & St. Louis
Railway v. Wallace, 288 U.S. 249 (1933) at page 269.
EQUAL PROTECTION
The three main areas of Plaintiff’s complaint in the
equal protection area are: partial exemptions to other
common carriers, predetermined price unrelated to actual
price of aviation fuel, and discriminatory tax credit struc-
ture.
First, Plaintiff asserts that all common carriers should
be treated alike and airlines should also receive the pro-
rated treatment under Chapter 212 that other common
carriers receive. Plaintiff cites cases to support this as-
sertion that interstate carriers are “similarly situated”
for tax purposes, Seaboard Air Line Ry. v. Simon, 47 So.
1001 (Fla. 1908) where all carriers are liable for lost or
damaged goods; Braniff Airways, Inc. v. Nebraska State
Board of Equalization and Assessment, 347 U.S. 590
(1954) that imposition of taxes on aircraft must be the
same as for riverboats; Ott v. Mississippi Valley Barge
Line Co., 336 U.S. 169 (1949) that water transportation
taxed same as other carriers; Delta Air Lines, Inc. »v.
State of Alabama, No. CV-1162 (Cir. Ct. Montgomery,
Ala. May 27, 1981) that airlines are not utilities and
receive the same treatment as other transportation modes.
56a
Defendant counters that states have wide latitude in tax-
ation and creating classifications. In Madden v. Ken-
tucky, 309 U.S. 83 (1940), the Supreme Court stated at
page 88:
“In taxation even more than in other fields, legisla-
tures possess the greatest freedom of classification.”
The Supreme Court has upheld tax classification in ad
valorem taxation of corporations, Lehnhausen v. Lake-
shore Auto Parts Co., 410 U.S. 356 (1973), reh. den. 411
U.S. 910; and exempting non-residents from ad valorem
taxes on merchandise held in warehouses, Allied Stores of
Ohio v. Bowers, 348 U.S. 522 (1959), where the Court
states there is “no iron rule of equality prohibiting the
flexibility and variety that are appropriate to reasonable
schemes of state taxation’, p. 526.
The courts of Florida have followed Lehnhausen, Mad-
den, and Allied Stores in Markham v. Yankee Clipper
Hotel, Inc., et al., 427 So.2d 383 (Fla. 4th DCA, 1983) ;
and in Just Valuation & Taxation League, Inc. v. Simp-
son, 209 So.2d 229 (Fla. 1968), in which the Florida Su-
preme Court states at p. 232:
“the presumption of constitutionality can be over-
come only by the most explicit demonstration that a
classification is a hostile and oppressive discrimina-
tion against particular persons and classes. The bur-
den is on the one attacking the legislative arrange-
ment to negative every conceivable basis which might
support it.”
The Florida Supreme Court has upheld the constitu-
tionality of Chapter 212 in Gaulden v. Kirk, 47 So.2d 567
(Fla. 1950) where a 3% tax was imposed on rentors and
lessors of living quarters, but accommodations rented for
longer than 6 months and two-family apartment buildings
were exempt. The court held this to be a reasonable
classification. Likewise the distinction between airlines
and other carriers is a reasonable classification and Plain-
57a
tiff has not sustained its burden to “‘negative every con-
ceivable basis which might support it”. Just Valuation,
supra,
Plaintiff maintains that this distinction is arbitrary
and unreasonable and will not pass constitutional muster,
citing Hartford Steam Boiler Inspection and Insurance
Co. v. Harrison, 301 U.S. 459 (1937), to support the
allegation that two different forms of business cannot be
treated differently. Plaintiff states that airlines and com-
mon carriers have been treated similarly for fuel tax pur-
poses since 1963, and that the new bill singles out airlines
to pay a disproportionate share of tax. However, Plain-
tiff does not sustain its burden to demonstrate this clas-
sification is “hostile and oppressive” per Just Valuation,
and this court therefore holds there is no invidious dis-
crimination by creation of an arbitrary classification.
Classifying airlines differently from vessels and railroads
fer fuel tax purposes is not arbitrary. Airlines enjoy ad-
vantages and must tolerate some disadvantages due to
their distinctive nature. Tor example, airlines enjoy the
advantage of being exempt from ad valorem taxes on the
lease of property from the county or other governmental
unit pursuant to Chapter 80-368. Vessels and railroads
are not exempt. Even though Plaintiff argues that 80-368
also benefits hotels, restaurants, and racetracks, it does
not object to this favorable classification and only when
disadvantaged does Plaintiff object. Also, proration of
mileage for aircraft has proven difficult in the past be-
cause of flight patterns over the Guif of Mexico and At-
lantic Ocean to avoid accumulation of intrastate mileage.
Defendant approximates that in the past airlines were
paying only about 6% of their actual tax due to these
flight patterns to avoid flying over the state.
Second, Plaintiff asserts the predetermined price of
$1.148 per gallon is not related to the actual price of avia-
tion fuel which customarily is less expensive and at the time
of writing was about $.90 per gallon. Plaintiff would have
——
58a
the DOR adjust the price as market price fluctuates at
[sic] tax aviation fuel at the lower rate. This suggestion
is not feasible because of the varying prices in different
locations, the volatile nature of gas prices, and the objec-
tive of the legislature to have a stabilized tax structure.
Rather than discriminate against airlines, the legislature
has imposed a set price per gallon and all consumers are
taxed equally regardless of nature of transport. The tax
is levied on first withdrawal from the storage tanks and
not at the retail level which latter price would be rela-
tively impossible to ascertain. Plaintiff urges the court to
allow the airlines to self-assess taxes as in the past and
insists there have been no problems previously. However,
as DOR points out, the discrepancy in self assessment
renders this point meritless. For the foregoing reasons,
this court holds the predetermined price structure does
not invidiously discriminate against airlines.
Third, Plaintiff maintains the Chapter 220 tax credit
structure favors local business and disadvantages foreign
corporations registered in Florida but without a home
office there. Plaintiff cites Department of Revenue v.
Amrep, 358 So.2d 1343 (Fla. 1978) for the proposition
that once a corporation is admitted to be registered in a
state, it enjoys the full equal protection of the law. This
is true, but it also must bear the cost of being privileged
to do business in the state. Plaintiff contends that state
attempts to tax foreign corporations more stringently than
domestic corporations have been invalidated in Wheeling
Steel Corporation v. Glander, 337 U.S. 562 (1949) deal-
ing with intangible tax on accounts receivable; and
WHYY, Inc. v. Borough of Glassboro, 393 U.S. 117
(1968) which afforded out-of-state non-profit corporations
tax exemptions equal to domestic non-profit corporations;
and O’Connell v. Kontojohn, 179 So. 802 (Fla. 1938)
which invalidated a discriminatory Pensacola tax based
on non-city residents who operated bakery trucks in that
city. However, the Senate Bill 8-A tax credit is valid be-
cause there is a rational basis behind allowing such credit
59a
for domestic corporations: encouraging foreign corpora-
tions to establish home offices in Florida. Further, the
Supreme Court states in Carmichael v. Southern Coal &
Coke Company, 301 U.S. 495 (1936) at page 509:
“The legislature is not bound to tax every member
of a class or none, but may make distinctions of de-
gree having a rational basis.”
Therefore, if the legislature reasonably believes a tax
credit for domestic corporations will further its objective
of encouraging in-state incorporation, it may afford this
more favorable treatment without discrimination. Just as
the legislature enjoys wide latitude in taxation and
classifications, it has wide latitude in promoting business
where the public interest is served. Carmichael at page
512. In Sanford-Orlando Kennel Club, supra, the Florida
Supreme Court states that the legislature may benefit a
certain class so long as it is not unreasonable. There is
no unreascnable burden on airlines to establish a home
office in Florida if they wish to receive a tax credit. Also,
this tax credit is on corporation income tax, not on the
sales tax, so a corporation must first pay corporate in-
come tax to avai! itself of the Chapter 220 credit. For
these reasons, this court holds the tax credit does not
favor local business nor discriminate against foreign
corporations.
