MASSACHUSETTS v. UNITED STATES
In 1970, Congress imposed an annual registration tax on all civil aircraft that fly in the navigable airspace of the United States. The state of Massachusetts owned and utilized a helicopter for the purpose of patrolling highways and fulfilling other police duties. When Massachusetts refused to pay the tax, the federal government collected it from the state's accounts, plus interest and penalties. Massachusetts then sought a refund of the money collected.
Did the tax on civil aircraft violate the implied immunity of state governments from federal taxation?
Legal provision: 26 U.S.C. 4491
No. The Court held that so long as charges did not discriminate against state functions, were based on fair approximations of uses of the system of navigable airspace, and were structured to produce revenues that did not exceed the total cost of the benefits to be supplied to national airsystem, there could be no basis for claims that the National Government was "using its taxing powers to control, unduly interfere with, or destroy" Massachusetts' ability to perform "essential services." The Court emphasized its reluctance to enlarge the scope of state immunity from federal taxation.
Argument of Terence P. O'malley
Chief Justice Warren E. Burger: We will hear arguments next in Number 1500, Massachusetts against the United States.
Mr. O'Malley, you may proceed whenever you are ready.
Mr. O'Malley: Mr. Chief Justice and May it please the court.
This court has granted the petition of Commonwealth of Massachusetts to issue a writ of certiorari to the United States, Court of Appeals for the First Circuit.
The basic issue raised on review concerns the constitutionality of applying the Federal Excise Tax on the use of civil Aircraft to a state police helicopter owned by the Commonwealth of Massachusetts and use exclusively for public safety purposes.
The action was initiated by the Commonwealth of Massachusetts in the United States, District Court of the District of Massachusetts on a petition to refund of the tax.
The tax computed is computed by $25 flat fee plus a varying amount based on the weight of the aircraft.
The tax was $131.43 for the taxable year ended June 30th 1971.
The total collected by a levy on funds of a Commonwealth was $183.38.
The Commonwealth alleged in its --
Unknown Speaker: That was before and not the --
Mr. O'Malley: For this taxable year, Your Honor, that's not an accurate indicate of how much money would be involved in the years between now and then.
Chief Justice Warren E. Burger: How many aircrafts does the state --
Mr. O'Malley: The State Police has one, the State Aeronautics Commission has three and there is large bill pending for those aircraft also.
But it's not --it hasn't been litigated, it's in abance pending disposition of this case.
Justice Potter Stewart: Also there is what --
Mr. O'Malley: Other aircraft owned by the Massachusetts Aeronautics Commission and there are tax bills in abance of a much larger figure than the $180.
Talking about strictly for this year 1971.
Commonwealth alleged that the helicopter was used by the State Police only for public safety purposes such as promoting highway safety and conducting searches for suspected criminals or escapees from correctional facilities.
The United States moved to dismiss the complaint, prepared a state acclaimed on which relief could be granted.
The District court allowed the motion stating that the decisions of this court talking about state immunity from federal taxation were essentially of historical interest only.
And the court also stated that this is a classic case of a user fee.
That rationale was based on the fact that the revenue derived from these aircraft taxes is used to make grants to state-owned airports or airport expansion and development.
On appeal the United States Court of Appeals affirmed the judgment of the District Court but only discussed the user fee rationale.
That rationale was based largely on an analogy, the team concerning cases of this court which upheld forfeit fees by municipalities as not in violation of the constitutional prohibition against duties on tonnage.
Commonwealth petitioned this court to certiorari.
The Solicitor General agreed that the case should be resolved because there was a decision by a federal court in Georgia which has sustained the immunity of Georgia from this particular tax.
The essential position of the Commonwealth, that this particular tax violates the constitutional principle of intergovernmental tax immunity.
The basic defense of the United States is that this tax is also a users fee and therefore exempt from the principal.
The Commonwealth view the argument will be broken down in to three basic parts.
First of all that there is no exception to the principle of intergovernmental tax immunity for taxes which are also designated, user fees.
