# Amicus Curiae Brief — Franks & Son, Inc. v. Washington

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1999
- **Citation:** 526 U.S. 1066

## Text

No. 98-1282

UFR
In the Supreme Court of the Gnited States

OCTOBER TERM, 1998

FRANKS & SON, INC., on behalf of
themselves and all others similarly situated

Petitioner

THE STATE OF WASHINGTON. W

A CTITAIS TSA
VAONINGIUN (

TRANSPORTATION COMMISSION, AND OFFICE OI

THE STATE TREASURER

On Petition for a Writ of Certiorari to the
Supreme Court of Washington

BRIEF OF AMERICAN TRUCKING
ASSOCIATIONS, INC. AS AMICUS
CURIAE IN SUPPORT OF PETITIONER

ROBERT DIGGES, JR. WALTER HELLERSTEIN
ATA LITIGATION CENTER UNIVERSITY OF GEOR‘
2200 MILL ROAD LAW SCHOOI
ALEXANDRIA, VA 22314 ATHENS, GA 30602
(703) 838-1889 (706) 542-5175

. Ci unsel of Re

QUESTION PRESENTED
Whether the Commerce Clause requirement that state taxes be
apportioned is applicable to “regulatory fees” — that is, state
actions that are used to pay for regulatory activity

il

TABLE OF CONTENTS

Page
QUESTION PRESENTED .... 2.3 ete ee eee (I)
TABLE OF AUTHORITi&€s © 6... «eee Pee ates Se ili
REASONS FOR GRANTING THE PETITION ......... 2
INTRODUCTION .o.eien ee 2

I. LOWER COURTS NEED GUIDANCE ON THE
RELEVANCE AND APPLICATION OF THE “TAX
VERSUS FEE” DESTEIWG, Sat sc oe ee 6

Il. THE COMMERCE CLAUSE’S APPORTIONMENT
REQUIREMENT APPLIES EQUALLY TO TAXES
AND FEES 2.6 esi use © ae ee ee 12

A. The Validity of a State Charge Under the Commerce
Clause is Based Upon its Practical Effect on
Imerstate COMMMEIGO 2 os va oe ee eee ee 12

B. Because the Practical Effect of Flat Taxes and Fees
Under the Commerce Clause is the Same, There is
no Basis for Applying a Different Legal Analysis . . 15

C. Separate Commerce Clause Standards for Fees and
Taxes Would Needlessly Complicate Judicial
Review, Leading to State Manipulation of Charges
and Inconsistemt ReMMS ... 6a ee esa oe eeu 17

Il. A PIKE ANALYSIS IS NOT APPROPRIATE FOR
REGULATORY FEES 543-2455. 02 8 18

CONCLUSION . 6.5 i654 © a uneee ee ee eee 20

il
TABLE OF AUTHORITIES

Cases

American Trucking Associations, Inc. v. Conway,
566 A.2d 1323 (Vt. 1989) ......,.

American Trucking Associations, Inc. y. Denn,
No. C2-95-4910 (Dist. Ct., Ramsey Cty., 1995)

American T, an ont Associations, Inc. v. Goldstein.
541 A.2d 955 (Md. 1988) ...........°

American Trucking Associations, Inc. v. Gray,
746 S.W.2d 377 (Ark. 1988) .....°...

American Trucking Associations, Inc. v. Kline.
> N.J.Tax G51 (N.J., 1987) ............

American Trucking Associations, Inc. v. New
Hampshire, No. 89-E-00405-B (N.H.
Super. Ct., Merrimack Co., ee en

American Trucking Associations, Inc. v. New
Hampshire, No. 89-E-00405 (N.H.
Super. Ct., Merrimack Co., 1991) ........

American Trucking Associations, Inc. v. New Jersey,
No. 001601-94 (N.J. Tax Ct.) ........°°

American Trucking Associations, Inc. y.
New Jersey, No. 001601 (N.J. Tax Ct..
eeu. 17,0908) ..............

American Trucking Associations, Inc. v. New
Jersey, No. 011562-92 (N.J. Tax Ct.
March 23, 1998), pees docketed,
No. A-6334-97T3F (N.J. Super. Ct., App.
wwommy 15,1998) .................

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

American Trucking Associations, Inc. v.
Secretary of Administration, 613 N.E.2d 95
TE sy is neces cn eke

Pages

ee)

iV

TABLE OF AUTHORITIES — Continued

Pages

American Trucking Associations, Inc. v. Secretary

of State, 595 A.2d 1014 (Me. 1991) .....---- Fe Be
American Trucking Associations, Inc. v. Secretary

of State, No. CV-89-410 (Me. 1990) .......----:- 3
American Trucking Associations, Inc. v. Smith,

No. 89-0385 (Ark. Chancery Ct., 1992) .......-.-.-- 3
American Trucking Associations, Inc. Vv.

Cowan, No.TX91-01608 (Ariz. Chancery

"Se RRR eS ie i A Pee ere 2
American Trucking Associations, Inc. v. State,

556 N.W. 2d 761 (Wis. Ct. App. 1996)

rev. denied, 560 N.W.2d 274 (Wis. 1996) .....----.- 2
Armco Inc. v. Hardesty, 467 U.S. 638 (1984) ...-..-.-- 20
Black Beauty Trucking, Inc. v. Indiana Dept.

of Revenue, 527 N.E. 2d 1163 (Ind.

eae Oe PN are ees se Oke ee Roa ete 2
Capitol Greyhound Lines v. Bryce, 339 U.S. 542

A ce elceta Cee ee ah ay Fe + eee ene) 13
Commonwealth Edison Co. v. Montana,

453: U.S. GOO UIGS1) cc et ee et eee es 9,12,14,16
Commonwealth Transportation Cabinet v.

American Trucking Associations, Inc.,

146 S.W.2d 65 (Ky. 1988) ....----- +s seers 3
Complete Auto Transit v. Brady,

SID US. TISCISTT) cg oe ee we cee ee 12,14,17,18
Covell v. City of Seattle, 127 Wash. 2d 874,

9A Be NOD oo eco Scere we hen wie 08 ae Oe 10

Evansville-Vanderburgh Airport Authority
Dist. v. Delta Airlines, Inc., 405 U.S.
ints if) ee Ree Eee eee ees, 8

TABLE OF AUTHORITIES — Continued

Pages
Fair Assessment in Real Estate Association, Inc..

5 UD. WOO CIS). ok oe howe ee eee ae 7
Fairbank v. United States, 181 U.S. 283 (1901) ........ 12
Federal Power Commission v. New England Power

Co, 453 US. 5 Ge. ot ee 6
Head Money Cases, 112 U.S. 580 (1884) ............ 6
In re Jenny Lynn Mining Co., 780 F.2d 585

eee Ca es te te eee 7
Interstate Towing Ass’n v. Cincinnati,

© F.30 1156 Gee Cir. 1993) .. . . 6 oe we ee chee ey 11
Kentucky v. American Trucking Associations, Inc..,

FO S.W. 206 GS Gy. TSG) os oc ce wc ec ccc 2
Marx v. American Trucking Associations, Inc..,

600 So. 24 212 (Miss. 1992) ............c..e. 3
Massachusetts v. United States.

Rae €) Ge CRT: 63s hw a ae eee 6, 7
National Cable Television Ass’n v. United States.

