Amicus Curiae Brief — United Air Lines, Inc. v. Mahin

Supreme oor |

FILED

IN THE

ne Court of the United |Statts’ *”

Ocroszr Tznm, 1971. MICHAEL RODAK, In. c

,

No. 71-862

UNITED AIR LINES, INC.,

: Appellant,

vs.

GEORGE E. MAHIN, er A.,

Appellees.

ON APPEAL FROM THE SUPREME COURT OF ILLINOIS.

BRIEF AS AMICI CURIAE OF AMERICAN AIRLINES,

o., BRANIFF AIRWAYS, INCORPORATED,

DELTA AIR LINES INO., AND NORTH-

™~ WEST AIRLINES, INC. .

James A, Von,

One First National Plaza,

Chicago, Illinois 60670,

Pu. C. Neat,

James H. DovoLAs,

Josurn P. Cann,

Attorneys for American Airlines,

Inc., Braniff Airways, Incorpo-

rated, Delta Air Lines, Inc., and

Northwest Airlines, Inc., Amici

Curiae.

m, Canton, Dova.as,

BEN & Wavp.

CONTENTS.

— PAGE

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—AHV . ͥ0ͥ0ͥ0ͥ3w6¹m-3 „0 4

f : TaBLE or Cass.

Adams Mfg. Co. v. Storen, 304 U. S. 307 (1938) 13

Boeing Air Transport v. Edelman, 61 F. 2d 319 (C. A.

TTT ĩ e 12

Canton R. Co. v. Rogan, 340 U. S. 511 (1951) .... 4, 11, 14

Carson Petroleum Co. v. Vial, 297 U. S. 95 (1929). 7

Central Greyhound Lines v. Mealey, 334 U. S. 653

jJJ!r ²˙ͤͤ See's A's wb ewan cess 14

Champlain Co. v. Town of Brattleboro, 260 U. S. 366

//ͤ A/ A 7

Coe v. Errol, 116 U. S. 517 (1886) ......... nn 7

Edelman v. Boeing Air. Transport, 289 U. S. 249

ZZZ 12-13

Empresa Siderurgica S. A. v. Merced County, 337 U. S.

%ͤͤͤ ũ’ͥͥ 0 ͥ A AAA 7, 10

Evansville-Vanderburgh Airport Authority Dist. v.

‘Delta Air Lines, 92 S. Ct. 1349 (1972) ........ 4, 12, 15

Gregg Dyeing Co. v. Query, 286 U. S. 472 (1932) 6

Gwin, White & Prince v. Henneford, 305 U. S. 434

7 A Ie rary ep 14

Helson and Randolph v. Kentucky, 279 U. S. 245

E 9, 13-14

ii

Henneford v. Silas Mason Co., 300 U. S. 577 (1937) .. 15

Hughes Bros. Co. v. Minnesota, 272 U. S. 469 (1926).. 7

International Harvester Co. v. Dept. of Treasury,

| Ee ree ͤ˙ 0 5

Joseph v. Carter & Weekes Stevedoring Co., 330 U. 8.

— AA. ͤ sascecteee 5, 11, 12, 1415

Joy Oil Co. Ltd. v. State Tax Commission, 337 U. S.

—...,.,.,,, ocs Soi ik eccvs ook 1

Michigan-Wisconsin Pipe Line Co. v. Calvert, 347 U. S.

( ok is OSs 2h Sas co sca need 0 5, 8, 11-13

Minnesota v. Blasius 290 U. S. 1 (1933) 1

McGoldrick v. Berwind-White Co., 309 U. S. 33

ͤ—“U UG. T ».. 12, 15

Northwest Airlines v. Minnesota, 322 U. S. 292 (1944) 13-14

Philadelphia Steamship Co. v. Pennsylvania, 122 U. S.

326 Re . Af . 15

Puget Sound Stevedoring Co. v. Tax Commission, 302

BW.... ck mas cs 6 X55 ll

Standard Oil Co. v. Peck, 342 U. S. 382 (1952) ........ 14

—w ... se eve 15

IN THE

e Court ot the United States

Octoser TERM, 1971.

No. 71-862

UNITED AIR LINES, INC.,

Appellant,

vs. n

GEORGE E. MAHIN, Er au,

Appellees.

_ ON APPEAL FROM THE SUPREME COURT OF ILLINOIS.