Second, that even if we discuss the user fee rationale, the taxing question even fails on those terms.
Third, I would briefly discuss the implications of the case of National League of Cities v. Usery, concerning the position of the Commonwealth here.
Justice William H. Rehnquist: Did the Court of Appeals ever address itself to the question of whether the general language of the statute meant that the tax should be applicable to state-owned vehicles.
Mr. O'Malley: It was agreed by all that the Commonwealth does come within the definition because the definition concerns all aircrafts which are registered or must be registered with the FAA.
This aircraft was registered and we believe must be registered with the FAA.
Justice William H. Rehnquist: There is some language in some of our cases which is treated in part in the Fright case, which came out the other way I think that even though you have general language, sometimes you require more than that in order to apply a particular regulation or a tax to a state.
Mr. O'Malley: There is also Legislative History, Your Honor, which explains why the exemption from the passage of tax, that used to exist for government employees, that's no longer in effect.
And the Legislative History states that they think all aircrafts should pay their way for the use of the aircraft system.
So that issue was never really raised and we do not contest the applicability of the tax as matter of statutory construction.
The tax is clearly a tax irrespective of whether or not we also describe it as a users fee.
As such it clearly comes within the scope of the principle as historically stated.
First of all, there is a direct imposition on the funds of the Commonwealth of Massachusetts.
Second of all even though the amount of the tax is not excessive in its direct terms, it's only $131 for this year.
In all decisions concerning the principle of tax immunity whether it's federal immunity or state immunity the court has always stated that the amount is immaterial.
The basic issue is whether or not there is a an infringement of sovereignty not whether or not the tax in question is excessive.
It also is --
Justice William H. Rehnquist: Now, Mr. O'Malley what if 120- 130 years ago, whenever it was a crucial, national issue, the federal government had build a toll road over the Appalachians and it charged everybody who was pulling a wagon over that toll road, whatever say a dollar.
Do you think a state could have claimed immunity from that sort of a charge?
Mr. O'Malley: No, we deny, Your Honor, if a particular charge is not a tax but strictly a fee, such as a toll, for the use of a particular road owned by the United States, we would not claim free usage of the road just as we do not claim as the government says, that we think we should be able to use mails for free.
We have to buy the the stamps like everyone else.
Justice Potter Stewart: Even though you are performing a sovereign function in the using.
Mr. O'Malley: Yes Your Honor, the crux of the issue is that there is a direct imposition on the Commonwealth's funds for the general support of government rather than the individual act of a proprietor trying to get compensation for the use of it.
Chief Justice Warren E. Burger: And you defied with this if the wagons were carrying ammunition to Valley Forge.
Mr. O'Malley: Well, if we proved the factual matter, there was a great infringement on the sovereignty because of the unique fact like that, I think may be that would be a separate case but as a general proposition, the proprietorship type fee, we do not challenge.
Chief Justice Warren E. Burger: You leave me a little confused there.
But for some purposes the state, the federal government could make a use charge but for some purposes they could not.
And on each of them, there are two sovereigns.
Mr. O'Malley: If I may backtrack a bit, Your Honor, our basic position is that if it is a tax, and we don't think that the type of toll concerning the use of a road is a tax, I think your question you related to, if the imposition of the toll, somehow or another prevented that it really threatened the existence of a state or of a governmental entity, that would raise separate issues which we don't think are involved in --
Chief Justice Warren E. Burger: But usually tolls on toll roads are, if not always, dedicated an earmark to amortize the bond issue, that was the basis of building it.
You don't have in this case I take it, a impounding of this use charge.
Mr. O'Malley: The revenue derived from this charge does go in to a trust fund in the treasury
And that money is used to make grants to the states for airport expansion and development.
Now, the facilities are still owned by the states or their subdivisions and the money is used, however to further -- the tax here though is a tax on the use of a navigable airspace.
It does not specifically geared to a particular use such as driving over a toll road and paying a one time charge for it.