G3) Us SEPP 6% be eee ee eee 6, 8
Pace v. Burgess, 92 U.S. 372 (1876) 2. nw we ee. 6
Perez v. Ledesma, 401 U.S. 82 (1971) ......... Pe oe
Pike v. Bruce Church, Inc.,

Per Ue ROT CUO ve x oo Oe eee 19, 20
Rosewell v. La Salle National Bank, 450 U.S.

PEP CODES 8b oo bo eS ee a Oe, ee eee 8
San Juan Cellular Phone Co. v. Public Service

Comm’n, 967 F.2d 683 (ist Cir. 1992) .......... 7,8

Turpin v. Burgess, 117 U.S. 504 (1886) ............. 6

v1

TABLE OF AUTHORITIES — Continued

Pages

Union Pacific Railroad Co. v. Public Utility Comm'n,

899 F.2d 854 (Sth Cir. 1990) 2... ce et ees 11
United States Shoe Corp. v. United States,

118 S. Ct. 1290 (1998) .......2 2 ee eee. 6,7, 8,9
United States v. Sperry Corp.,

493 U.S. $2 (1969) ww ee re eee ere es 6
V-1 Oil Co. v. Utah State Dept. of Public Safety,

131 F.3d 1415 (10th Cir. 1997) ........--505--: 1]
Westlake Transportation, Inc. v. Michigan Public

Service Commission, No. 95-15628-CM (Mich.

Ct. Cl., October 13, 1995), appeal docketed,

No. 216090 (Mich. App. Ct., Dec. 3, 1998) ...... 2,5
Statutes and Regulations
31 U.S.C. §483a 6... ee er eee 8
31 U.S.C. § 583a 2... ee eee 10
31 U.S.C. §9701 .. 0. ee ee ee 6
49 U.S.C. § 1103(b) . 2. 2 ee ees 7
Ark. Code Ann. § 26-55-708 (2) ....-..-- 5555555: 3
Ark. Code. Ann. §§ 75-817 and 75-819 ..........-.-.-.-. 3
Ariz. Rev. Stat. §§ 28-2421 and 28-2422 ..........-.. 3
Ariz. Rev. Stat. § 28-3005 ........-.--5-5555525- 3
Ind. Code § 6-6-8-1 ......-- 5-2 eee ee es 3
Ky. Rev. Stat. Ann. § 1388.660(4-7)....---- 5-5-5: - 3
N_H. Rev. Stat. Ann. § 147-A:6, If .........--.--.--. 2
N.H. Rev. Stat. Ann. § 21-P:20,I1V .............-.-.-. 3
N.H. Rev. Stat. Ann. § 260:52, V (Supp. 1988) .......-. 3
N.J.S.A. 13:1E-18(a) ...-...--- eee ee eee eee ees 3
N.J.S.A. § 54:39A-10 2.0.0.2 ee ee 3
Mass. Gen. Laws ch. 21C,§7 ........- 5555555 ees 3
Mass. Gen. Laws ch. 62C, § 67 .......-.---5+5505: 3
Md. Ann. Code art. 81, § 423(a) ... 2... 2-2 ee ee ees 3
Me. Rev. Stat. Ann. tit. 29 § 246-A ..........-.555: 3
Me. Rev. Stat. Ann. tit. 29 §246-D ............5.-5. 3
Mich. Comp. Laws 478.2(2) .. 2... 5-5-2 eee eee 2
Minn. Stat. § 221.31... 0... - 2. ee eee eee eee ees 3
Miss. Code Ann. § 27-61-5(1) .. 2... 2. ee ee ee es 3
Miss. Code Ann. § 77-7-119 .... 2.2... 2 ee ee eee ees 3

LLU“

V1
TABLE OF AUTHORITIES — Continued
Pages

Vt. Stat. Ann. tit. 23 §
Vt. Stat. Ann. tit. 23 §
§ §

oo
Ar
ra
oc
rh

Miscellaneous

Hellerstein, Js "Internal Consistency" Foolish
Reflections on an Emerging Commerce Claus:
Restraint on State Taxation," 87 MICH. |
REV. 138 (1988)

Lockhart, State Tax Barriers to Interstate Trad:
53 HARV. L. REV. 1253 (1940)

U.S. Department of Transportation, Highway
Statistics 1997, IV-5 - IV-6 (1997)

INTEREST OF THE AMICUS CURIAE

American Trucking Associations, Inc. (ATA), is a national
trade association of motor carriers, state trucking associations, and
national trucking conferences created to promote and protect the
interests of the trucking industry.' That industry consists of every
type of motor carrier operation in the United States and includes
tens of thousands of interstate for-hire carriers, private carriers, and
leasing companies.

The interstate trucking industry traditionally has been one of
the principal targets of discriminatory state taxation and regulation.
As a result, ATA and its members have brought or participated in
Commerce Clause challenges to a wide range of state taxes, fees,
and regulations before this Court and other state and federal courts.
Indeed, ATA was the lead plaintiff (appellant before this Court) in
the case whose principles are most directly at issue in this appeal
(American Trucking Associations, Inc. vy. Scheiner, 483 U.S. 266
(1987) (“Scheiner”)), and it has often litigated the identical “tax
vs. fee” issue raised in this matter. E.g., American Trucking
Associations, Inc. v. Secretary of State, 595 A.2d 1014 (Me. 1991)
(“Secretary of State”): American Trucking Associations, Inc. y.
Secretary of Administration, 613 N -E.2d 95 (Mass. 1993)
(“Secretary of Administration”); American T; rucking Associations,
Inc. v. New Jersey, No. 011562-92 (N.J. Tax Ct. March 23, 1998),
appeal docketed, No. A-6334-97T3F (N.J. Super. Ct., App. Div.
July 15, 1998).

Moreover, despite ATA’s and others’ Strenuous efforts to
enforce Scheiner’s Commerce Clause Standards, states and localities
persist in imposing unapportioned, annual charges on interstate
trucking operations. These governmental entities argue that the
discriminatory and burdensome structure of these charges should be
ignored on the ground that the charges involved are not taxes but

' Pursuant to Rule 37.2 of the Rules of this Court, the parties have
consented to the filing of this brief amicus curiae. Their letters of consent
have been filed with the Clerk of the Court.

Pursuant to Rule 37.6 of the Rules of this Court, amicus states that
this brief was not authored in whole or in part by counsel for a party, and
no person or entity, other than amicus or its members, made a monetary
contribution to the preparation or submission of this brief.