COMMERCE CLAUSE
Plaintiffs contend that Senate Bill 8-A is a state at-
tempt to regulate commerce between the states and ex-
ceeds state limitations pursuant to the United States
Constitution, Article I, Section 8, Clause 3 grant to Con-
gress. Assuming this bill affects interstate commerce, the
state tax must meet the four prongs of Complete Auto
Transit v. Brady, 430 U.S. 274 (1977), set out on page
278 of that opinion:
1) activity taxed has a sufficient nexus with the
State,
60a
2) the tax may not discriminate against interstate
commerce,
3) the tax must be fairly apportioned; and
4) the tax must be related to services provided by
the state.
Plaintiff contends that Senate Bill 8-A fails at least two
prongs of this test because this is a road tax unrelated
to airline services, and because t' 2 tax is not fairly appor-
tioned and favors certain carriers and local businesses.
Plaintiff insists this is a “user” tax because Governor
Graham called this session to raise $250 million to fund
road construction and maintenance. However, the work-
ing of section 206.46 specifically eliminated reference to
“construction and maintenance of state roads” in alloca-
tion funds from the State Transportation Trust fund
into which the fuel taxes are deposited. Instead, the
section is worded to provide funds for “transportation
purposes” which includes airport and aircraft services,
contrary to the assertion of Plaintiff. Plaintiff maintains
that because these funds are used for roads and airlines
do not use roads, the tax is unrelated to services pro-
vided by the state. This is obviously not the case, as the
legislature expressly included all transportation purposes
in the allocation of funds.
Plaintiff attempts to convince the court that this is a
user tax and not an excise tax and is therefore subject
to a higher standard of scrutiny. This argument is
flawed. As previously noted, favoring local businesses is
not necessarily unreasonable or arbitrary. In the case of
the Chapter 220 tax credit, Plaintiff is not unreasonably
disfavored as there is a legitimate state purpose in en-
couraging corporate home offices to locate in Florida and
to otherwise attract industry to the state. Plaintiff can
merely incorporate in Florida if it wishes to receive the
credit. Use of public airport facilities is a privilege the
airlines enjoy and they should share the cost of these
6la
facilities so long as the cost is reasonable. Commonwealth
Edison Co. v. Montana, 453 U.S. 609 (1981) supports
this statement and goes on to say that courts should not
inquire inte the amount of the tax or value of benefit
received. In Montana, a severance tax on coal mined in
Montana was upheld as a general revenue tax even
though 90% was shipped out of state. Plaintiff tries to
distinguish this case, saying Senate Bill 8-A is a use tax.
However, this distinction does not withstand scrutiny.
The court in Montana made it very clear thet a state
can regulate interstate commerce so long as there is no
discrimination. In the case at bar the tax is levied upon
all consumers equally based on the quantity of fuel with-
drawn and there is no discrimination. The Supreme
Court of the United States also deferred to the legislature
in establishing tax measures in Montana. In Evansville-
Vanderburgh Airport Authority District v. Delta Air-
lines, Inc., 405 U.S. 707 (1972), a “use” charge for
enplaning passengers was upheld as rationally related to
the use of facilities, even though such charge was “im-
perfect”. Therefore, even if the Florida fuel tax were
considered a use tax, this tax is valid because the funds
are allocated for “public transportation” including air
facilities, and according to Montana the benefit does not
have to be measured with mathematical accuracy. The
Complete Auto test prong #4 does not require a propor-
tional relation of tax to benefit receive, but only requires
that the tax be related to the services provided. Com-
plete Auto also states that interstate commerce must pay
its own way, similar to the reasoning in Montana.
To supports [sie] its contention that Senate Bill 8-A
favors local business by extending a tax credit only to
Florida-based corporations, Plaintiff cites Maryland v.
Louisiana, 451 U.S. 725 (1981) where a tax on natural
gas pumped out-of-state created a burden on interstate
commerce. Here the tax is on fuel purchased in the state
and all consumers are taxed equally so there is no similar
62a
burden on interstate commerce. Boston Stock Exchange
v. State Tax Commission, 429 U.S. 318 (1977) involves a
New York statute which taxed out-of-state transfers. Here
the legislature is not trying to tax any out-of-state trans-
actions. In Archer Daniels Midland Co. v. State, 315
N.W.2d 597 (Minn. 1982), a tax exemption for gasohol
produced from Minnesota products with no comparable
exemption for out-of-state product production, was de-
clared invalid as a restriction on interstate commerce.
Senate Bill 8-A in no way affects out-of-state production
or consumption. The Florida Supreme Court has upheld
special tax exemptions to encourage Florida industry.
Faircloth v. Mr. Boston Distiller Corp., 245 So.2d 240
(Fla. 1970). This court likewise finds there is no burden
on interstate commerce by Senate Bill 8-A and no viola-
tion of the Commerce Clause.
IMPROPER DELEGATION OF LEGISLATIVE
AUTHORITY
Intervenor Eastern Airlines raises an additional point
that Senate Bill 8-A is an improper delegation of legisla-
tive authority by allowing the DOR to determine the
fuel fixed price after June 1, 1985. Gindl v. Department
of Education, 396 So.2d 1105 (Fla. 1979, corrected on
rehearing 1981) allows the Department of Education to
appropriate state funds to a state agency based on the
Florida Price Level Index. The method of appropriation
in Senate Bill 8-A is equivalent to the Gindl method and
is a proper delegation of authority.
SEVERABILITY
Both parties agree that this bill should not be severed
in part. Additionally, there is no severability clause in
the bill. However, in view of the rulings made herein, it
is unnecessary to consider or determine any questions of
severability.
a
63a
ACCORDINGLY, IT iS FURTHER ORDERED AND
ADJUDGED:
A. This Court finds and determines that Chapter 83-3,
Laws of Florida, also referred to as Senate Bill &-A, is
a valid enactment and is not in conflict with the Equal
Protection clauses of the United States Constitution (14th
Amendment) ner the Florida Constitution (Article I, Sec-
tion 2); nor with the Commerce Clause of the United
States Constitution (Article I, Section 8, Clause 3).
B. It is further found that the reference to the Con-
sumer Price Index in future applications of the price per
gallon to be used in computing the tax is not an unlawful
delegation of legislative power. The Consumer Price In-
dex is a computation by governmental agency of average
prices of items of commerce. Reference to this measure
is not a delegation of legislative discretion but an eco-
nomic computation relied upon to apply a legislative
policy of a tax based upon an approximate price prevail-
ing at a given time.
C. All challenges to the validity of this statute are
found to be without merit.
D. All prayers that the Defendant Department of
Revenue be restrained from enforcement of Chapter 83-3
or collecting taxes imposed thereon are hereby denied.
E. The Amended Complaint and this cause be and the
same are hereby dismissed finally.
DONE AND ORDERED, this 23rd day of May, 1983.
‘s/ Ben C. Willis
BEN C. WILLIS
Circuit Judge
64a
APPENDIX F
IN THE SUPREME COURT
STATE OF FLORIDA
Case No. 63,989
STATE OF FLORIDA, DEPARTMENT OF REVENUE,
Appellants/Cross Appellees,
V.
LINEAS AEREAS COSTARRICENSES, S.A., et al.,
Appellees/Cross Appellants.
[Filed June 29, 1984]
Appeal From the Second Circuit
Court in and for Leon County
APPELLEES’ MOTION FOR REHEARING
DAVID A. NELSON
N. FRASER SCHUH, III
SQUIRE, SANDERS & DEMPSEY
Suite 3000, Miami Center
100 Chopin Plaza
Miami, Florida 33131
Phone (305) 577-8700
Attorneys for
Appellees/Cross Appellants
65a
APPELLEES’ MOTION FOR REHEARING
Pursuant to Rule 9.330(a) of the Florida Rules of Ap-
pellate Procedure, Appelies respectfully move for rehear-
ing of the decision filed herein on June 14, 1984.
The points of law or fact justifying such rehearing are
these:
1. The United States government has entered into
2ir transport agreements specifically addressing ex-
cise taxes imposed on fuel “by State, regional and
local authorities” and establishing a policy of recip-
rocal exemption from such taxes.