At some point these charges may -- the lines of distinction become fine ones but in this case it has never been contested that this is not really a tax, the only argument has been that it also has aspects of being a use of shape.
Chief Justice Warren E. Burger: And the federal government had spent hundreds of millions of dollars on river channels in order to make river navigation feasible.
On your theory could they charge a state- owned barges for carrying tasks for the state?
Mr. O'Malley: I do not think that could make a direct tax of the states because they happen to use -- have designated this particular revenue for river improvements, however, if on a one time basis, there is an agency that has a particular expense and has a charge against both, for the particular use and its clearly user's fee and it does not involve those sovereign issues such as the levying on funds of a state or exerting the power who even sees the facilities of a state, because they want to enforce this revenue contribution.
The different considerations that --
Justice Thurgood Marshall: Mr. O'Malley, wasn't it true that for years, the state official business didn't have to pay taxes on the plane tickets?
Mr. O'Malley: Yes, Your Honor.
Justice Thurgood Marshall: And now they do.
Mr. O'Malley: Now, they do Your Honor.
Justice Thurgood Marshall: Who is raising that change?
Mr. O'Malley: The Legislative History --
Justice Thurgood Marshall: Or is that by legislature?
Mr. O'Malley: A legislature repealed the exemption for the employees and I think the tax here is quite different because at least it's user oriented in that case, Your Honor.
There are a number of exceptions that are recognized in the immunity principle, so that there is no question about the federal power raised revenue being unduly interfered with.
In other words, the states have to be engaging in the sovereign function and they cannot immunize contract as all of the employees from incidental federal taxes.
These type of considerations have often been recognized but the fact is that no other exception has ever been recognized for taxes such as this, where the government claims, they have a particular use if they want to make for this particular revenue.
The sole argument that the government seems to make is that this court should analagyse this tax with taxes that are enacted from interstate carriers or even state highways.
We consider the questions involved in an undue burden of interstate commerce issue quite different from the sovereignty issues raised in the tax immunity argument.
The interstate commerce burden question necessarily involves a question of degree.
The relative judgments have to be made but in terms of the constitutional principle involving the status of the states under the constitution, questions of degree do not illuminate whether or not there is actually an infringement in the constitutional sense.
But even when reference is made to the user fee argument, there are two aspect that the Commonwealth wishes to raise.
First of all, this case was decided on a motion to dismiss.
In the first instance, whether or not there has been an approximate benefit relative to the amount of the tax would raise the factual question which probably would have to require a hearing but more importantly, we think the failure of the user fee to even qualify as such in this case indicates that this type of innovation is unworthy in the tax immunity area because even though different difficult factual issues will be raised, they do not illuminate the questions of sovereignty that are involved here that are not involved in cases where you have an interstate carrier claiming that their activities are being unduly burdened.
Justice John Paul Stevens: Mr. O'Malley, with regard just to your first argument, is it your position that even if it were a user fee, in which the charge was related to the amount of usage of the air system that the state aircraft did use that would still be invalid.
Mr. O'Malley: Yes, when they use it in the form of a tax.
If there is another way to exact an administrative charge and it's based on a voluntary participation in a particular program or use of a particular road then --
Justice John Paul Stevens: But if that is your position why don't you challenge -- and apparently the state has not challenged the tax on airline tickets by state employees.
Mr. O'Malley: We have not Your Honor, there is question there whether or not the incidence of the tax is actually on the Commonwealth of the state or on the particular employees who then may or may not get reimbursed by the government.
Well there is that separate issue there, there is no question here but that the internal revenue agents, in this case levied on funds of the Commonwealth quite directly.
Chief Justice Warren E. Burger: Surely some of the Massachusetts travelers are reimbursed by the state, are you suggesting that it was a demeanor or something?