5

“regulatory fees.” ATA accordingly has a strong interest in the
question presented by this case — whether the Commerce Clause’s
fair apportionment requirement ceases to apply to an exaction
merely because the levy may be characterized as a regulatory fee.

REASONS FOR GRANTING THE PETITION
INTRODUCTION

Following this Court’s Scheiner decision in 1987, ATA hoped
that states would recognize the decision’s unequivocal
condemnation of flat, annual charges on interstate trucking
operations and quickly eliminate them. Instead, most states tried
to evade Scheiner’s principles and forced ATA to undertake an
ongoing, decade-long litigation effort to enforce the Commerce
Clause requirements that Scheiner articulated. See, e.g., Kentucky
v. American Trucking Associations, Inc., 746 S.W. 2d 65 (Ky.
1988); Black Beauty Trucking, Inc. v. Indiana Dept. of Revenue,
527 N.E. 2d 1163 (ind. Tax Ct. 1988) (“Black Beauty”); Secretary
of State, 595 A.2d 1014 (Me. 1991); American Trucking
Associations, Inc. v. State, 556 N.W. 2d 761 (Wis. Ct. App.
1996), rev. denied, 560 N.W.2d 274 (Wis. 1996) (“Srate). All
told, ATA has been forced to bring suit against 15 states
challenging more than two dozen flat state taxes and fees imposed
on interstate trucking.’

2 American Trucking Associations, Inc. v. New Jersey, No. 011562-92
(N.J. Tax Ct. March 23, 1998), appeal docketed, No. A-6334-97T3F (N.J.
Super. Ct., App. Div. July 15, 1998) ($212-per-unit hazardous waste
transporter fee) (N.J. Stat. Ann. § 13:1E-18); American Trucking
Associations, Inc. v. State, 556 N.W. 2d 761 (Wis. Ct. App. 1996), rev.
denied, 560 N.W.2d 274 (Wisc. 1996) ($400-per-company hazardous
material transportation fee) (Wis. Admin. Code § SERB 4.03(2)(a)-(e));
Westlake Transportation, Inc. v. Michigan Public Service Commission, No.
95-15628-CM (Mich. Ct. Cl., October 13, 1995), appeal docketed, No.
216090 (Mich. App. Ct., Dec. 3, 1998) ($100-per-truck intrastate operating
fee (Mich. Comp. Laws 478.2(1)) and $100-per-vehicle flat annual
interstate registration fee (Mich. Comp. Laws 478.2(2)); American
Trucking Assaciations, Inc. v. New Hampshire, No. 89-E-00405-B (N.H.
Super. Ct., Merrimack Co., 1995) ($200-per-unit hazardous waste
transporter fee (N.H. Rev. Stat. Ann. § 147-A:6, II) and $25-per-unit

CC

ee)

hazardous material fee (reduced to $5-per-truck during the litigation) (N.H.
Rev. Stat. Ann. § 21-P:20, IV)); American Trucking Associations, Inc. vy.
Denn, No. C2-95-4910 (Dist. Ct., Ramsey Cty., 1995) ($40-per-vehicle cab
card fee (Minn. Stat. § 221.31)); American Trucking Associations, Inc. v.
New Jersey, No. 001601 (N.J. Tax Ct., filed Feb. 17, 1994) (flat-per-
company hazardous waste transporter business disclosure fee (N.J. Stat.
Ann. §§ 13:1E-18 and 13:1E-126 et seq.)); American Trucking
Associations, Inc. v. Secretary of Admin., 613 N.E. 2d 95 (Mass. 1993)
($7-per-truck license fee and $7-per-truck “user of special fuels” license
fee (Mass. Gen. Laws ch. 62C, § 67) and $200-per-truck hazardous waste
carrier fee (Mass. Gen. Laws ch. 21C, § 7)); American Trucking
Associations, Inc. v. Smith, No. 89-0385 (Ark. Chancery Ct., 1992) ($10-
per-truck fuel decal tax (Ark. Code Ann. § 26-55-708 (2)); American
Trucking Associations, Inc. v. Cowan, No.TX91-01608 (Ariz. Chancery
Ct., 1992) ($125-per-truck cargo tank fee (Ariz. Rev. Stat. § 28-3005) and
$100-per-carrier, $25-per-truck hazardous and special waste transporter fees
(Ariz. Rev. Stat. §§ 28-2421 and 28-2422)); Marx v. American Trucking
Associations, Inc., 600 So. 2d 212 (Miss. 1992) ($12-per-truck fuel
identification fee (Miss. Code Ann. § 27-61-5(1)) and $13-per-truck bingo
stamp fee (Miss. Code Ann. § 77-7-119)); American Trucking
Associations, Inc. v. Secretary of State, 595 A.2d 1014 (Me. 1991) ($25-
per-truck hazardous waste fee (Me. Rev. Stat. Ann. tit. 29 § 246-D));
American Trucking Associations, Inc. v. New Hampshire, No. 89-E-00405
(N.H. Super. Ct., Merrimack Co., 1991) ($20-per-truck decal fee (N.H.
Rev. Stat. Ann. § 260:52, V (Supp. 1988))); American Trucking
Associations, Inc. v. Secretary of State, No. CV-89-410 (Me. 1990) ($15-
per-truck decal fee (Me. Rev. Stat. Ann. tit. 29 § 246-A)); American
Trucking Associations, Inc. v. Conway, 566 A.2d 1323 (Vt. 1989) ($50-
per-truck fuel decal fee (23 Vt. Stat. Ann. tit. 23 § 415 (1982)) and $50-
per-truck retaliatory fee (Vt. Stat. Ann. tit. 23 § 3007 (1982))); American
Trucking Associations, Inc. v. Goldstein, 541 A.2d 955 (Md. 1988) ($25-
per-truck fuel decal fee (Md. Ann. Code art. 81, § 423(a)(1987 Cum.
Supp.))); Commonwealth Transportation Cabinet vy. American Trucking
Associations, Inc., 746 S.W.2d 65 (Ky. 1988) ($150-per-truck
supplemental highway use tax (Ky. Rev. Stat. Ann. § 1388.660(4-7)):
American Trucking Associations, Inc. v. Gray, 746 S.W.2d 377 (Ark.
1988) ($175-per-truck highway use equalization tax (Ark. Code. Ann. §§
75-817 and 75-819)); Black Beauty Trucking, Inc. v. Indiana Dept. of
Revenue, 527 N.E.2d 1163 (Ind.Tax Ct., 1988) ($50-per-truck supplemental
highway use tax (Ind. Code § 6-6-8-1 et seq.); American Trucking
Associations, Inc. v. Kline, 9 N.J.Tax 63] (N.J., 1987) ($25-per-truck fuel

In those cases, states have attempted to exploit every ambiguity
in Scheiner. For example, states have contended that the decision
applies only to situations where a state, by means of other tax
reductions, exempts local interests from the impact of the flat
charge — a blatant mischaracterization of Scheiner’s scope. See
483 U.S. at 273-75.° And states have attempted, as in this case, to
circumvent Scheiner’s apportionment requirement by arguing that
the decision applies only to taxes and not fees.