BRIEF AS AMICI CURIAE OF AMERICAN AIRLINES,

mo., BRANIFF AIRWAYS, INCORPORATED,

DELTA AIR LINES INC., AND NORTE.

WEST AIRLINES, Mo.

— —

This brief is presented with the consent of the parties,

as shown by copies of letters from the parties attorneys

which have been filed with the Clerk.

Interest of Amici Curiae.

„This case involves the levy of Illinois use tax on the

eding of fuel on airplanes that are about tio take off on

_ fiterstate and foreign flights. The airlines filiing this state-

ment as amici curiae support and adopt the position and

gament in appellant’s brief that the Commerce Clause

8 1 a tax. The amici curiae have a diirect interest

N

in the outcome of the case because of the large tax liabili-

ties involved. For example, American’s claims for use

taxes so levied and paid on the use of airplane fuel for a

six-year period total more than $2,400,000, Braniff’s more

than $88,000, and Northwest’s more than $700,000.

Statutory Provisions.

The following provisions of the Illinois Use Tax Act (II.

Rev. Stat. 1971, ch. 120, §§ 439.177.) are relevant in this

case:

§2. „Use“ means the exercise by any person of

any right or power over tangible personal property

incident to the ownership of that property,.

§3. A tax is imposed upon the privilege of using

in this State tangible e property purchased at

retail from a retailer, . .

j

* 2 * e a

To prevent actual or likely multistate taxation, the

tax herein imposed does not apply to the use of tan-

gible personal — in this State under the follow-

ing circums

(a) The use, in this State, of tangible personal

property acquired outside this State by a non-resident

individual and brought into this State by such indi-

vidual for his or her own use while temporarily within

this State or while passing through this State;

(b) the use, in this State, of tangible personal

property by an interstate carrier for hire as rolling

stock moving in interstate commerce or by lessors

under a lease of one year or longer executed or in

effect at the time of purchase of tangible personal

property to interstate carriers for-hire for use as roll-

. ing stock moving in interstate commerce as long as 80

used by such interstate carriers for-hire;

(e) the use, in this State, of tangible personal

* “property which is acquired outside this State and

3

caused to be brought into this State by a person who

has. already paid a tax in another State in respect to

the sale, purchase or use of such property, to the

extent of the amount of such tax so paid in such other

State;

(d) the temporary storage, in this State, of tan-

gible personal property which is acquired outside this

State and which, subsequent to being brought into this

State and stored here temporarily, is used solely out-

side this State or physically attached to or incorpo-

rated into other tangible personal property that is

used solely outside this State.

The appealed decision holds that the exemption from the

tax by clause (d) of section 3 does not apply to airplane

fuel acquired outside the state, brought and stored here

temporarily, and consumed in interstate and foreign flights.

The decision holds that the loading of the fuel in the air-

plane is a taxable event under the provisions of sections 2

and 3 quoted above.

ARGUMENT.

This case raises important questions concerning the

scope of the protection afforded by the Commerce Clanse

against the direct encroachment by the states upon the

stream of interstate commerce. More particularly, it in-

volves the preservation of the Commerce Clause as 3

check upon ‘‘the disposition of cities and states to exploit

their location astride the Nation’s portals’’.* Unlike the

Court’s recent decision in Evansville-Vanderburgh A. A.

Dist. v. Delta Airlines, Inc., 92 S. Ct. 1349 (1972), this case

involves, not the right of a state to exact reasonable charges

for the use of state-provided facilities, but its power to

augment its general revenues through excise taxes laid

directly and disproportionately upon interstate commerce.

However, the very fact that the Court has conceded to the

states the power to impose charges like those in the Evans-

ville case heightens the importance of this case: it empha-

sizes the need for protecting the Nation’s interest in the

free movement of goods and persons against unwarranted.

exactions that add to an accumulating burden of impedi-

ments to interstate air commerce.

In the decision appealed from, the State of Illinois, by

virtue of its position as the situs of a terminal having the

heaviest interstate and international air traffic of any air-

port in the world, has sought to allocate to itself, through a

tax ‘‘upon the privilege of using’’ personal property,

the entire value of the aviation fuel moving through that

terminal onto planes using the terminal. Its claim rests

on the theory that the loading of fuel into the tanks of

the airplanes before take-off is a local taxable event, rather

® Jackson, J., concurring in Canton R. Co. v. Rogan, 340 U. 8.

511 517 (1951). f

5

than an integral part of interstate and foreign commerce.