2. By virtue of ‘Most Favored Nation” provisions
contained in several other international agreements,
the United States has agreed to extend the protection
of these state tax provisions to a number of addi-
tional foreign nations.
3. The provisions of the agreements and treaties
in question bring this case within the “speaking with
one voice” principle of Japan Line Ltd. v. County of
Los Angeles, 441 U.S. 434 (1979).
In Department of Revenue v. Wardair Canada, Ltd.,
No. 64,036 (Fla. June 14, 1984), this Court determined
that the tax exemption provisions of the Non-Scheduled
Air Service Agreement between the United States and
Canada were inapplicable because that agreement “spe-
cifically addresses only national customs, duties, excise
taxes and charges... .” Slip Op., p. 3. (Emphasis sup-
plied.) Wardair was held to be controlling in Department
of Revenue v. Air Jamaica Ltd., No. 64,035 (Fla. June
14, 1984), and the instant case was disposed of solely on
the basis of the decisions in the companion cases.
Unlike the Canadian agreement involved in Wardair,
the air transport agreements that the United States has
concluded with several of the countries whose carriers are
66a
parties to this case and the Air Jamaica case deal ex-
pressly with state taxes as well as national taxes. The
agreement with Costa Rica, introduced in the Court below
as part of plaintiffs’ Exhibit 2 (R370-71), is illustrative:
Article 9 of the agreement (a copy of which is attached
hereto as an Appendix) specifically refers in paragraph 1
to excise taxes on fuel, among other things; provides in
paragraph 2(c) that fuel, lubricants and consumable tech-
nical supplies “shall... be exempt” from such taxes on a
reciprocal basis; and mandates in paragraph 5 that each
party use its best efforts to secure for the other parties’
airlines “an exemption from taxes, duties, charges and
fees imposed by State, regional and local authorities on
the items specified in paragraphs (1) and (2) of this
Article... .” (Emphasis supplied. )
A similar undertaking with respect to “taxes, duties,
charges and fees imposed by State, regional and local au-
thorities” is found in Article 10(6) of the protocol of
April 4, 1979, between the governments of the United
States and Jamaica relating to air transport, T.I.A.S.
96138, amending the Air Transport Services Agreement of
October 2, 1969, T.I.A.S. 6770. See also the agreements
identified at page 4 of the trial court’s judgment in Air
Jamaica, set forth as an Appendix to Appellee’s Answer
Brief herein.
The air transport agreements that address state taxes
by name clearly reflect a federal policy in favor of recip-
rocal exemption from excise taxes at the state level. “A
proliferation of state and local taxes,” the United States
Department of State has confirmed, ‘would frustrate the
international system of reciprocal tax exemptions... .”
Plaintiff's Exhibit 6, R373-74. Speaking specifically of
the Florida tax at issue here, the State Department ad-
vised the Florida Department of Revenue that failure to
exclude foreign airlines from the tax “will cause serious
foreign relations preblems.” Jd.
67a
The impact of these provisions is not limited to na-
tions whose aviation agreements with the United States
specifically include them. The Treaty of Peace, Amity,
Navigation and Commerce between the United States and
New Granada [now Colombia] 9 Stat. 881, TS 54 (1848),
cited by the Appellees [Answer Brief at 8] provides that
“any particular favor [granted] to other nations, in re-
spect of commerce and navigation,” shall “immediately
become common to the other party ....”’ Other treaties
with provisions of the same general import are also cited
in Appellees’ Answer Brief. By extending the provisions
regarding state taxation of airlines such as those found
in the agreement with Costa Rica to many other nations,
these most favored nation provisions further establish the
uniform international policy of the United States favor-
ing reciprocal exemption of airlines from state and local
fuel taxes.
Because the United States has entered into air trans-
port agreements expressly addressing state taxes, the nec-
essity for federal uniformity is even clearer here than it
was in Japan Line Ltd. v. County of Los Angeles, 441
U.S. 484 (1979). The California property tax at issue in
that case was not specifically addressed in the Customs
Convention on Containers which this country had con-
cluded with Japan, 441 U.S. at 452, but the United States
Supreme Court nevertheless held that the California tax
could not be applied to Japanese containers for the rea-
son, among others, that it prevented the federai govern-
ment from “speaking with one voice” in international
trade. It follows a fortiori, we submit, that the “negative
implications of Congress’ power to ‘regulate Commerce
with foreign Nations’ under the Commerce Clause,” 441
U.S. at 449, preclude Florida from imposing an excise tax
on fuel used by the foreign air carriers here.
The motion for rehearing should be granted.
68a
Respectfully submitted,
/3/ N. Fraser Schuh, III
DAvip A. NELSON
N. FRASER SCHUH, III
SQUIRE, SANDERS & DEMPSEY
Suite 3000, Miami Center
100 Chopin Plaza
Miami, Florida 33131
Phone— (305) 577-8700
Attorneys for Appellees/
Cross Appellants
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of
the foregoing Motion for Rehearing was sent by United
States Mail, postage prepaid, this 27th day of June, 1984,
to LARRY LEVY, ESQ., General Counsel, Department of
Revenue, Carlton Building, Room 203, Tallahassee, Flor-
ida 32301; JOSEPH C. MELLICHAMP, III, ESQ., As-
sistant Attorney General, Department of Legal Affairs,
The Capitol, LL0O4, Tallahassee, Florida 32301; and
JAMES E. TRIBBLE, ESQ., Blackwell, Walker, Gray,
Powers, Flick & Hoehl, Suite 2400, AmeriFirst Building,
1S.E. 38rd Avenue, Miami, Florida 33131.
/s/ N. Fraser Schuh, III
Attorney for Appellees
69a
APPENDIX
AIR TRANSPORT AGREEMENT
BETWEEN THE GOVERNMENT OF THE
UNITED STATES OF AMERICA
AND
THE REPUBLIC OF COSTA RICA
a * * *
ARTICLE 9
Customs Duties and Taxes
(1) On arriving in the territory of one Party, aircraft
operated in international air transportation by the des-
ignated airlines of the other Party, their regular equip-
ment, ground equipment, fuel, lubricants, consumable
technical supplies, spare parts, including engines, aircraft
stores (including but not limited to such items as food,
beverages and liquor, tobacco and other products destined
for sale to or use by passengers in limited quantities dur-
ing the flight), and other items intended for or used
solely in connection with the operation or servicing of
aircraft engaged in international air transportation shall
be exempt, on the basis of reciprocity, from all import
restrictions, property taxes and capital levies, customs
duties, excise taxes, and similar fees and charges imposed
by the national authorities, and not based on the cost of
services provided, provided such equipment and supplies
remain on board the aircraft.
(2) There shall also be exempt, on the basis of reci-
procity, from the taxes, duties, fees and charges referred
to in paragraph (1) of this Article, with the exception
of charges based on the cost of the service provided:
(a) aircraft stores introduced into or supplied in the
territory of a Party and taken on board, within reason-
able limits, for use on outbound aircraft of a designated
airline of the other Party engaged in international air
transportation, even when these stores are to be used on
70a
a part of the journey performed over the territory of the
Party in which they are taken on board;
(b) ground equipment and spare parts including en-
gines introduced into the territory of a Party for the
servicing, maintenance or repair of aireraft of a desig-
nated airline of the other Party used in international air
transportation; and
(c) fuel, lubricants and consumable technical supplies
introduced inte or supplied in the territory of a Party
for use in an aircraft of a designated airline of the other
Party engaged in international air transportation, even
when these supplies are to be used on a part of the jour-
ney performed over the territory of the Party in which
they are taken on board.
(3) Equipment and supplies referred to in paragraphs
(1) and (2) of this Article may be required to be kept
under the supervision or control of the appropriate au-
thorities.
(4) The exemptions provided for by this Article shall
also be available where the designated airlines of one
Party have contracted with another airline, which simi-
larly enjoys such exemptions from the other Party, for
the loan or transfer in the territory of the other Party
of the items specified in paragraphs (1) and (2) of this
Article.