The “tax versus fee” argument has, therefore, been expressly
considered by courts in ATA cases. Rejecting the argument, the
Supreme Judicial Court of Massachusetts found that “[ijt is of no
relevance what label is attached to the assessment imposed by a
State if it actually discriminates against interstate commerce.”
Secretary of Administration, 613 N.E.2d at 99 n. 9. Likewise, the
Supreme Judicial Court of Maine held that “a tariff such as the one
imposed here is forbidden if it produces the prohibited
discriminatory effects on interstate commerce, whether designated
as a ‘fee’ or a general revenue ‘tax.’” Secretary of State, 595 A.2d
at 1016. Accordingly, the decision below directly conflicts with the
decisions of the highest courts of two states, and review by this
Court is needed to settle the standard of Commerce Clause review
governing “fees” that affect interstate commercial activities.

Moreover, the issue of the appropriate Commerce Clause
standar¢ to be applied to “fees” is now pending in two cases
challenging impositions by the State of New Jersey. Ina challenge
to a $212-per-unit annual hazardous waste transporter fee (which,
like the Washington fee, funds, in part, roadside safety
inspections), the New Jersey Tax Court rejected the State’s claim

decal fee (N.J. Stat. Ann. § 54:39A-10)).

3 As Petitioners note (Pet. at 26), states have also argued that
apportionment was impracticable, that it was inappropriate because the
charge involved was not for highway maintenance or construction, and
that their charge, as a “user fee,” need not be apportioned. See e.g.
State, 566 N.W. 2d at 767-68; Secretary of State, 595 A.2d at 1016;
Secretary of Administration, 613 N.E.2d at 101-03.

——— ss s—“‘_SN

5

that the charge was a regulatory fee that need not be apportioned.
The Court held that “[i]t is irrelevant whether I call the transporter
fees fees or taxes under Commerce Clause jurisprudence. It is
clear in Scheiner that the United States Supreme Court looked not
at the formal designation or character of a state imposition as being
a ‘fee or tax,’ but instead to the affect of that imposition on
interstate commerce .. .” American T, rucking Associations, Inc. v.
New Jersey, No. 011562-92 (N.J. Tax Ct. March 23. 1998) appeal
docketed, No. A-6334-97T3F (N.J. Super. Ct., App. Div. July 15,
1998).

An identical “tax versus fee” issue is pending in a concurrent
challenge to New Jersey’s flat, annual per-company hazardous
waste transporter business disclosure fee (N.J.S.A. 13: 1E-18(a)).
American Trucking Associations, Inc. v. New Jersey, No. 001601-
94 (N.J. Tax Ct.). And recently, the Michigan Court of Claims
rejected an ATA challenge to a $100-per-truck intrastate regulatory
fee that affects interstate commerce, expressing the view that state
regulation of safety standards “is not amenable to a fee structure
based on apportionment by usage.” Westlake Ti ransportation, Inc.
v. Michigan Public Service Commission, No. 95-15628-CM (Mich.
Ct. Cl., (Oct. 13, 1998)), appeal docketed, No. 216090 (Mich.
App. Ct., Dec. 3, 1998). Consequently, the case below presents
a substantial, recurring legal issue that demands this Court’s
attention.

Finally, many other substantial flat, annual charges, which are
not subject to current challenge, are being imposed on interstate
trucking operations (and other interstate businesses). See Petition
at 24n. 17. Without guidance from this Court on the “tax versus
fee” issue, the chances of eliminating those discriminatory charges,
without years of costly litigation, will be slim. Indeed, given the
recalcitrant attitude that many states have taken regarding flat,
annual taxes and fees, it can be reasonably expected that those
States will be emboldened by the decision below to enact new flat,
annual “fees” on the interstate trucking industry and other interstate
businesses. States have a powerful incentive to utilize flat charges
to export an unfair portion of their tax burden to out-of-state
interests; in Scheiner (483 U.S. at 276), the Court recognized that
the flat charges effectively cost interstate highway users five times
as much as local users. It is again, therefore, critically important

:

6

that this Court clarify the Commerce Clause standards applicable
to state “fees” to prevent further mischief in this area.

I. LOWER COURTS NEED GUIDANCE ON THE
RELEVANCE AND APPLICATION OF THE “TAX
VERSUS FEE” DISTINCTION

Whether a particular exaction constitutes a “tax” or a “fee” is
a recurring question that arises in a wide variety of contexts. For
example, this Court recently had to determine whether the federal
Harbor Maintenance Tax, as it applies to exports, constituted a tax
prohibited by the Export Clause of the Constitution (U.S. Const.
art. I, § 9, cl. 5), or a fee that fell outside the constitutional
prohibition. United States Shoe Corp. v. United States, 118 S. Ct.
1290 (1998); see also Turpin v. Burgess, 117 U.S. 504 (1886);
Pace v. Burgess, 92 U.S. 372 (1876). Similarly, the Court has had
to determine whether charges by federal agencies are authorized
fees for benefits granted* or are in substance taxes that Congress |
can impose only by the exercise of its taxing power. Federal Power
Commission v. New England Power Co., 415 U.S. 345 (1974);
National Cable Television Ass'n v. United States, 415 U.S. 336
(1974). It has had to determine whether federal registration fees
imposed on civil aircraft constituted taxes that arguably violated the
states’ constitutional immunity from federal taxation, or were
reasonable user fees that were not barred by that doctrine.
Massachusetts v. United States, 435 U.S. 444 (1978). And, over a
century ago, the Court had to determine whether per-passenger
charges on those transporting immigrants into the country
constituted an allegedly nonuniform exercise of the federal taxing
power, see U.S. Const. art. I, § 8, cl. 1, or a fee for services
rendered that was not subject to the constitutional restraint on that
power. Head Money Cases, 112 U.S. 580 (1884). Cf. United States
v. Sperry Corp., 493 U.S. 52 (1989) (distinguishing charges that
constitute governmental takings under Due Process Clause from
reasonable user fees).

* See 31 U.S.C. § 9701 (delegating to administrative agencies the
authority to assess charges in situations where a “service or thing of
value” is provided by the agency).

7

Other courts have addressed similar questions in yet other
contexts. See, e.g., San Juan Cellular Phone Co. v. Public Service
Comm'n, 967 F.2d 683 (1st Cir. 1992) (Breyer, J.) (determining
whether an exaction is a tax, which may not be challenged in
federal court under the anti-tax injunction act, or a fee, which may
be so challenged); Union Pacific Railroad Co. v. Public Utility
Comm'n, 899 F.2d 854 (9th Cir. 1990) (determining whether a
levy is a tax subject to the antidiscrimination provisions of the
Railroad Revitalization and Regulatory Reform Act of 1976, 49
U.S.C. § 1103(b), or a fee not subject to the Act’s
antidiscrimination provisions); In re Jenny Lynn Mining Co., 780
F.2d 585 (6th Cir. 1986) (determining whether a levy is a tax
subject to priority in bankruptcy proceedings or a fee not entitled
to such priority).