That theory is plainly untenable in the face of this Court’s

decisions in Michigan-Wisconsin Pipe Lime Co. v. Calvert,

347 U. S. 157 (1954), and Joseph v. Carter d Weekes Steve-

doring Co., 330 U. S. 422 (1947), and is contrary to princi-

ples long followed by the Court in preserving the very

process of interstate commerce from direct taxation by

the states.

The tenuous nature of Illinois’ claim is apparent from

the facts concerning the movement of the fuel Illinois is

attempting to tax. The fuel is not produced, sold, or con-

sumed in Illinois. It is continuously committed to and

moving in interstate commerce from before it enters IIli-

nois until it leaves Illinois. United Air Lines, the appel-

lant, purchases the fuel from a seller in Indiana. Title

passes in Indiana, and United takes delivery in Indiana.“

The fuel moves from the seller’s terminal in Indiana

through common-carrier pipeline (or by common-carrier

trucks) directly to the airlines’ storage and handling fa-

cilities at O’Hare and Midway airports. After a brief

delay, during which the fuel is tested for quality and

filtered to remove impurities arising from the transporta-

tion process, it is pumped into the tanks of the airplanes.

Fuel moves from Indiana on a daily basis. Its flow is

interrupted in United’s facilities at the airports only to

the extent required by the practical exigencies of opera-

tion and the necessity for having a supply on hand to

meet the schedule of traffic. The average period of delay

is from two and a half to six days, varying with the type

of fuel and the storage facilities involved. (Stip. par. 7,

App. 38.) The planes which receive the fuel are either com-

meneing interstate and foreign flights or are taking off in

fF TES

7

1

0

|

Indiana Gross Income Tax is paid on the transaction in

P. par. 13, app. 41). Cf. International Harvester

Treasu „322 U. S. 340 (1944). :

continuation of interstate and foreign flights after a tem.

porary stop for unloading, loading, and fueling. The

fuel loaded aboard them is consumed entirely in interstate

flight and, except for negligible quantities, outside the

borders of Illinois.

Such a continuous movement of a commodity as part of

an integrated interstate process affords no basis for a state

tax upon the value of the commodity. The temporary

presence of the aviation fuel under the circumstances of

this case could not constitutionally be made the basis for

a property tax on its value, and a similar tax denominated

a ‘‘use’’ tax and asserted to be for storage could fare

no better under the Commerce Clause.“ The applicable

test is that stated by Chief Justice Hughes in Gregg

Dyeing Co. v. Query, 286 U. S. 472 (1932), upholding a

gasoline tax on the value of gasoline stored by a bleachery

for use in its manufacturing processes within the state.

[[Wie are not concerned with what the tax is called but

with what the statute does. It imposes an exaction with

respect to gasoline purchased in other States and brought

into South Carolina and there placed by appellants in

storage for future use within the State. By the terms of

the Act, as construed by the state court and applied to

these appellants, interstate commerce in relation to the

subject of the tax has ended. The gasoline has come to

rest within the State, having been placed in appellants’

storage tanks and added to appellants’ property kept for’

local purposes. In such circumstances the State has the

authority ‘to tax the products or their storage or sale.“

In this case the fuel has never come to rest“ within

Illinois within the meaning of the decisions of this Court,

„ The use tax is obviously more objectionable than a property

tax from the standpoint of the purposes of the Commerce Clause.

E would fall ar

of the quantity present in the state on tax day; the

tax falls on.the entire value of the flow throughout the year.

1 5

it has never been kept for local purposes or stored for

future use within the State, and interstate commerce

has not ended. Coe v. Errol, 116 U. S. 517 (1886);

Champlain Co. v. Town of Brattleboro, 260 U. S. 366

(1922); Hughes Bros. Co. v. Minnesota, 272 U. S. 469

(1926) ; Carson Petroleum Co. v. Vial, 279 U. 8. 95 (1929) ;

. Ltd. v. State Tax Commission, 337 U. 8.