Mr. O'Malley: No, Your Honor, I think it is more analogous to the cases where the salaries of government employees that once considered immune from federal taxation but that particular aspect of the doctrine is since been discarded because -- just because the state has to perhaps make up the difference in order to supply a wage and cover that tax, the connection between the state and the imposition of the taxes was more remote and do not justify the protection that they thought the constitution required.
The formula in this case only involved weight, there was no formula which speaks of the amount of the use of the system concerning the amount of a tax, but even when you get beyond the formula and you look to the result, the user fee is not proved to be a rough accommodation, approximation of the amount of use of a system.
The Secretary of Transportation was required by Congress in this Act to make a cost allocation study concerning whether or not these charges were actually geared to in any way, the use of a system.
The secretary's findings are clear that the amount of the tax is not related to the use of the system.
Now, this is a report filed by the federal official chart with the regulation of the airways and it should be given considerable weight by this court and should also be an indication that getting into this type of problem in the sovereignty area is not a productive one because it in no way illuminates what we consider to be the basic question of power rather than the question of degree.
Finally, the United States really does not address the failure of this particular tax to work out as a rough approximation of the use of a system.
Rather it makes a comparison that the Commonwealth in this particular year involved did receive $1.5 million in grants for airport expansion and development and then compute it with the amount of the tax.
We think this is clearly indicative of why it would not be appropriate to use the user fee issue in the tax immunity area.
First of all, the amount awarded was pursuant to a Matching Grant Program.
These are the type of programs that are often used in Federal state areas such as welfare and education.
They have programs of co-operative federalism.
The United States states does not mention, first of all, they don't mention that this is a Matching Grant Program and second of all they do not mention the amount that the Commonwealth supplied in programs of this nature.
If necessary, the Commonwealth would prove that the Commonwealth supplied $346,000 to meet the grants made by the federal government.
Now, if this figure are degree of matching grant is not satisfactory, then Congress would be free to change the formulas so that the state had to supply more money.
But at least it would be done on a voluntary cooperative federal state basis and it would not require the unilateral and potentially cohesive measure such as the tax and measuring question here.
And finally in the cases involving the use of the highways and their requirement to pay their way in interstate commerce, the court has always been satisfied that the highways were provided by the states and the states were really just demanding compensation for the use of the highways, and if the state was really in a proprietary capacity for the most part in making the charge.
In this case the tax is on the use of the navigable airspace.
The federal government does not own the airspace and even when reference is made to the airport facilities, there are still state based facilities that is either owned by the state or the political subdivisions and in some cases these facilities may or may not receive federal funding.
This indicates how we have difficulty in approximating the amount of use with the amount of a tax, the difficulty also added in this case is that we are not even sure what the use of what facility is being compensated for, by levying a tax on the use of a navigable air space.
Justice Lewis F. Powell: But the air controller federal employees, --
Mr. O'Malley: Pardon me Your Honor.
Justice Lewis F. Powell: Aren't the controllers at the airports federal employee?
Mr. O'Malley: There are federal employees involved at airports but the airport facilities themselves apart from the National Airport and Dallas Airport are not federally owned facilities.
Justice Byron R. White: There is a lot of federal money in them though, I take it.
Mr. O'Malley: Yes Your Honor, generally they do participate in the programs but also to be noted Your Honor is that there are limitations as to what part of the facility these funds are available for.
For example, they don't give money for the use of terminal facilities.
It's mostly directed towards the actual airport side.
Justice Byron R. White: Whose communications facilities are they?
Between airport and aircraft?
Mr. O'Malley: As I understand it, the grants here are made to the states to provide the facilities.
Justice Byron R. White: But they are federal funds, I think on the communication,
Mr. O'Malley: Yes there federal funds involved in these programs and again there are matching funds to varying extents under the statute.
Justice Byron R. White: And Federal regulation, the frequencies used.
Mr. O'Malley: There is a considerable federal regulation --
Justice Byron R. White: Management of the frequencies used.
Mr. O'Malley: In terms of the rules enacted by the Federal Aviation Administration with some Federal Aviation Administration personnel involved in implementing the measure on.