In each of these cases, even though the question is nominally
the same—whether the particular exaction at issue is a tax or a
fee—the underlying reasons for (and the legal consequences of)
characterizing the exaction as a tax or a fee are often quite different
and unrelated to one another. Thus, the characterization of an
exaction as a tax rather than a fee resolves such disparate questions
as whether the exaction should be subject to constitutional restraints
on federal taxation of exports (United States Shoe); whether the
exaction constitutes an impermissible levy by the Federal
Government on the states (Massachusetts); whether the exaction
must conform to constitutional uniformity principles (Head Taxes );
whether the exaction may be challenged in federal court (San Juan
Cellular); and whether the exaction is subject to priority in
bankruptcy proceedings (Jenny Lynn Mining).

Because each of these inquiries is informed by different
constitutional and statutory provisions and the discrete policies
underlying them, it would be surprising if the line drawn between
a tax and fee in one context would provide controlling or even
meaningful guidance to the appropriate line, if any, between a tax
and a fee in another context. For example, the policies underlying
the tax injunction act—to prevent federal interference with the
lifeblood of state government (see Fair Assessment in Real Estate
Association, Inc. v. McNary, 454 U.S. 100 (1981))—have little to
do with the policies underlying the limited Statutory grant to federal

8

agencies to assess charges that provide “‘value to the recipient.’”
National Cable, 415 U.S. at 341 (quoting 31 U.S.C. § 483a).

As Justice Breyer observed when he was sitting on the First
Circuit, in rejecting the argument that an exaction that does not
provide individual “value to the recipient” must be deemed a tax
for all purposes:

Deciding whether (or to what extent) a particular fee provides
such individual value could make sense in the context of such
a statute.

Here, however we are dealing with a very different
statute, a “tax injunction” statute, which has as its objective to
prevent a taxpayer from “throwing” state “tax administration

. into disarray” as the taxpayer tries to “escape... .
ordinary procedural requirements” by going to federal court
for an injunction, perhaps thereby “damaging” the “State’s
budget” and “shifting to the State . . . the risk of taxpayer
insolvency.” Whether a particular agency charge defrays the
administrative costs of regulating a single regulated firm or a
class of such firms has little, or nothing, to do with this
problem. Hence, the Court’s limiting language in National
Cable is irrelevant here.

San Juan Cellular, 967 F.2d at 10-11 (ellipses in original) (quoting
Rosewell v. La Salle National Bank, 450 U.S. 503, 527 (1981)
(quoting Perez v. Ledesma, 401 U.S. 82, 128 (1971) (Brennan, J.,
concurring in part and dissenting part))) (additional citation
omitted).

This Court has likewise recognized that the question whether
an exaction should be considered as a tax or fee for constitutional
or other purposes is an inquiry that depends on the context in which
the question arises, and that the lines drawn in one context do not
determine the lines drawn in another. Thus in United States Shoe,
which involved the question whether an exaction was a tax for
purposes of the limitation on federal taxation of exports, the Court
distinguished cases that had drawn a line between taxes and fees
under the Takings Clause (Sperry), the intergovernmental immunity
doctrine.(Massachusetts), and the Commerce Clause (Evansville-
Vanderburgh Airport Authority Dist. v. Delta Airlines, Inc., 405

SS

9

U.S. 707 (1972))°: “Those decisions involved constitutional
provisions other than the Export Clause . . . and thus do not
govern here.” United States Shoe, 118 S. Ct. at 1295.

The Washington Supreme Court utterly ignored the context-
specific nature of the “tax versus fee” inquiry, and the necessity of
identifying the constitutional or Statutory concerns at stake, in
mechanically determining that the exaction at issue was a
“regulatory fee” and, “therefore” (according to the court) not
subject to the Commerce Clause requirement that taxes be fairly
apportioned and internally consistent. Pet. App. at 10a-16a. The
court relied on cases arising under a variety of disparate and
unrelated provisions in concluding that the exaction constituted a
“regulatory fee” that was insulated from the Court’s Commerce
Clause jurisprudence applicable to state taxing measures. See Pet.
App. at lla-12a (discussing Union Pacific, arising under the
Railroad Revitalization and Regulatory Reform Act); Pet. App. at

> Tt is worth observing that, in the Commerce Clause context, the only
distinction the Court has ever drawn between a tax and fee is a distinction
between general revenue measures, on the one hand, and user fees, on the
other, and then only to point out that user fees are subjected to a greater
degree of constitutional scrutiny than are general revenue measures. As
the Court observed in Commonwealth Edison Co. v. Montana, 453 U.S.
609 (1981), with regard to “‘user’ fees or ‘taxes’ that were designed and
defended as a specific charge imposed by the State for the use of state-
owned or state-provided transportation or other facilities and services” (id.
at 621):

“[sJuch imposition although termed a tax, cannot be tested by
standards which generally determine the validity of taxes.” Because
such charges are purportedly assessed to reimburse the State for
costs incurred in providing specific, quantifiable services, we have
required a showing, based on factual evidence in the record, that
“the fees charged do not appear to be manifestly disproportionate to
the services rendered ... .”

Id. at 622 n.12 (citation omitted: ellipses in original). There is no
Suggestion here that the exaction at issue is a user charge in the sense
employed by the Court. Moreover, even if it were, it would expose the
charge to increased — not lesser — constitutional scrutiny, as the court
below suggested.

10

12a (discussing National Cable, arising under the Independent
Offices Appropriation Act, 31 U.S.C. § 583a); Pet. App. at 12a-
13a (discussing Covell v. City of Seattle, 127 Wash. 2d 874, 905
P.2d 324 (1995), arising under the Washington State constitutional
requirement of uniformity and equality in property taxation).

The court below therefore failed to pay attention to the
rationale, if any, for excluding the exaction at issue from
Commerce Clause scrutiny applicable to taxes. The court’s failure
in this regard is most dramatically illustrated by its heavy reliance
on the distinction purportedly drawn between taxes and fees in
Hellerstein, Js “Internal Consistency” Foolish?: Reflections on an
Emerging Commerce Clause Restraint on State Taxation,” 87
MICH. L. REV. 138 (1988). The court declared that the article:

identified “professional and similar licensing fees that are
imposed by every state” as possible victims of strict
application of internal consistency to nondiscriminatory
regulatory fees.