(5) Each Party shall use its best efforts to secure for
the designated airlines of the other Party, on the basis of
reciprocity, an exemption from taxes, duties, charges and
fees imposed by State, regional and local authorities on
the items specified in paragraphs (1) and (2) of this
Article, as weil as from fuel through-put charges, in the
circumstances described in this Article, except to the ex-
tent that the charges are based on the actual cost of pro-
viding the service.
ee LL —~t
T1la
APPENDIX G
IN THE SUPREME COURT OF FLORIDA
Wednesday, September 12, 1984
Case No. 63,989
Circuit Court Case No. 83-964 (Leon)
DEPARTMENT OF REVENUE,
Appellant/Cross Appellee,
VS.
LINEAS AEREAS COSTARRICENSES, et al.,
Appellee, Cross Appellant.
On consideration of the motion for rehearing filed by
attorneys for appellee/cross-appellant, and response
thereto,
IT IS ORDERED by the Court that said motion be
and the same is hereby denied.
BOYD, C.J., ADKINS, CVERTON, ALDERMAN, Mc-
DONALD and SHAW, JJ., Concur
N
72a
C
ec: Hon. Paul F. Hartsfield,
Clerk
Hon. Ben C. Willis,
Chief Judge
David A. Nelson,
Esquire
and N. Fraser Schuh, III,
Esquire
Joseph C. Mellichamp, III,
Esquire
Larry Levy,
Esquire
James E. Tribble,
Esquire
A True Copy
TEST:
Sid J. White
Clerk Supreme Court
By: Debbie Causseaux
Deputy
73a
APPENDIX H
IN THE SUPREME COURT
STATE OF FLORIDA
Case No. 63,989
STATE OF FLORIDA, DEPARTMENT OF REVENUE,
Appellants/Cross Appellees,
V.
LINEAS AEREAS COSTARRICENSES, §.A., et al.,
Appellees/Cross Appellants.
[Filed Sept. 14, 1984]
NOTICE OF APPEAL TO THE
SUPREME COURT OF THE UNITED STATES
Notice is hereby given that Plaintiff/Appellee/Cross Ap-
pellant, LINEAS AEREAS COSTARRICENSES, and In-
tervening Plaintiffs /Appellees/Cross Appellants, TRANS-
PORTES AEREOS NACIONALES, 8.A., AEROLINEAS
ARGENTINAS, AERONAVES DE MEXICO, S.A.,
AEROVIAS NACIONALES DE COLOMBIA, S.A.,
TRINIDAD AND TOBAGO (BWIA INTERNATIONAL)
AIRWAYS CORP., EMPRESA ECUATORIANA DE
AVIACION, S.A., COMPANIA MEXICANA DE AVI-
ACION, S.A., DE C.V., VIACAO AEREA RIO-GRAN-
DENSE and VENZOLANA INTERNACIONAL DE AVI-
ACION, S.A., appeal to the Supreme Court of the United
States from the Final Decree of the Supreme Court of
Florida affirming that portion of the Circuit Court’s
74a
Order upholding the Florida tax on aviation fuel as con-
stitutional and reversing that portion of the Circuit
Court’s Order insofar as it upheld the -corporate tax
credit to Florida-based airlines and recognized an exemp-
tion from the tax for foreign airlines, entered in this
action on June 14, 1984, rehearing denied September 12,
1984.
This appeal is taken pursuant to Title 28, United
States Code, Section 1257, subparagrah (2).
DATED September 13, 1984.
/s/ N. Fraser Schuh, III
N. FRASER SCHUH, III
SQUIRE, SANDERS & DEMPSEY
Attorneys for Plaintiffs/
Appellees/Cross Appellants
Suite 3000, Miami Center
100 Chopin Plaza
Miami, Florida 33131
Phone— (305) 577-8700
AFFIDAVIT OF SERVICE BY MAIL
STATE OF FLORIDA
ss
COUNTY OF DADE
I, N. FRASER SCHUH, III, depose and say that I
am an attorney in the office of Squire, Sanders & Demp-
sey, attorneys of record for Plaintiffs/Appellees/Cross
Appellants, LINEAS AEREAS COSTARRICENSES,
S.A.. TRANSPORTES AEREOS NACIONALES, S.A.,
AEROLINEAS ARGENTINAS, AERONAVES DE
MEXICO, S.A., AEROVIAS NACIONALES DE CO-
LOMBIA, S.A., TRINIDAD AND TOBAGO (BWIA
INTERNATIONAL) AIRWAYS CORP., EMPRESA
|
75a
ECUATORIANA DE AVIACION, S8.A., COMPANIA
MEXICANA DE AVIACION, 8.A., DE C.V., VIACAO
AEREA RIO-GRANDENSE and VENZOLANA INTER-
NACIONAL DE AVIACION, S.A., and that on Septem-
ber 13, 1984, pursuant to Rule 28, Rules of the Supreme
Court, I served a copy of the foregoing Notice of Appeal
to the Supreme Court of the United States on each of the
parties required to be served herein, as follows:
On Defendant/Appellant/Cross Appellee, STATE OF
FLORIDA DEPARTMENT OF REVENUE, by mailing
copies in duly addressed envelopes, with first class post-
age prepaid, to LARRY E. LEVY, ESQ., General Coun-
sel, State of Florida, Department of Revenue, Room 203,
Carlton Building, Tallahassee, Florida 32301; and to
JOSEPH C. MELLICHAMP, ESQ., Assistant General
Counsel, Department of Legal Affairs, The Capital, Tal-
lahassee, Florida 32301.
All parties required to be served have been served.
/3/ N. Fraser Schuh, III
N. FRASER SCHUH, III
SWORN TO AND SUBSCRIBED before me this 13th
day of September, 1984.
/s/ [Illegible]
Notary Public
My commission expires:
76a
APPENDIX I
List of the Appellants in this Proceeding
Indicating Their Parent Companies, Subsidiaries
(Except Wholly-Owned Subsidiaries), and Affiliates
AEROLINEAS ARGENTINAS
a. Parent Companies:
Aerolineas Argentinas is owned by the Govern-
ment of Argentina.
b. Subsidiaries (Except Wholly-Owned Subsidiar-
ies) and Affiliates:
1. Buenos Aires Catering, S.A.
AERONAVES DE MEXICO, S.A. (AEROMEXICO)
a. Parent Companies:
Aeronaves de Mexico, S.A. is owned by the Gov-
ernment of Mexico.
b. Subsidiaries (Except Wholly-Owned Subsidiar-
ies) and Affiliates:
1. Carge Transportation Datatronic, S.A.
2. Empresa Mexicana de Transporte Multimodal,
S.A.
3. Telefonos de Mexico, S.A.
4. Transportacion Aerea Mexicana, S.A. de C.V.
5. Turborreactores, S.A. de C.V.
AEROVIAS NACIONALES DE COLOMBIA, S.A.
(AVIANCA)
a. Parent Companies:
none
I eniainieeeenteernteemetenienmimainiel
77a
b. Subsidiaries (Except Wholly-Owned Subsidiar-
ies) and Affiliates:
1. Sociedad Aeronautica de Medellin Consolidada,
S.A. (SAM)
2. Helicopteros Nacionales de Colombia, S.A.
(HELICOL)
8. Corporacion de Viajes Ltda. (COVIAJES)
4. Aerocomercio Internacional Ltda.
5. Sociedad Productora y Comercializadora de
Alimentos Ltda.
COMPANIA MEXICANA DE AVIACION, S.A. DE
C.V. (MEXICANA AIRLINES)
a. Parent Companies:
A majority of the shares of Compania Mexicana
de Aviacion, S.A. de C.V. are owned by the Gov-
ernment of Mexico.
b. Subsidiaries (Except Wholly-Owned Subsidiar-
ies) and Affiliates:
1. Aeropuertos y Terrenos S.A.
2. Cargo Transportation Datatronic S.A.
3. Transportacion Aerea Mexicana, S.A. de C.V.
4. Turborreactores, S.A. de C.V. -
©MPRESA ECUATORIANA DE AVIACION
(ECUATORIANA)
a. Parent Companies:
Empresa Ecuatoriana de Aviacion is owned by
the Government of Ecuador.
b. Subsidiaries (Except Wholly-Owned Subsidiar-
ies) and Affiliates:
none
78a
LINEAS AEREAS COSTARRICENSES, S.A. (LACSA)
a. Parent Companies:
none
b. Subsidiaries (Except Wholly-Owned Subsidiar-
ies) and Affiliates:
1. Hoteles, Restaurantes y Cafeterias de Ibero-
america, S.A.