Justice Lewis F. Powell: The navigational aids controlled by airways all across the country are federal, aren't they?
Mr. O'Malley: Well, some of them, I don't think so, Your Honor, I think some of the facilities and the equipment is provided by the grants of the nature involved here but that the states are involved in it. May be --
Justice Lewis F. Powell: The traffic is controlled interstate basis.
Mr. O'Malley: There may be a subdivision of the various facilities that would only be --
Justice Lewis F. Powell: The record in this case contain any information.
Mr. O'Malley: No Your Honors, it was decided strictly on the basis of the motion to dismiss and the user fee rationale is actually evolved.
In this case, it's gone along rather than something that was clearly understood at the beginning.
Justice Thurgood Marshall: You do not want to convince me there that the state controls the traffic from one side of this country to the other.
Mr. O'Malley: Certainly not Your Honor.
Chief Justice Warren E. Burger: Then the problem is that--
Justice Thurgood Marshall: It is definitely regulated by the federal government.
Justice Thurgood Marshall: It is not the federal government, it is the air force.
Mr. O'Malley: Air force?
Justice Thurgood Marshall: It is not the Air force, it is NASA.
Its anything that is far away from state as you can get.
Mr. O'Malley: We are talking about the commercial aircrafts in general aviation.
Justice Thurgood Marshall: All aviations is controlled by the federal government.
Mr. O'Malley: In one form or another, yes Your Honor.
Justice John Paul Stevens: Mr. O'Malley it is true though, isn't that this helicopter involved in this case, helicopter could take off from the roof of the hospital say, fly around and land, never talk to anybody on the radio, never use any federal facility and still have to pay the tax.
Mr. O'Malley: Certainly Your Honor , the tax is on --
Justice John Paul Stevens: The same tax is there if it spent $100, 000 during the year using all the facility, precisely the same tax.
Mr. O'Malley: It would be based solely on the weight of the aircraft and it has nothing to do with the use.
A helicopter by a chance would use these facilities less that an airplane would because of its maneuverability.
The costly feature involved in making these grants is concerning the terminal airspace.
Justice John Paul Stevens: And the helicopter could take off and land without talking to any federal employee, couldn't it?
Mr. O'Malley: Certainly could Your Honor and very often it does.
Justice Lewis F. Powell: Is your submission limited to helicopters?
Mr. O'Malley: I don't think this case should turn of helicopter but it is strictly a state aircraft use for public safety purposes and if the aircraft did use the --
if it were the argument would not differ Your Honor.
Chief Justice Warren E. Burger: What are your arrangements on the automobiles?
Any of them subject to any tax?
Mr. O'Malley: The fuel tax, if there's an exemption on the fuel tax for the state crude because I don't believe there's any other federal tax involved and the state does not tax its own property in that fashion.
The final point is that while most of the discussion of the tax immunity is contained in older cases and perhaps considered by man to be just an old historical doctrine, we believe that the court's recent decision in the National League of Cities v. Usery dramatically shows of the concepts of a state sovereignty that are at the very core of the complaint raised in this case are still very much alive, in that case the court was concerned with the exercise of the commerce clause power but I think the court implicitly, if not explicitly, recognized the continuing vitality of this constitutional principle and was clear to state that were not going to resolve a case on a particularized assessment of impact.
The particular federal statute was declared unconstitutional because this fine would fringe upon the essential role of a states in our union and we think that this case requires similar treatment.
Therefore, we think the judgment of the Court of Appeal should be reversed.
Chief Justice Warren E. Burger: Mr Ryan.
Argument of Allan A. Ryan, Jr.
Mr. Allan A. Ryan, Jr.: Mr. Chief Justice Burger, May it please the court.
In 1970, Congress enacted a law entitled an Act to provide for an expansion and improvement of the nation's airport and airways system and for the imposition of the airport and airway user charges.
This Act was divided into two titles.