Many of these fees are flat and unapportioned, and, for
that reason, could be challenged under the “internal
consistency” rationale. . . . One feature of these licensing
fees, however, arguably insulates them from challenge
under the “internal consistency” doctrine. In contrast to

.. exactions . . . presumed to be imposed for general
revenue purposes pursuant to the state’s taxing power, the
levies considered here are presumed to be imposed for
regulatory purposes pursuant to the state’s police power.
However thin that distinction may be in some cases, it is
a distinction the law recognizes, and the question for
present purposes is whether it is a distinction that makes
a constitutional difference insofar as the commerce clause
(and “internal consistency”) analysis is concerned.

Pet. App. at 16a (quoting Hellerstein, supra, 87 MICH. L. REV. at
156 (omission of footnotes and ellipses in original)).

While the court relies on the distinction the article identifies
between exactions imposed for general revenue purposes and levies
imposed for regulatory purposes in support of its conclusion that
the latter need not satisfy the “internal consistency” test, if

ee eee

1]

completely ignores the article’s analysis of the issue, which flatly
contradicts the court’s conclusion. In answering the question posed
— whether the “tax versus fee” distinction is one that “makes a
constitutional difference insofar as the commerce clause (and
‘internal consistency’) analysis is concerned” — the article declares:

Although the Court’s formal criteria for evaluating
commerce clause challenges to state regulations are not
identical to its criteria for evaluating commerce clause
challenges to state taxation, there is no reason to believe that
a regulatory license fee would be immune from the “internal
consistency” requirement merely because it constituted an
exercise of the regulatory power rather than an exercise of the
State's taxing power. Surely the evils that the “internal
consistency” test was designed to combat are the same
regardless of whether the unapportioned flat levy is an exercise
of the tax power or the regulatory power. In each case, the
licensee carrying on his trade in more than one jurisdiction
bears a greater financial burden than his intrastate competitor
merely because he is engaging in interstate commerce with the
consequent interference with free trade among the states.
Hence, there does not appear to be any sound policy basis for
distinguishing the “fee” from the “tax” cases insofar as the
application of the “internal consistency” doctrine is concerned.

Hellerstein, supra, 87 MICH. L. REV. at 157 (emphasis supplied;
footnote omitted). In short, rather than Supporting the court’s
conclusion, the article’s analysis demonstrates that there is no sound
basis for declining to apply the Commerce Clause’s fair
apportionment requirement, and its related “internal consistency”
test, to the “regulatory fee” at issue here.

The Washington Supreme Court is not alone in its misguided
reliance ‘on cases from other contexts to resolve the question
whether the Commerce Clause restraints imposed on state taxes
apply to exactions that may be characterized as “regulatory fees.”
See, e.g., V-1 Oil Co. v. Utah State Dept. of Public Safety, 131
F.3d 1415 (10th Cir. 1997) (relying on unrelated state law
precedents in holding that an exaction should be analyzed as a
“regulation” rather than a “tax” under the Commerce Clause):
Interstate Towing Ass'n v. Cincinnati, 6 F.3d 1154 (6th Cir. 1993)

12
(same). Moreover, the Washington decision is in conflict with
decisions of other courts that have properly recognized the
irrelevance of the tax-regulatory fee dichotomy for purposes of
analyzing whether a flat, annual charge on interstate trucks violates
the Commerce Clause. See, e.g., Secretary of Administration;
Secretary of State.

Consequently, this Court’s guidance is sorely needed to assure
that the question whether an exaction is subject to the restraints that
the Commerce Clause imposes on the exercise of state tax power
is resolved in light of the principles that underlie the Court’s
Commerce Clause jurisprudence and not by reference to cases from
other, unrelated contexts. Courts need to be reminded, as this Court
observed many years ago, that “we must regard things rather than
names” (Fairbank v. United States, 181 U.S. 283, 304 (1901)), in
undertaking the constitutional analysis.

Ii. THE COMMERCE CLAUSE’S FAIR APPORTIONMENT
REQUIREMENT APPLIES EQUALLY TO TAXES AND
FEES

A. The Validity of a State Charge Under the Commerce
Clause is Based Upon its Practical Effect on Interstate
Commerce

In recent decades, this Court has adjudicated virtually every
Commerce Clause challenge to a state charge (whether denominated
a tax or a fee) under the four-prong analysis of Complete Auto
Transit, Inc. v. Brady, 430 U.S. 274, 279 (1977) (a charge will
pass muster only if it “is applied to an activity with a substantial
nexus with the taxing State, is fairly apportioned, does not
discriminate against interstate commerce, and is fairly related to
services provided by the State.”).

In applying Complete Auto’s analysis, this Court has also made
clear that “the permissibility of state taxation [is] based upon its
actual effect rather than its legal terminology” (id. 439 U.S. at
281), noting that “a focus on that formalism merely obscures the
question whether the tax produces a forbidden effect.” Jd. at 288.
See also Commonwealth Edison, 453 U.S. at 616 (“In reviewing
Commerce Clause challenges to state taxes, our goal has instead
been to ‘establish a consistent and rational method of inquiry’

13

focusing on ‘the practical effect of a challenged tax.’”) (citations
omitted).

It is beyond dispute that flat, annual charges have the same
impact on interstate motor carriers (and on other interstate
businesses) no matter what the charges are denominated. This is
So because the level of the fee is “not keyed to the interstate
truckers’ actual use of State highways, facilities, or services.”
Secretary of Administration, 613 N.E. 2d at 100. Consequently,
“an interstate carrier will be subject to the [flat] taxes of several
States, even though his entire use of the [States’] highways[,]
[services, or facilities] is not significantly greater than that of
intrastate operators who are subject to only one [flat] tax.”

~ Scheiner, 483 U.S. at 292 (quoting Capitol Greyhound Lines y.
‘Bryce, 339 U.S. 542, 557 (1950) (Frankfurter, J., dissenting)).
This is true, of course, no matter what a state charge is called and
no matter what the uses to which the state puts the charge’s
proceeds.

For example, whether called a regulatory fee, a highway user
tax or fee, or a general revenue tax, a flat. annual $50 per-truck
charge costs an interstate trucker as much as $2,450 (to operate in
the 48 contiguous states and the District of Columbia), while
costing a purely intrastate trucker only $50. This is so even though
the two trucks’ level of operations are identical. This “cumulative
effect does not result from the mileage or distance traveled, but
from the interstate character of the journey.” Scheiner, 483 U.S.
at 284 n.16 (quoting Lockhart, State Tax Barriers to Interstate
Trade, 53 HARV. L. REV. 1253, 1269 (1940)).

The result of this cumulative burden is that some entities
engaged in interstate commerce will be forced to draw back from
full participation in the interstate market. In Scheiner, the Court
observed that flat, annual charges have a “forbidden impact on
interstate commerce because [they] [] exert{] an inexorable
hydraulic pressure on interstate businesses to ply their trade within
the State that enacted the measure rather than ‘among the several
States.’” Scheiner, 483 U.S. at 286-87. Consequently, flat annual
charges of all sorts do not “maintain state boundaries as a neutral
factor in [a taxpayer’s]” economic decisionmaking” (id. at 283).
Such charges therefore offend the Commerce Clause.