2. Inversiones Aerolandia, S.A.
3. Pathfinder Tours, Inc. |
4. Servicios Aereos Nacionales, S.A.
TRANSPORTES AEREOS NACIONALES, S.A.
(TAN AIRLINES)
a. Parent Companies:
none
b. Subsidiaries (Except Wholly-Owned Subsidiar-
ies) and Affiliates:
Aerovias Nacionales de Honduras, S.A.
Budget Rent-a-Car, Honduras
Credomatic de Honduras, S.A.
Financiera Centroamericana, S.A.
General Air Services, Inc.
Hoteles de Honduras, S.A.
Servicio Aereo de Honduras, S.A.
Ss PT Pref
Servicios Tecnicos Especializados
TRINIDAD & TOBAGO AIRWAYS CORPORATION
(BWIA INTERNATIONAL AIRLINES)
a. Parent Companies:
Trinidad & Tobago Airways Corporation is
owned by the Government of Trinidad & Tobago.
ST
79a
b. Subsidiaries (Except Wholly-Owned Subsidiar-
ies) and Affiliates:
1. Airline Caterers, Ltd.
VIACAO AEREA RIO-GRANDENSE, 8.A. (VARIG)
a. Parent Companies:
Viacao Aerea Rio-Grandense, S.A. is owned by
the Government of Brazil.
b. Subsidiaries (Except Wholly-Owned Subsidiar-
ies) and Affiliates:
1. Agripec S.A. Agropecuaria, Industria, Come-
rcio e Exportacao
Companhia Tropical de Hoteis
Companhia Tropical de Hoteis—Amazonia
Companhia Tropical de Hoteis do Nordeste
PP
Companhia Tropical—Hotel Santarem
Companhia Tropical—Hotel Tambau
Expressao Brasileira de Propaganda Ltda.
Hotel de Bahia, S.A.
Icaro Editora Ltda.
RIO-SUL, Servicos Aereos Regionais, S.A.
. Servicos Auxiliaries de Transporte Aereo,
S.A. (SATA)
2 Pp = &
ee
— ©
—
bo
Sociedade Brasileira de Turismo Aereo—
“ROTATUR’”, Ltda.
80a
APPENDIX J
Fla. Stat. Ann. § 212.08(4) (West Supp. 1984)
212.08 Sales, rental, storage, use tax; specified exemp-
tions
The sale at retail, the rental, the use, the consumption,
the distribution, and the storage to be used or consumed
in this state of the following tangible personal property
are hereby specifically exempt from the tax imposed by
this chapter.
* * * *
(4) Exemptions, items bearing other excise taxes, etc.—
(a) Also exempt are:
1. Water (not exempting mineral water or carbon-
ated water).
2. All fuels used by a public or private utility, in-
cluding any municipal corporation or rural electric co-
operative association, in the generation of electric power
or energy for sale. Fuel other than motor fuel and spe-
cial fuel is taxable as provided in this part, with the
exception of fuel expressly exempt herein. However,
diesel fuel and kerosene used in any tractor, vehicle, or
other farm equipment which is used exclusively on a
farm or for processing farm products on the farm are
taxable as provided in part II. Motor fuels and special
fuels are taxable as provided in part II, with the excep-
tion of those motor fuels and special fuels used by rail-
road locomotives or vessels to transport persons or prop-
erty in interstate or foreign commerce which are tax-
able under this part only to the extent provided herein.
The basis of the tax shall be the ratio of intrastate mile-
age to interstate or foreign mileage traveled by the
carrier during the previous fiscal year of the carrier,
such ratio to be determined at the close of the fiscal year
of the carrier. This ratio shall be applied each month
8la
to the total purchases made in this state of gasoline and
other fuels to establish that portion of the total used and
consumed in intrastate movement and subject to tax un-
der this chapter.
(b) Alcoholic beverages and malt beverages are not
exempt. The terms “alcoholic beverages” and “malt bev-
erages” as used in this paragraph have the same mean-
ings ascribed to them in ss. 561.01(4) and 563.01, re-
spectively. It is determined by the Legislature that the
classification of alcoholic beverages made in this para-
graph for the purpose of extending the tax imposed by
this chapter is reasonable and just; and it is intended
that such tax be separate from, and in addition to, any
other tax imposed on alcoholic beverages.
82a
APPENDIX K
Air Transport Services Agreement dated
September 22, 1977 between the
United States of America
and Argentina
29 U.S.T. 2795, T.I.A.S. No. 8978
F. Business Conditions: The civil aeronautics author-
ities of each country shall endeavor to ensure that the
designated airlines of each country will be able to op-
erate at maximum efficiency. In particular, efforts will
be made to provide: 1) for ease and promptness of con-
version and remittance; 2) for navigation and communi-
cation charges and fuel prices at the lowest practicable
levels; 3) for exemption from taxes; and 4) for unre-
stricted advertising of airlines’ services.
Extension and Amendment:
March 11, 1981
T.LA.S. No. 10440
September 9, 1983 and October 13, 1983
83a
Air Transport Services Agreement dated
June 23, 1982 between the
United States of America
and Brazil
IX. BUSINESS CONDITIONS AND COMMERCIAL
OPPORTUNITIES
The authorities of each country shall make all possible
efforts to ensure that the airlines of each country can
operate at maximum efficiency with a fair and equal op-
portunity to compete for traffic on a non-discriminatory
basis. In particular, each government will provide for:
1) fair and equal opportunity to carry commercial traffic
without discrimination among airlines; 2) simple proce-
dures for prompt conversion and remittance of currency;
3) airport and airways charges and fuel charges on a
non-discriminatory basis; 4) exemption from federal
taxes to the maximum extent possible; 5) unrestricted
opportunities for advertising and other promotion of all
of the services of the designated airlines, and 6) the op-
portunity for airlines to provide ground handling serv-
ices for themselves or to contract with a company of their
choice for the provision of those services in accordance
with national legal requirements.
Extension:
April 20, 1983 and May 2, 1983
Amendment:
June 15, 1984
VII. Business Conditions and Commercial
Opportunities
Each Party affirmed its commitment to make all pos-
sible efforts to ensure that the airlines of each country
can operate at the maximum efficiency with a fair and
84a
equal opportunity to compete for traffic on a non-dis-
criminatory basis. In particular, each government will
provide for: 1) fair and equal opportunity to carry com-
mercial traffic without discrimination among airlines;
2) simple procedures for prompt conversion and remit-
tance of currency; 3) airport and airways charges and
fuel charges on a non-discriminatory basis; 4) exemption
from federal taxes to the maximum extent possible; 5)
unrestricted opportunities for advertising and other pro-
10tion of all of the services of the airlines; and 6) the
opportunity for airlines to provide ground handling serv-
ices for themselves or to contract with a company of
their choice for the provision of those services in accord-
ance with national legal requirements. In addition, the
delegations agreed that a designated airline of either
Party may notify directly the aeronautical authorities
of the other Party of any problems which the airline has
encountered regarding discrimination or unfair prac-
tices; such notification shall impose an obligation on the
aeronautical authorities of that Party to investigate fully
such allegations and, if considered substantiated, the
aeronautical authorities shall immediately take steps to
eliminate the discrimination of unfair practices com-
plained of.
VIII. Fuel Purchases
The delegations of both countries stated that the desig-
nated airlines of both countries may purchase local serv-
ices and fuel in local currency or in freely convertible
currencies at the option of the airline. The Brazilian
delegation stated that studies are being conducted with
a goal of eliminating all additional charges which may
occur in the processing of payments for these local serv-
ices and fuel.