286 (1949); Empresa Siderurgica 8. A. v. Merced Coumty,

$37 U. S. 154 (1949). The crucial question in determining

whether the state may tax, as said in Minnesota v. Blasius,

290 U. S. 1, 9 (1933), is whether there is continuity of

transit. If the interstate movement has begun, it may

be regarded as continuing, so as to maintain the immunity

of the property from state taxation, despite temporary in-

terruptions due to the necessities of the journey or for the

purpose of safety and convenience in the course of move-

ment.“ 290 U. S. at 9-10. A breach in the continuity of

transit has most often been found where the temporary

halt or storage was of a kind giving rise to the possibility

that the property might be diverted from its interstate

destination to a local one, a circtmstance plainly absent

here. Cf. Minnesota v. Blasius; Joy Oil Co. Ltd. v. State

Tax Commission. Mere delay in transit, or temporary

storage, is not by itself sufficient to allow the state to tax,

and interruptions for weeks or even months have been

held not to deprive the property in transit of its immunity

from state taxation. Coe v. Errol; Champlain Co. v. Town

of Brattleboro; Hughes Bros. Co. v. Minnesota. The brief

delay of the fuel in appellant's tanks in this case is

afer ery from the fifteen months’ storage while awaiting

a: 0 nt which was held, by a sharply divided Court

Joy Oil Co. case, to bar immunity from local taxa-

The delay here is similar to the temporary storage

Carson Petroleum Co. v. Vial, where there was an

ion of oil in the dockside tanks of the exporter

8

while waiting for ships to arrive, a delay occasioned by the

practical necessities of carrying out the continuous inter-

state transit.“ If United took its aviation fuel in tank

trucks at the Indiana refinery, drove the trucks directly

to the side of its airplanes, and loaded the planes from

those trucks, it would be beyond dispute that the fuel was

in interstate commerce throughout its passage in Illinois,

Under the cases cited above, the result can be no different

merely because pipelines and tanks at —* airport are

used instead.

It is apparent, therefore, that Illinois could not impose

its tax by reason of the presence or ‘‘storage’’ of the

fuel in Illinois. But in fact Illinois has not purported to

do so. In recognition of the constitutional’ principles re-

flected in the above-cited cases, the Illinois Use Tax Act

does fiot attempt to reach the temporary storage of prop-

erty in interstate commerce. It expressly excludes from

the definition of a taxable use the temporary storage of

property which is acquired outside this State and which,

subsequent to being brought into this State and stored here

temporarily, is used solely outside this State.’’ § 3, clause

(d), above pp. 2-3. Although this exemption may cover

even some situations where the property is not in interstate

commerce, it is clearly broad enough to cover those where,

as in this case, the property is in continuous interstate

transit.

In the face of this statutory provision, the problem for

the Illinois taxing authorities in attempting to reach

»The testing for quality and filtering of transportation im-

purities. that occurs as the aviation fuel moves through United's

tanks is likewise plainly a necessary incident of the interstate

movement and not an independent processing that could be

deemed to break the transit. Quite properly, Illinois has not

relied on this aspect of the case to support its tax, any more than

it could rely on changes in the size of pipeline or changes in the

mode of 277 b. 8. 157. Ct. Miokigan - Wisconsin Pipe Line Co. v.

Calvert, 347 S. 157, 163 (1954), where the gas was «eom-

pressed, cooled, scrubbed, and dehydra as part of the inter-

state movement. i

J

United’s aviation fuel was to find a ‘‘use’’ of the property

occurring after temporary storage but not outside this

State. A use within the statute could be found in the

consumption of the small amount of the fuel burned in

the airplanes during the Illinois portion of their departing

flights. The Department of Revenue initially sought to

tax only that use. But that ‘‘use,’’ as was later recognized,

was one that Illinois is forbidden to tax under the many

authorities prohibiting direct taxation of interstate com-

merce, including those discussed above, but most particu-

larly under this Court’s decision in Helson and Randolph

v. Kentucky, 279 U. S. 245 (1929), specifically forbidding

a tax on the use of gasoline within the state by a carrier

engaged in interstate commerce.

The new position of Illinois, represented by the decision

below, seeks to escape this dilemma by an artful interpreta-

tion of the statute. Extending its grasp to the entire amount

of the fuel, Illinois has now purported to find in the very act

of loading the fuel on board the airplanes an event that

breaks the ‘‘continuity of transit’’ and constitutes a local

use. As explained in the ruling of the Illinois Depart-

ment of Revenue upheld by the Illinois Supreme Court,

“The Department’s position is that temporary storage ends

and a taxable use occurs when the fuel is taken out of

storage facilities and is placed into the tank of the airplane,

railroad engine or truck. At this point, the fuel is converted

into its ultimate use, and, therefore, a taxable use occurs in

Tinois.”” (App. 23. Italics supplied.) Employing a slightly

different verbal formula, the Illinois Supreme Court has

said that the intention of United to use the fuel (' only to

at. lits] operations from the O' Hare and Midway

rts’’ (and, thus, to use the fuel within the State)

deprives. the fuel of the temporary storage’’ exemption

of 1 statute (App. 202).