Title 1, the Airport and Airway Development Act authorized the Secretary of Transportation, to spend a great deal of money to improve the nation's airports and the services which make air travel safe, services such as air traffic control, communication and navigation aids.
Title 2, the Airport and Airway Revenue Act imposed or increased charges on those who use the nation's airports and such supporting services.
One of those charges is that a issue here, a charge or tax on the use of any taxable civil aircraft of $25 per year or plus a few cents propound.
Title 2 also established a Trust Fund to ensure that the funds raised by the charges in Title 2 would help pay for the improvements required by Title 1.
The issue in this case is whether the Commonwealth of Massachusetts which uses the services made possible by Title 1, every time its helicopter lifts off the pad must pay its share of the cost imposed by Title 2.
Justice William H. Rehnquist: You say the helicopter uses the services made possible by Title 1 every time the helicopter lifts off the pad, do you disagree with your opponent's response to Mr. Justice Steven's question?
Mr. Allan A. Ryan, Jr.: I do although, I think that --
strictly speaking as a factual matter it's not reflected by this record.
I make that statement because I think that something that --
Can be presumed and to that extent I do disagree.
I think it is physically possible as Mr. Justice Stevens perhaps was suggesting, that a helicopter could take off from a hospital --
Justice John Paul Stevens: I am saying lawfully there is no legal limit on the take off from uncontrolled airport, you don't have to talk to anyone?
Mr. Allan A. Ryan, Jr.: Not in the taking off process I don't believe Mr. Justice.
Justice John Paul Stevens: Neither in landing nor in flying.
Unknown Speaker: You are being interrogated by an expert.
Mr. Allan A. Ryan, Jr.: Well, I am not an expert.
Justice John Paul Stevens: I can assure you, I have done it.
Let me ask you this.
Does your legal position depend on as a factual matter, the plane actually making use of any federal communication facility?
Mr. Allan A. Ryan, Jr.: No it does not, not strictly speaking.
And if you tell me that this helicopter can take off and fly over a Logan Airport.
Justice John Paul Stevens: No, on the Logan airport it can not but there are many areas on the State of Massachusetts which are uncontrolled their space in which an aircraft can fly without talking to anyone.
It can take off from uncontrolled fields and land on uncontrolled fields.
The tax applies to those planes.
Mr. Allan A. Ryan, Jr.: Yes it does.
I would suggest this Mr. Justice Stevens that if it did so, if it took off and landed on an uncontrolled airfield and flipped off all its switches and talked to nobody, if it was involved in a mid-air collision with a private plane heading say from Connecticut to New Hampshire and if it were found that that private plane had the right of way and the helicopter had it been listening, would have been told to drop down a thousand feet, the Commonwealth would certainly be in no position to say that the collision was not its fault.
In other words, if it disregards those federal services, it does so at its peril.
And I think that --
Justice Thurgood Marshall: It is not in this case is it?
Mr. Allan A. Ryan, Jr.: Well, I think it --
Justice Thurgood Marshall: I understood from the State of Massachusetts that they had to pay regardless of whether they took off from the hospital or Logan Airport or any place.
Unknown Speaker: Or ever took off --
Justice Thurgood Marshall: Or ever took off --
Mr. Allan A. Ryan, Jr.: Well, I would agree with the former but not the latter.
There is no tax on the possession of the aircraft.
If it is simply possessed on the ground all year long, there is no tax.
If it takes off once or if it takes off 365 times during the year, it's the same tax.
Unknown Speaker: But the facilities are there for its use.
Mr. Allan A. Ryan, Jr.: Absolutely .
And I think as a practical matter, although even if this helicopter may not use federal services on one trip or another one, over the course of the year, I think it is certainly reasonable to expect that they will almost --
Chief Justice Warren E. Burger: Then what I wish to make is your legal position, as I understand it, does not depend on the aircraft actually making use of anything that the federal government spends money for.
Mr. Allan A. Ryan, Jr.: That's correct ,it does not.
Unknown Speaker: But does it depend on the fact that the facilities are available?