85a
Air Transport Services Agreement dated
October 24, 1956 between the
United States of America
and Colombia
14 U.S.T. 429, T.I.A.S. No. 5338
ARTICLE 7
In order to prevent discriminatory practices and to
assure equality of treatment, both contracting parties
agree that:
* * * *
(B) Fuel, lubricating oils, consumable technical sup-
plies, spare parts, regular equipment, and stores intro-
duced into the territory of one contracting party by the
other contracting party or its nationals, and intended
solely for use by aircraft of such contracting party shall
be exempt on a basis of reciprocity from customs duties,
inspection fees and other national duties or charges.
(C) Fuel, lubricating oils, consumable technical sup-
plies, spare parts, regular equipment, and stores retained
on board aircraft of the airlines of one contracting party
authorized to operate the routes and services provided for
in this Agreement shall, upon arriving in or leaving the
territory of the other contracting party, be exempt on
a basis of reciprocity from customs duties, inspection fees
and other national duties or charges, even though such
supplies be used or consumed by such air craft on flights
in that territory.
(D) Fuel, lubricating oils, consumable technical sup-
plies, spare parts, regular equipment, and stores taken
on board aircraft of the airlines of one contracting party
in the territory of the other and used in international
services shall be exempt on a basis of reciprocity from
86a
customs duties, excise taxes, inspection fees and other
national duties or charges.
Amendment:
October 23, 1968
19 U.S.T. 7501, T:I.A.S. No. 6593 '
October 16, 1981 and October 22, 1981
T.LA.S. No. 10404
87a
Air Transport Services Agreement dated
October 20, 1983 and November 23, 1983
between the United States of America
and Costa Rica
ARTICLE 9
Customs Duties and Taxes
(1) On arriving in the territory of one Party, air-
craft operated in internationa! air transportation by the
designated airlines of the other Party, their regular
equipment, ground equipment, fuel, lubricants, consum-
able technical supplies, spare parts, including engines,
aircraft stores (including but not limited to such items
as food, beverages and liquor, tobacco and other products
destined for sale to or use by pasengers in limited quanti-
ties during the flight), and other items intended for or
used solely in connection with the operation or servicing
of aircraft engaged in international air transportation
shall be exempt, on the basis of reciprocity, from all im-
port restrictions, property taxes and capital levies, cus-
toms duties, excise taxes, and similar fees and charges
imposed by the national authorities, and not based on the
cost of services provided, provided such equipment and
supplies remain on board the aircraft.
(2) There shall also be exempt, on the basis of reci-
procity, frem the taxes, duties, fees and charges referred
to in paragraph (1) of this Article, with the exception of
charges based on the cost of the service provided:
(a) aircraft stores introduced into or supplied in the
territory of a Party and taken on board, within reason-
able limits, for use on outbound aircraft of a designated
airline of the other Party engaged in international air
transportation, even when these stores are to be used
on a part of the journey performed over the territory of
the Party in which they are taken on board;
a
88a
(b) ground equipment and spare parts including en-
gines introduced into the territory of a Party for the
servicing, maintenance or repair of aircraft of a desig-
nated airline of the other Party used in international
air transportation; and
(c) fuel, lubricants and consumable technical supplies
introduced into or supplied in the territory of a Party
for use in an aircraft of a designated airline of the
other Party engaged in international air transportation,
even when these supplies are to be used on a part of the
journey performed over the territory of the Party in
which they are taken on board.
(3) Equipment and supplies referred to in paragraphs
(1) and (2) of this Article may be required to be kept
under the supervision or control of the appropriate au-
thorities.
(4) The exemptions provided for by this Article shall
also be available where the designated airlines of one
Party have contracted with another airline, which simi-
larly enjoys such exemptions from the other Party, for
the loan or transfer in the territory of the other Party
of the items specified in paragraphs (1) and (2) of this
Article.
(5) Each Party shall use its best efforts to secure for
the designated airlines of the other Party, on the basis
of reciprocity, an exemption from taxes, duties, charges
and fees imposed by State, regional and local authorities
on the items specified in paragraphs (1) and (2) of this
Article, as well as from fuel through-put charges, in the
circumstances described in this Article, except to the
extent that the charges are based on the actual cost of
providing the service.
89a
Air Transport Services Agreement dated
January 8, 1947 between the
United States of America
and Ecuador
61 Stat. 2773, T.LA.S. No. 1606
ARTICLE 3
In order to prevent discriminatory practices and to
assure equality of treatment, both contracting parties
agree that:
* * . *
(b) Fuel, lubricating oils, and spare parts introduced
into the territory of one contracting party by the other
contracting party or its nationals, and intended solely for
use by aircraft of the airlines of such contracting party
shall, with respect to the imposition of customs duties,
inspection fees or other national duties or charges by the
contracting party whose territory is entered, be accorded
the same treatment as that applying to national airlines
and to airlines of the most-favored-nation.
(c) The fuel, lubricating oils, spare parts, regular
equipment and aircraft stores retained on board civil air-
craft of the airlines of one contracting party authorized
to operate the routes and services described in the Annex
shall, upon arriving in or leaving the territory of the
other contracting party, be exempt from customs, inspec-
tion fees or similar duties or charges, even though such
supplies be used or consumed by such aircraft on flights
in that territory.
Amendment:
January 3, 1951 and January 10, 1951
2 U.S.T. 482, T.I.A.S. No. 2196
Supplement:
December 31, 1975
T.LA.S. No. 8205
90a
Air Transport Services Agreement dated
August 15, 1960 between the
United States of America
and Mexico
12 U.S.T. 60, T.I.A.S. No. 4675
ARTICLE 7
In order to prevent discriminatory practices and to
assure equality of treatment, both parties agree further
to observe the following principles:
* * * *
(b) Fuel, lubricating oils, consumable technical sup-
plies, spare parts, regular equipment, and stores intro-
duced into the territory of one party by the other party
or its nationals, and intended solely for use by aircraft
of such party shall be exempt on a basis of reciprocity
from custom duties, inspection fees and other national
duties or charges.
(c) Fuel, lubricating oils, other consumable technical
supplies, spare parts, regular equipment, and stores re-
tained on board aircraft of the airlines of one party au-
thorized to operate the routes and services provided for in
this Agreement shall, upon arriving in or leaving the ter-
ritory of the other party, be exempt on a basis of reci-
procity from customs duties, inspection fees and other
national duties or charges, even though such supplies be
used or consumed by such aircraft on flights in that
territory.
(d) Fuel, lubricating oils, other consumable technical
supplies, spare parts, regular equipment, and stores taken
on board aircraft of the airlines of one party in the terri-
tory of the other and use in international services shall
be exempt on a basis of reciprocity from customs duties,
9la
excise taxes, inspection fees and other national duties or
charges.
Extension and Amendment:
July 31, 1970
22 U.S.T. 1492, T.I.A.S. No. 7167
January 20, 1978
Department of State Press Release No. 63,
February 7, 1978
December 13, 1983 and December 16, 1983
aii
92a
Air Transport Services Agreement dated
February 11, 1946 between the
United States of America
and the United Kingdom
60 Stat. 1499, T.I.A.S. No. 1507
ARTICLE 3
* * * *
(2) Fuel, lubricating oils and spare parts introduced
into, or taken on board aircraft in, the territory of one
Contracting Party by, or on behalf of, a designated air
carrier of the other Contracting Party and intended solely
for use by the aircraft of such carrier shall be accorded,
with respect to customs duties, inspection fees or other
charges imposed by the former Contracting Party, treat-
ment not less favourable than that granted to national
air carriers engaged in international air services or such
carriers of the most favoured nation.
(3) Supplies of fuel, lubricating oils, spare parts, regu-
lar equipment and aircraft stores retained on board air-
craft of a designated air carrier of one Contracting Party
shall be exempt in the territory of the other Contracting
Party from customs duties, inspection fees or similar
duties or charges, even though such supplies be used by
such aircraft on flights within that territory.