10

On either ‘formulation, it is obvious that the operative

event that Illinois deems sufficient to allow it to tax is the

loading of the fuel on board airplanes for consumption in

interstate commerce. The Illinois Supreme Court’s em.

phasis on intention“ as the decisive circumstance (pre.

sumably because the intention comes before the loading)

cannot disguise the fact that it is the loading and use of

the fuel that alone triggers the tax. Indeed, the Ilinois

court’s reliance on intention stands constitutional doo-

trine on its head. While it ir settled that mere intention to

commit property to interstate commerce cannot confer

immunity from state taxation (cf. Empresa Siderurgica

v. Merced County, 387 U. S. 154 (1949)), it is a bizarre

holding that such an intention deprives the property of its

immunity and can be the very basis for a state tax.

Under the decision below, the case must be considered

precisely as if the Illinois statute read, ‘‘A tax is hereby

imposed upon the loading of fuel on airplanes bound on

interstate and foreign flights’’. The Illinois Supreme Court

concedes that the tax would not apply if fuel were loaded

and transported out of the state by any means other than

flights, of interstate aircraft. ‘‘It is clear that if United

was to withdraw its fuel from storage at Des Plaines and

the airports and transport it outside the State for use else-

where, as for example at an airport in nearby Wisconsin,

the exemption would apply and neither the storage, nor the

withdrawal, nor the transportation of the fuel outside the

State would be uses subject to the tax’’ (App. 202). The

Illinois court has thus adopted a special interpretation of

the statute for the sole purpose of reaching fuel loaded for

interstate flights. The vice of the tax is compounded. Not

only is it a tax on! interstate commerce”. It is a tax that

is ‘aimed at or discriminates. e interstate com-

merce.

Unless the Court is to abandon both ancient and recent

11

authority, a tax on the loading of interstate carriers is a

tax on interstate commerce itself and is forbidden. In

Joseph v. Carter d Weekes Stevedoring Co., 330 U. S. 422

(1947), the Court held invalid, as a direct tax on interstate

commerce, a gross receipts tax on the loading and unload-

ing of interstate vessels. ‘‘The transportation in com-

meree,”’ said the Court, at the least, begins with loading

and ends with unloading.’’ (330 U. S. at 427.) That de-

cision was a reaffirmation of Puget Sound Stevedoring Co.

vy, Taw Commission 302 U. S. 90 (1937), and a long line of

earlier cases outlawing gross receipts and similar taxes

levied ‘‘on the commerce itself.’’ (330 U. S. at 433.) The

decision was reached over a dissenting opinion which ac-

knowledged the controlling force of the line of decisions

relied on by the majority but proposed that the doctrine

be changed.* The Court again adhered to its position and

reaffirmed the principle of the Carter & Weekes. case in

Michigan-Wisconsin Pipe Line Co. v. Calvert, 347 U. S. 157

(1954). The Court there held invalid a Texas tax on the

‘“‘gathering’’ of natural gas as applied to the taking“

of the gas by an interstate pipeline from the pipes of the

producer. As the opinion said, ‘‘It is now well settled

that a tax imposed on a local activity related to interstate

commerce is valid if, and only if, the local activity is not

such an integral part of ‘the interstate commerce, the flow

of commerce, that it cannot realistically be separated from

* (347 U. S. at 166.) The Court declined to recognize

the event of transferring the gas from the pipeline of the

gasoline plant to the pipeline of the interstate carrier (the

2 Tustice ie dogg dissenting opinion proposed that a ‘‘ fairly

ed’? tax be sustained, notwithstanding that it was a

on the commerce. That suggestion would of course

help. to the Illinois tax in the present case, since it is a

a on the entire value of the fuel being loaded. In this

indeed, the present case presents a much more drastic

* the tax condemned in Carter d Weekes, where

4 on the value of the loading activity itself, not

loaded. Compare Canton R. Co. v. Rogan, 340

the importance of this distinction

taking or loading for transmission,“ id. at 167) as a

severable local event—and this notwithstanding. that the

transfer in the Pipe Line case, in contrast to the instant

case, coincided with a change of possession and the trans-

fer of title. The tax on loading involved in the present case

is indistinguishable from the tax on gathering held invalid

in the Michigan-Wisconsin case.