14

Moreover, any type of unapportioned annual charge “‘bear[s]
more heavily in the aggregate on a firm that [does business] in
many places than on a firm otherwise identical . . . that [does
business] in only one place.’” Scheiner, 483 U.S. 285 n.20
(citation omitted). As this Court explained in Scheiner, “in the
general average of instances, the privilege is not as valuable to the
interstate carriers” because “the very nature of the market that
interstate operators serve prevents them from making full use of the
privilege of doing business for which they have paid the State.” Jd.
at 284 n.16, 291. Consequently, interstate motor carriers and other
interstate businesses, under any type of a flat annual charge,
inherently pay more than their fair share of a state’s costs. See
Scheiner, 483 U.S. at 296 (“[I]mposition of [a] flat tax{] for a
privilege that is several times more valuable to a local business than
to its out-of-state competitors is unquestionably discriminatory and
thus offends the Commerce Clause.”).

Finally, it is also indisputable that any type of flat charge fails
Complete Auto’s fourth prong requirement that taxes be “fairly
related to services provided by the state.” Complete Auto, 430 U.S.
at 279. With respect to taxes, this requirement has been interpreted
to require that “the measure of the tax must be reasonably related
to the extent of the [taxpayer’s] contact, since it is the activities or
presence of the taxpayer in the State that may be properly made to
bear a just ‘share of state tax burden.’” Commonwealth Edison,
453 U.S. at 626. When taxes “are assessed in proportion to a
taxpayer’s activities or presence in a State, [a] taxpayer is
shouldering its fair share” of the state’s tax burden. /d. at 627.
Conversely, “‘when the measure of a tax bears no relation to the
taxpayer’s presence or activities in a State, a court may properly
conclude . . . that the State is imposing an undue burden on
interstate commerce.’” Scheiner, 483 U.S. at 291 (quoting
Commonwealth Edison, 453 U.S. at 629.) Indeed, as we have
noted (at note 5, supra), under the fourth prong fees are subject to
an even more demanding Commerce Clause analysis than are
general revenue taxes.

In practice, unapportioned annual charges, whether labeled a
tax or a fee, expose interstate motor carriers (and other forms of
interstate business) to duplicative taxation. Such levies also
inherently place a disproportionate and discriminatory share of a

15

State’s tax or regulatory cost on out-of-state taxpayers. Such flat
charges therefore unquestionably violate the Commerce Clause.

B. Because the Practical Effect of Flat Taxes and Fees
Under the Commerce Clause is the Same, There is no
Basis for Applying a Different Legal Analysis

Before allowing a state to impose a flat, annual charge that
inherently discriminates against and burdens interstate commerce,
it would be reasonable to expect some explanation as to why such
a charge was appropriate in the context of a “regulatory” or “user”
fee — an explanation, that is, of what is it about a regulatory or
user fee that makes a flat charge any less discriminatory or
burdensome, less of a threat to the free movement of interstate
commerce, or more difficult to apportion than a general revenue
tax. But while the Supreme Court of Washington alludes to “policy
reasons” that justify a different Commerce Clause standard for
regulatory fees, it never explains those reasons. Instead, it
speculates that applying an apportionment requirement could
jeopardize other forms of flat state charges (Pet. App. at 15a) and
cites out-of-context cases holding that the burden on interstate
commerce from “a direct tax” is “inherently greater” than from
“police power regulations.” Jd. at lla.

The Court’s concern about the potential invalidation of all flat
charges is simply wrong. Per-use flat charges, such as the
enplaning fee in Evansville, or toll charges or head taxes, are self-
apportioned (each use triggers a separate fee payment) and
therefore do not violate the Commerce Clause. Such fees are
“directly related, in purpose and amount, to the use of a service or
privilege” (Secretary of Administration, 613 N.E.2d at 102),
making each feepayer’s payment equivalent to the approximate
value of the services received from the state. Likewise, flat
administrative fees also would not offend the Commerce Clause
when they simply recoup the state’s true administrative cost of
doing a particular administrative task (e.g., fees for processing a
license application). Under a true administrative fee, the state’s
cost would be the same for each feepayer, would not vary with the
level of a feepayer’s activity in the state, and would be in an
amount appropriate to provide compensation for an identifiable,
specific administrative service.

16

Other flat, annual “fees” imposed to reimburse a state for
generic costs of regulation or providing a service or facility must
be apportioned to protect interstate commerce against potential
multiple taxation. State regulatory programs or generic services
whose costs vary with the level of a feepayer’s in-state activity
(e.g., conducting random inspections) involve charges very much
akin to general revenue taxes, a point that is discussed below.
Feepayers in such circumstances simply contribute to the costs of
a generic government program. As with general revenue taxes, the
only fair way to distribute the cost of such programs is to apportion
them according to the feepayer’s level of activity or presence in the
state. Consequently, the Washington court’s supposition that
regulatory fees do not as directly affect interstate commerce as do
general revenue taxes is simply wrong. A $50 per-truck charge
labeled a regulatory user fee is just as burdensome to interstate
motor carriers and just as much a threat to interstate commerce as
a $50 per-truck charge labeled a highway tax.

Finally, it is worth noting that apportioning a regulatory or
user fee is no more difficult than apportioning a general revenue
tax. In fact, it should be easier for a state to apportion a regulatory
or user fee according to usage of state services or facilities than it
is to apportion a general revenue tax that is imposed to recoup costs
of general governmental benefits. See Commonwealth Edison, 453
U.S. at 623 (noting that a general revenue tax “is not an assessment
of benefits”). In any event, apportionment is not based on
identifying each cost imposed on a state by particular activities and
then apportioning those costs to specific feepayers. Rather,
apportionment is instead based on the level of activities or presence
in the state of the taxpayer. See id. at 626 (“a tax [must be]
reasonably related to the extent of the [taxpayer’s] contact [with the
taxing State], since it is the activities or presence of the taxpayer in
the State that may properly be made to pay a ‘just share of state tax
burden.’”) (citation omitted). It is no more difficult to apportion
a fee (based on the extent of in-state activity) than it is a tax.

17

C. Separate Commerce Clause Standards for Fees and
Taxes Would Needlessly Complicate Judicial Review,
Leading to State Manipulation of Charges and
Inconsistent Results

State exactions do not fall into neat, well-defined tax and fee
categories. States impose many types of charges for many different
purposes. Some charges are broad-based taxes that generate
revenue for general governmental purposes (e.g., personal and
corporate income taxes, sales and use taxes). Others are more
selective taxes that likewise generate revenue for general
governmental purposes (e.g., alcohol and tobacco taxes). Still
others are selective charges (taxes and fees) that are earmarked for
a particular governmental purpose (e.g., highway use taxes
earmarked for road construction and maintenance, regulatory fees
earmarked for funding state regulatory services). And finally, there
are per-use fees and administrative fees that are charges for
individualized uses of specific state services or facilities (e.g., tolls,
administrative filing fees).