Agreement dated November 22, 1961 between the
United States of America and the United Kingdom pro-
viding for air routes between the West Indies and the
United States, operations over which will be in accordance
93a
with the provisions of the agreement of February 11,
1946
13 U.S.T. 171, T.LA.S. No. 4955
Agreement dated September 22, 1962 and October 8,
1962 between the United States of America and Trinidad
and Tobago to continue application of certain agreements
to scheduled services between the United States and the
Caribbean area by United States and Trinidad and
Tobago Airlines
13 U.S.T. 2463, T.I.A.S. No. 5209
94a
APPENDIX L
Letter dated September 29, 1982 to Executive Director
of State of Florida Department of Revenue
from Deputy Assistant Secretary of State for
Transportation and Telecommunications
[SEAL]
United States Department of State
Washington, D.C. 20520
September 29, 1982
Mr. Randy Miller
Director
Department of Revenue
102 Carlton Building
Calhoun Street
Talahassee, Florida 32301
Dear Mr. Miller:
The Department of State is seeking your cooperation in
an important matter affecting U.S. international rela-
tions.
The U.S. Government exempts foreign airlines from
customs duties, taxes, fees and other national charges on
their aircraft, fuel, and aviation related materials. These
exemptions include such items as lubricants, consumable
technical supplies, spare parts (including engines) and
aircraft stores (including food, beverages and tobacco).
The United States obligation to accord these exemptions
stems from our adherence to Article 24 of the Interna-
tional Convention on Civil Aviation (Chicago, 1944) and
to the air transport agreements which the United States
has with over 70 foreign countries. In some cases, such
as the absence of a bilateral aviation agreement, exemp-
tions are accorded foreign airlines pursuant to a finding
of reciprocity.
95a
Governments of a number of countries have recently
brought to our attention that their airlines are required
to pay state and local taxes on items for which the U.S.
Government grants an exemption from federal taxes.
Some foreign governments have questioned the appropri-
ateness of imposing these state and local taxes on foreign
air carriers in view of the generally-accepted and long-
standing international practice of reciprocally exempting
such items from taxes. A few such governments have
raised the possibility that state and local authorities in
their jurisdictions could impose similar taxes on U.S. air-
lines. A proliferation of state and local taxes would
frustrate the international system of reciprocal tax ex-
emptions and thereby significantly increase the cost of
international air transportation.
We urge, therefore, that you exempt foreign air car-
riers from taxes levied in your jurisdiction on items for
which the U.S. Government provides an exemption. To
ensure that U.S. airlines enjoy reciprocal treatment
abroad, we recommend that you grant such exemptions
only to foreign airlines which demonstrate that state and
local authorities in their country exempt U.S. airlines
from taxes.
In order to respond to foreign government inquiries,
we would appreciate knowing precisely what state and
local charges you currently levy on foreign airlines. Such
information would be particularly helpful if you would
indicate whether the charges are indeed taxes or whether
they are fees for services rendered. Information con-
cerning actual and proposed exemptions for foreign air-
lines would also be useful.
We appreciate your assistance and cooperation in this
matter.
|
96a
Sincerely,
MATTHEW V. Scocozza
Deputy Assistant Secretary |
for Transportation and
Telecommunication
ec: Mr. Grover C. Jones
Chief, Bureau of Aviation
Florida Dept. of T ransportation
605 Suwannee St.
Mail Station 46
Talahassee, Florida 32301
Mr. Richard Judy
Director
Miami International Airport
Box 59-2075, AMF
Miami, Florida
97a
Letter dated October 25, 1982 to
Deputy Assistant Secretary of State for
Transportation and Telecommunications
from Executive Director of State of
Florida Department of Revenue
STATE OF FLORIDA
DEPARTMENT OF REVENUE
Tallahassee, 32301
[SEAL]
Randy Miller
Executive Director
October 25, 1982
Mr. Matthew V. Scocozza
Deputy Assistant Secretary
for Transportation and Telecommunication
United States Department of State
Washington, D. C. 20520
Dear Mr. Scocozza:
This will answer your letter of September 29 regard-
ing taxation of foreign airlines.
The State of Florida recognized the importance of for-
eign airlines (and steamships) many years ago, and in
spite of increased tax rates and bases over the years, the
generous tax advantages allowed them have not changed.
Examples of these tax advantages are:
1. They are totally exempt from the state 8¢ motor
fuel tax (the same as domestic commercial air-
lines) on all fuel placed aboard the aircraft.
2. The state’s sales and use tax applies only to the
ratio of miles flown in Florida to total system
98a
miles. The very short distance out of Miami, Ft.
Lauderdale, Tampa and Jacksonville is so minute,
and since we must recognize any tax properly
imposed by another state or taxing jurisdiction,
the result is that practically no Florida sales and
use tax is realized from foreign carriers on their
purchases of aircraft, parts, fuel, certain ground
and loading equipment, ete.
This letter relates to state imposed taxes only. Any
taxes and/or fees imposed by local taxing authorities are
something we have very little knowledge of and no control
over.
We are taking the liberty of forwarding a copy of your
letter to Governor Bob Graham for review by his policy
issue staff, and if there is some particular issue not cov-
ered in this response, please let us hear from you again.
Sincerely,
/s/ Randy Miller
RANDY MILLER
Executive Director
RM /vam
ec: Honorable Bob Graham
Mr. Grover C. Jones
Mr. Richard Judy
99a
Letter dated March 17, 1982 [1983] to
Executive Director of State of Florida
Department of Revenue from
Deputy Assistant Secretary of State for
Transportation and Telecommunications
[SEAL]
DEPARTMENT OF STATE
Washington, D.C. 20520.
Mr. Randy Miller March 17, 1982
Executive Director
Department of Revenue
State of Florida
Tallahassee, Fla. 23201
Dear Mr. Miller:
I am writing to you to express the Department of
State’s concern regarding the recent enactment of a state
tax on aviation fuel. In your letter to me of October 25,
1982, you indicated that the State of Florida “.. . recog-
nized the importance of foreign airlines many years ago
. and that the generous tax advantages allowed them
have not changed.”
Therefore, we were surprised and distressed to hear
that the State of Florida plans to impose a 5% tax on
aviation fuel, effective April 1, 1988. I understand the
tax is to be applied to all aviation fuel sold and not only
to fuel consumed in Florida, as had previously been the
case. If imposed, this tax will cause serious foreign rela-
tions problems unless provision is made to exclude foreign
airlines, It may be possible, for example, to provide for
an exemption based on reciprocity whereby foreign air-
lines would be exempted from the tax if U.S. airlines
operating to the foreign airline’s home country are also
exempted from similar taxes.
ea
100a
We would appreciate any further information you can
give us concerning this new tax and for your comments
on my suggestion to avoid the foreign relations di fficulties.
Sincerely,
/8/ Matthew V. Scocozza
MATTHEW V. Scocozza
Deputy Assistant Secretary
for Transportation and
Telecommunication
10la
Letter of August 30, 1983 to Clerk of Florida Supreme
Court transmitting Motion of Appellees to
Supplement Record and Appellee’s
Post-Argument Exhibit A
SQUIRE, SANDERS & DEMPSEY
Cleveland
August 30, 1983
(216) 687-8585
Hon. Sid J. White
Clerk
Supreme Court of Florida
Tallahassee, Florida 32301
Re: Department of Revenue v.
Lineas Aereas Costarricenses, 8.A., et al.
Case No. 63,989
Dear Mr. White:
After today’s argument, I learned that the Department
of State had been expecting me to bring the Depart-
ment’s latest message to the attention of the Court.
To that end, I enclose the original and several copies
of a Motion to Supplement the Record; I trust you will
find the Motion in order for filing.
Also enclosed, as “Appellees’ Post-Argument Exhibit
A” are copies of the wire Mr. Papkin and I received this
morning from the Department of State. I assume the
wire should be lodged with your office pending the Court’s
ruling on the Motion to Supplement.
Very truly yours,
/s/ D.A.N.
DAviIpD A. NELSON
102a
IN THE SUPREME COURT OF FLORIDA
Case No. 63,989
DEPARTMENT OF REVENUE,
Appellant, Cross-Appellee,
VS.
LINEAS AEREAS COSTARRICENSES, S.A., et al.,
Appellees, Cross-Appellants.
MOTION OF APPELLEES TO
SUPPLEMENT RECORD
Appellees (“the Foreign Airlines”) respectfully move
the Court, pursuant to Rules 9.200(f) and 9.300 of the
Florida Rules of Appellate Procedure, for leave to sup-
plement the record by filing with the Court a telegram
(copies of which, marked Appellees’ Post-Argument Ex-
hibit A, have been lodged with the Clerk) dated August
30, 1983, to Squire, Sanders & Dempsey from Hon.