Edelman v. Boeing Air Transport, Inc., 289 U. S. 249

(1933), obliquely relied on by the court below, does not sup-

port the Illinois tax. The Edelman case sustained a fuel tax

as a tax upon ‘‘the storage and withdrawal’’ of the fuel, not

as a tax on the loading, as this Court explicitly and correctly

recognized in the Carter & Weekes decision, where Edel.

man and similar cases were distinguished. (330 U. S. at

431, 432 n. 18, citing the Court’s earlier decision in

McGoldrick v. Berwind-White, Co., 309 U. S. 33 (1940).)

And the facts as to storage differed markedly from those

in the present case: the gasoline brought from out of

state was commingled in the taxpayer’s tanks with gas

purchased intrastaß nnd it was held not only for use in

the taxpayer’s planes but for sale to others. In addition,

under the Court’s recent decision in the Evansville case,

92 S. Ct. 1349 (1972), the exaction in Edelman was readily

sustainable on the ground that it was limited to the main-

tenance and improvement of the municipal airports used

by the air transport company.* Clearly the State of Wyo-

ming could not have been suspected of attempting to

exploit interstate commerce by reason of a dd geo-

graphic position in air transportation.

In the Court of Appeal's opinion, Boeing Air Transport v.

Edelman, 61 F. 2d 319, 323 (C. A. 10, 1932), it was explained

that, after the ae & of Cheyenne gave the appellant air carrier

the right to use the city’s airfield for 25 years, the legislature

amended the tax statute to provide that the State Treasurer

shall pay over all funds received from the gasoline license tax

eure used at any municipal air field to the city or town

such air field is located, to be used for the maintenance

and improvement of such air field’’.

Aside from those differences, the Edelman case repre-

ted a high-water mark in the Court’s search in the early

‘thirties for formulas that would assist states in finding

‘additional sources of revenue. It reflected an incipient

‘permissiveness toward taxation of the process of inter-

‘state commerce that has been rectified by the subsequent

dourse of decision. Mr. Justice Stone, reluctantly concur-

ring in the Helson decision, had advanced the view that

no ‘‘practical justification’ could be found for relieving

- interstate commerce from a tax which is neither aimed

at nor discriminates against interstate commerce (279

VU. S. at 253). His opinion for the Court in the Edelman

~ ease a short time later plainly reflected that attitude. But

as the Court noted in Michigan-Wisconsin Pipe Line Co.

v. Calvert, this view has not prevailed’’ (347 U. S. at

166). Mr. Justice Stone had himself helped lead the Court

toward recognition that the practical justification’’ for

more stringent rules is the danger that a state, even under

~ nondiscriminatory tax, may attribute to itself values

to Which other states may lay equal claim under similar

or different taxes. Thus the danger of multiple burdens,’’

actual or potential, became an additional touchstone. It

‘was forcefuly urged in Chief Justice Stone’s 18-page dis-

sent, joined in by three Justices, in Northwest Airlines v.

Minnesota, 322 U. S. 292 (1944), where a divided and

troubled majority upheld a Minnesota property tax on the

entire value of a fleet of airplanes based there: ‘‘The

tax now sustained is so obviously disproportionate to the

protection afforded to the taxed property by the taxing

state as to place a constitutionally intolerable burden on

‘interstate commerce. . . It is no answer to suggest that

tm states other than Minnesota have not asserted their

Constitutional power to tax or that we do not know how

or to what extent they may have exercised it... . It is

enough to know that the tax exposes petitioner to ‘the

risk of a multiple burden to which local commerce is.

not exposed’ [citing Adams Mfg. Co. v. Storen, 304 U. 8.

14

307, 311 (1938), and Gwin, White & Prince v. Henneford,

306: U. S. 434, 439 (1939) J.“ (322 U. S. at 326)...