It is not always easy to determine exactly where a state charge
falls along the “tax versus fee” continuum. For example, the
charges reviewed in Scheiner (one denominated a tax and one a
fee), were fees in the same sense as was the Washington per-truck
charge at issue in this case. The Scheiner charges were imposed on
truck owners to pay general highway costs incurred by the state
because of the operation of their vehicles (see Scheiner, 483 U.S.
at 270-71), while the Washington fees were imposed on truck
owners to fund general state safety activities related to the operation
of their trucks. Yet, although there is virtually no practical
difference between the types of charges, the Washington Supreme
Court categorized them differently and in a manner that ultimately
controlled, according to that court, their constitutionality under the
Commerce Clause.

Basing the validity under the Commerce Clause of a state
exaction On its categorization rather than its practical effect would
add a complicated layer of analysis to constitutional review. As
this Court recognized in Complete Auto, such a formalistic view
would “operate only as a rule of draftsmanship, and serve[] only to
distract the courts and parties from their inquiry into whether the

18

challenged tax produced results forbidden by the Commerce
Clause.” Complete Auto, 430 U.S. at 285. Undoubtedly, courts
would reach inconsistent conclusions on charges that imposed “no
real economic difference” on the parties. /d. at 284. Whether a
State charge is a tax or fee simply does “not address the problems
with which the Commerce Clause is concerned.” /d. at 288.

Moreover, such formalism invites states to attempt to
manipulate the legal analysis. State legislatures are under pressure
from local interests to export as much of their tax and regulatory
cost burden as possible to out-of-state entities. Flat, annual charges
are a proven tool for just such discrimination. If flat highway taxes
are unconstitutional, but flat regulatory fees are permissible, it will
be a simple matter for a state to break down a general highway tax
into a number of so-called regulatory fees.

For example, highway taxes fund a variety of state activities,
including capital outlays for road construction and improvements;
maintenance costs to keep highways in a usable condition; highway
and traffic service costs, such as traffic control devices, snow
removal, and the like; administrative costs related to general
highway planning and research; highway law enforcement and
safety expenditures, including traffic supervision, vehicle
inspection, and enforcement of size and weight limitations; debt
service costs; and intergovernmental transfers for local road-related
projects. U.S. Department of Transportation, Highway Statistics
1997, IV-5 - IV-6 (1997). It would not be difficult for a state to
replace a flat unconstitutional general highway tax (e.g., the
Pennsylvania $36 per-axle tax or $25 marker fee) with a series of
flat regulatory/user fees (a safety inspection fee, a hazardous
material enforcement fee, a size and weight inspection fee, a rest
area fee, a snow removal fee, and so on). Indisputably, the impact
of such fees would be the same on interstate commerce as an
identical exaction labeled a highway tax.

Ill. A PIKE ANALYSIS IS NOT APPROPRIATE FOR
REGULATORY FEES

Even if the distinction between a tax and a “regulatory fee”
were deemed to have some bearing on the standards for
adjudicating the constitutionality of an exaction under the
Commerce Clause, it does not follow, as the court below

19

concluded, that the appropriate standards are those stated in Pike v
Bruce Church, Inc., 397 U.S. 137 (1970). In Pike, this Court
articulated the now-familiar balancing test that it has frequently
applied to state statutes that regulate interstate commerce:

Where the statute regulates evenhandedly to effectuate a
legitimate local public interest, and its effects on interstate
commerce are only incidental, it wiil be upheld unless the
burden imposed on such commerce is clearly excessive in
relation to the putative local benefits. If a legitimate local
purpose is found, then the question becomes one of degree
And the extent of the burden that will be tolerated will of
course depend on the nature of the local interest involved, and
on whether it could be promoted as well with a lesser impact
On interstate activities.

Pike, 397 U.S. at 142 (citations omitted).

On its face, the open-ended balancing test that has been used
to determine the constitutionality of state regulations of interstate
commerce has no application to fees that do not themselves have
any regulatory content. No matter what the revenue they generate
is used for, the “regulatory fees” at issue here do not function as
regulations. The only thing that the fees require is that the truckers
pay money to the state. There is simply no “putative local
benefit”—the effect of a substantive regulation under the Pike
test—to balance against the burden of the tax.°

Moreover, even if the Pike test were applicable to the
exactions at issue here, it is plain that the court below misapplied
it. Under Pike, a regulation must “regulate[] evenhandedly” (i.e. ,
be nondiscriminatory) before a court may “balance” the burden the
regulation imposes against the benefit it provides. But the flat levy
at issue here is clearly discriminatory. However one may
characterize this levy (as a tax, a regulatory fee, or something

® In this respect, the regulatory fee at issue here is easily distinguishable
from a fee that itself may function as a regulation, e.g., a progressive fee
calibrated to the amount of pollutants a feepayer discharges into the
environment. Such a fee does not merely raise revenue; it also directly
affects the level of pollutants discharged.

20

else), and whatever test of constitutionality may govern its validity,
it is indisputable that the levy is unfairly apportioned. Indeed, the
State conceded as much (see Pet. App. at 15a), contending instead
that the fair apportionment requirement was inapplicable. But this
Court has flatly stated that “[a] tax that unfairly apportions income
from other States is a form of discrimination against interstate
commerce.” Armco Inc. v. Hardesty, 467 U.S. 638, 644 (1984). It
is therefore apparent that the flat levy at issue here cannot satisfy
the threshold requirement of the Pike test because it is structurally
discriminatory and thus not “evenhanded.”

Furthermore, even if one overlooked the fact that flat levies by
their very nature discriminate against interstate commerce, the levy
at issue here would sril/ flunk the Pike balancing test. Under Pike,
no burden on interstate commerce will be tolerated if the state’s
purpose in the regulation can “be promoted as well with a lesser
impact on interstate activities.” Pike, 397 U.S. at 142. Here, of
course, the State undeniably could fund its motor carrier safety
enforcement program with a fairly apportioned levy. Hence a
reasonable, nondiscriminatory alternative to the State’s flat levy
clearly exists. Accordingly, the Court’s review of this case is
needed to confine the Pike balancing test within its appropriate
bounds and to assure that, within those bounds, the Pike analysis
is properly construed.

CONCLUSION
The petition for a writ of certiorari should be granted.

Respectfully submitted.

ROBERT DIGGES, JR. WALTER HELLERSTEIN*
ATA LITIGATION CENTER UNIVERSITY OF GEORGIA
2200 MILL ROAD LAW SCHOOL
ALEXANDRIA, VA 22314 ATHENS, GA 30602
(703) 838-1889 (706) 542-5175

* Counsel of Record

MARCH 12, 1999

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386018_1284%3A3. Public record. Not legal advice.