Matthew V. Scocozza, Deputy Assistant Secretary of
State for Transportation and Telecommunications, United
States Department of State.
In support of this Motion, Appellees would show this
Court the following:
1. The telegram amplifies two previous letters from
Mr. Scocozza that were received in evidence as part of
Plaintiffs’ Exhibit 6 (R 373-74) and comprise part of the
record on appeal. (Copies of the earlier letters are at-
tached). The telegram is written “on behalf of the avia-
tion authorities of the United States”—the Civil Aero-
nautics Board and the Department of Transportation, as
well as the Department of State—and further illuminates
the national policy alluded to in the briefs and oral
argument.
103a
9 “The views of the State Department carry substan-
tial weight in these matters. . . ”” United States v.
Postal, 589 F.2d 862, 883 (5th Cir. 1979). While the
form in which the Department has presented its views
here may be somewhat unorthodox, appellees urge this
Court to let the Department’s communication be received
for whatever it may be worth.
Respectfully submitted,
SQUIRE, SANDERS & DEMPSEY
Attorneys for Appellees/Cross-
Appellants
By
Davip A. NELSON
One Biscayne Tower
Two South Biscayne Boulevard
Suite 3684
Miami, Florida 33131
(305) 577-8700
CERTIFICATE OF SERVICE
WE HEREBY CERTIFY that a true and correct copy
of the foregoing Motion has been delivered to the office of
Joseph C. Mellichamp, III, Assistant Attorney General,
Department of Legal Affairs, LL04, the Capitol, Talla-
hassee, Florida, and the office of Larry Levy, General
Counsel, Department of Revenue, State of Florida, 203
Carlton Building, Tallahassee, Florida 32301, and has
been mailed to James E. Tribble, Blackwell, Walker,
Gray, Powers, Flick & Hoehl, 2400 AmeriFirst Building,
One Southeast Third Avenue, Miami, Florida 33131, this
30th day of August, 1983.
DAvID A. NELSON
Attorney for Appellees /Cross-
Appellants
1$4da
Appellees’ Post-Argument Exhibit A—Telegram dated
August 30, 1983 from Deputy Assistant Secretary of
State for Transportation and Telecommunications to
Squire, Sanders & Dempsey
[LOGO] TELEGRAM
WESTERN UNION
THA007 (0805) (4-002043M242)PD 08/30/83 0801
ICS IFLDOSA WSH
2403 UG WASHDC
PMS SQUIRE, SANDERS AND DEMPSEY (URGENT
DELIVERY REQUESTED)
C/O TALLAHASSEE HILTON
101 SOUTH ADAMS STREET
TALLAHASSEE FLA 32302
ATTN: SQUIRE SANDERS AND DEMPSEY, MR.
ROBERT PAPKIN
DEAR MR. PAPKIN:
I AM WRITING ON BEHALF OF THE AVIATION
AUTHORITIES OF THE UNITED STATES—THE
DEPARTMENT OF STATE, THE CIVIL AERONAU-
TICS BOARD AND THE DEPARTMENT OF TRANS-
PORTATION—WITH RESPECT TO THE APPEAL
IN STATE OF FLORIDA, DEPARTMENT OF REVE-
NUE V. LINEAS AEREAS COSTARRICENSES, S.A.,
ET AL., CASE NO. 63,989, WHICH I UNDERSTAND
IS PENDING BEFORE THE SUPREME COURT OF
THE STATE OF FLORIDA. AS YOU WILL BE
AWARE FROM THE RECORD OF THE APPEAL, I
HAVE TWICE WRITTEN TO THE DEPARTMENT
OF REVENUE OF THE STATE OF FLORIDA TO EX-
PLAIN HOW THE POLICIES AND INTERESTS OF
105a
THE UNITED STATES ARE AFFECTED BY STATE
AND LOCAL TAXATION OF INTERNATIONAL AIR
CARRIERS. THOSE LETTERS HAVE BEEN INTRO-
DUCED INTO THE RECORD OF THIS PROCEED-
ING AND WERE RELIED UPON IN THE TRIAL
COURTS FINAL JUDGMENT (AS AMENDED).
THE POSITIONS EXPRESSED IN THOSE LETTERS
CONTINUE TO REFLECT THE POLICIES OF THE
U.S. AVIATION
THE UNITED STATES IS COMMITTED—BY STAT-
UTE, INTERNATIONAL AGREEMENT AND EX-
PRESS POLICY—TO A MARKETPLACE FOR IN-
TERNATIONAL AVIATION GOVERNED, TO THE
GREATEST EXTENT POSSIBLE, BY COMPETITIVE
FORCES UNALTERED BY GOVERNMENTAL IN-
TERVENTION. FOREIGN TAXA'TION OF AIR CAR-
RIERS THREATENS AN EXCESSIVE TAX BURDEN
ON INTERNATIONAL TRANSPORTATION AND RE-
STRICTED ACCESS TO THE MARKETPLACE; IT
MAY ALSO UNDERMINE THE EVENHANDEDNESS
REQUISITE TO FAIR COMPETITION IN THE MAR-
KETPLACE. THEREFORE, THE FEDERAL GOV-
ERNMENT HAS PARTICIPATED IN AND IS CON-
TINUING TO ENCOURAGE A GROWING INTERNA-
TIONAL CONSENSUS TO PROMOTE INTERNA-
TIONAL AIR SERVICES THROUGH RECIPROCAL
EXEMPTION OF AIR CARRIERS FROM FOREIGN
TAXES. AS PART OF THIS POLICY, THE U.S. EN-
COURAGES THE STATES TO EXEMPT FOREIGN
AIR CARRIERS FROM ALL TAXES, IN PARTICU-
LAR TO AVOID RETALIATION BY FOREIGN GOV-
ERNMENTS AGAINST ALL U.S. CARRIERS IN RE-
SPONSE TO THE TAX POLICY OF ONLY ONE
STATE. SENATE BILL NO. 8-A CONFLICTS WITH
THIS FEDERAL POLICY AND THE LONG-AC-
CEPTED INTERNATIONAL PRACTICE IT RE-
FLECTS.
106a
FURTHER, AS I UNDERSTAND SENATE BILL NO.
8-A, IT IS SPECIFICALLY INTENDED TO PROVIDE
A COMPETITIVE ADVANTAGE TO QUALIFIED USS.
AIR CARRIERS DOMICILED IN THE STATE OF
FLORIDA. IN OUR VIEW, THIS OBJECTIVE IS
INCONSISTENT WITH THE POLICY REFLECTED
IN ALL RELEVANT BILATERAL CIVIL AVIATION
AGREEMENTS TO PROVIDE A “FAIR AND EQUAL
OPPORTUNITY TO COMPETE.”
VERY TRULY YOURS,
MATTHEW V. SCOCOZZA
DEPUTY ASSISTANT SECRETARY FOR
TRANSPORTATION AND TELECOMMUNICATIONS
DEPARTMENT OF STATE WASHINGTON DC 246266
107a
IN THE SUPREME COURT OF FLORIDA
Case No. 63,989
DEPARTMENT OF REVENUE,
Appellant, Cross-Appellee,
VS.
LINEAS AEREAS COSTARRICENSES, S.A., et al.,
Appellees, Cross-A ppellants.
RESPONSE AND MOTION TO STRIKE
Comes now the Appellant, DEPARTMENT OF REVE-
NUE, in response to the Motion of Appellees to Supple-
ment Record and says:
MOTION TO STRIKE
Appellant moves to Strike said Motion for the follow-
ing reasons:
1. Said motion and the telegram is a blatant and
flagrant violation of the integrity of this Court and the
appellate process. The Appellees are attempting to intro-
duce hearsay of the “rankest kind”. The telegram is
obviously an attempt by the Appellees to “bloat” the
record with no opportunity whatsoever for cross examina-
tion by the Appellant. The “timing” of this telegram
demonstrates quite clearly that the faceless fe
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