A constitutional theory permitting Illinois to tax the

entire quantity of fuel loaded or ‘‘taken’’ in Illinois

would be difficult to reconcile with denial of similar claims

by other states based on similar incidents“ such as

‘bringing in or “‘consumption.’’ See Joseph v. Carter ¢

Weekes Stevedoring Co., 330 U. S. at 429. The claim as-

serted by Kentucky in the Helson case shows that the

danger is not fanciful, not to mention the claim of Indiana

in the present case to a tax 6n the gross receipts from

The solution urged by Chief Justice Stone’s dissent in

the Northwest Airlines case was ‘‘apportionment’’. In

that and other contexts the notion of apportionment has

at times been put forward as an alternative or a supple-

ment to the rule forbidding direct“ taxation of the

process of interstate commerce and the instrumentalities

of interstate commerce. See Standard Oil Co. v. Peck, 342

U. S. 382 (1952); Central Greyhound Lines, Inc. v. Mealey,

334 U. S. 653 (1948); Canton R. Co. v. Rogan, 340 U. S. 511

(1951); and cases discussed in the dissenting opinion of

Douglas, J. in Joseph v. Carter d Weekes Stevedoring Co.,

330 U. S. 422, 434 (1947). That view might conceivably

lead the Court, in a case presenting the issue, to a re-

examination of the Helson case and to acceptance of the

‘*burn-off rule initially followed by the Illinois Depart-

ment of Revenue, taxing the portion of fuel actually used

within the state. Such a departure might have far-reaching

implications for the doctrine forbidding direct impositions

‘‘on interstate commerce itself. But those problems are

irrelevant to the validity of the tax involved in the present

case, which is a tax on the entire value of the fuel used

in interstate operations and in no sense an apportioned

tax.

5

he issue in this case is narrow but important. Sustain-

the Illinois tax would destroy the clear boundary of

rotection long maintained by the Court around the very

deess of interstate commerce and its instrumentalities.

r since Philadelphia Steamship Co. v. Pennsylvania,

2 U. S. 326 (1887), the Court has been alert to guard

‘the facilities of interstate commerce and the interstate

‘movement of goods against excise taxes in the nature of

receipts taxes bearing directly on the interstate

itself. This special solicitude has not been nullified

» eroded by the emergence of the doctrine that inter-

state commerce must pay its way,’’ reflected in decisions

permitting sales and use taxes in a variety of situations

olving interstate transactions. E.g. Henneford v. Silas

ason Co., 300 U. S. 577 (1937); Western Live Stock v.

ureau of Revenue, 303 U. S. 250 (1938); McGoldrick v.

erwind-White Coal Mining Co., 309 U. S. 33 (1940). The

question was thoroughly recanvassed in 1947 in the Carter

& Weekes case, and the long-standing recognition of a

special zone of protection for the very process of interstate

commerce was reaffirmed. Nor has the principle been called

into question by the Court’s very recent decision in the

Evansville Airport case. That decision merely followed

the distinction, recognized in many prior cases, between

a toll or fee for the use of state-provided facilities and a

general- revenue tax.

The principle involved is not a merely artificial, mechan-

_ ical, or technical concept, although its enforcement neces-

_ sarily involves maintaining a constitutional line of de-

marcation between segments of a physical and economic

& continuum. The doctrine is prophylactic in its purpose

£ and effect. Its practical function is that the national

© interest i in the free and efficient movement of goods and

persons is protected against local exploitation of the chan-

nels essential to the national market and the national com-

munity. Such protection is required not only as against

the more obvious forms of such exploitation, such as

16

tation of states to structure or distort their tax 8

so as to throw an undue proportion of their costs of ge

ment upon special sources of interstate-commerce

inherent in their geographie position. That the ten on

is a real one is illustrated by the present case. Illinois

has not in general attempted to tax property that is only |

temporarily within the state and that is to be used outside

the state. It clearly could not tax the consumption of ful

by airplanes in interstate flights, even though such oon.

sumption took place within the state’s borders. Yet in this

case it has contrived to interpret its tax laws to enable it

to tax the entire amount of aviation fuel supplied for inter-

state and foreign comnierce at one of the largest airports —

in the world. Since it has been compelled to do so by —

focusing the tax upon an integral step in interstate com-

merce, it has transgressed the settled bounds of state

taxation.

The judgment of the Illinois Supreme Court should be

reversed.

August, 1972.

Respectfully submitted,

James A, VELDE, .

One First National Plaza,

Chicago, IIlinois 60670,

Pur C. Neat,

James H. Dovauas,

JoszrPu P. Can, ;

Attorneys for American Airlines,

Inc., Braniff Airways, Incorpo-

rated, Delta Air Lines, Inc., and

Northwest Airlines, Inc., Amici

Curiae.

of Counsel:

Gaben, Carton, Dovarss,

‘Cunaeen & Wann.