Mr. Allan A. Ryan, Jr.: The facilities are there.
It is --
Unknown Speaker: Which it may use.
Mr. Allan A. Ryan, Jr.: Which it may use, and which it provided at federal expense through the imposition of this tax in Title 2.
Justice William H. Rehnquist: Well, could the Federal government open a store up in Boston, kind of a PX type store would have price items and tax the State of Massachusetts for the privilege of using the store even though it decided never to use it?
Mr. Allan A. Ryan, Jr.: In that situation, I think we are somewhat --
we are not in the same position we are here.
I think, let me refer this another tax that was passed as part of this Airway Development Act which imposed an excise tax on aviation fuels of so much per gallon.
Now, Congress in its wisdom exempted the states from payment of that tax.
But I think that is the corollary there that perhaps shows that this is closely tied to use that the $25 or the $130 charge is there on one time basis, and it is there to defray the costs of administering the Federal Aviation Act and maintaining the navigability of the airspace.
The aviation fuels charge is there to precisely calibrate the payment of taxes by the amount of hours or miles flown.
Justice Thurgood Marshall: Not that it matters.
Would you get more money to pay excise tax on, the gasolines.
Mr. Allan A. Ryan, Jr.: I assume that the government would.
I think that the reason that was --
Justice Thurgood Marshall: That is up to them I mean,--
Mr. Allan A. Ryan, Jr.: That is up to the Congress responding to whatever political forces it feels.
Justice John Paul Stevens: Well, Mr. Ryan, can I test your theory with another question?
Supposing the situation were reversed.
Now let's say the state of Virginia puts money in its airports and supposing it imposed a $25 tax on every aircraft that landed at any one of the --
That was based at any one of the airfields in the state, as a user charge, it is the same theory as you have here.
And the FBI on the plane that was flying out one of those airplanes, does the State of Virginia tax United States for the ownership of that plane?
Mr. Allan A. Ryan, Jr.: I believe so.
We think that the theory of Packet Co. v. Keokuk in the head money cases and Clyde Mallory Lines stand for the proposition that user charges are not taxes or more precisely they are subject to the same restraints that the constitution --.
Justice John Paul Stevens: Would it be so, they did not have a Trust Fund?
Mr. Allan A. Ryan, Jr.: If it still could be considered a user charge, we think that Trust Fund here is evidence or proof that this is truly a user charge.
In the absence of a Trust Fund, I think you could still find a user charge and in fact I think in the Montanic trucking case which we cite in our brief, this court did.
Justice John Paul Stevens: And so one time annual measured, suppose if they measure it on the value of the aircraft instead of the weight of the aircraft, could they do that?
Mr. Allan A. Ryan, Jr.: It makes no difference.
Justice John Paul Stevens: So, in other words the State of Virginia could impose a personal property tax on the United States?
Mr. Allan A. Ryan, Jr.: Well, if it was a user charge, regardless of what they call it, whether they call personal property tax or anything else, if the --
Justice John Paul Stevens: It is explained in the Legislative History, the reason is to help pay for airports and will only tax airplanes that land or based at Virginia.
Mr. Allan A. Ryan, Jr.: I think that would be so.
You run into a problem of course, with the Supremacy clause.
The traditional genesis of intergovernmental immunity that it does not work both ways.
Justice John Paul Stevens: If you can call it a user charge why would not it work both ways.
That's really what I was trying to figure out.
Mr. Allan A. Ryan, Jr.: Well, if it is a user charge --
Justice John Paul Stevens: And that can be a user charge, it is just the tax based on the value of the aircraft as long it just lands at a state-owned facility on the one case or uses the federal facility in the other case.
Mr. Allan A. Ryan, Jr.: I think that would be actual use of state powers.
Justice Thurgood Marshall: Well, we have a big military convoy fully loaded and armed and stuff to pay toll, what would happen?
You would weigh it wouldn't you?
It happened several times on a World War II.
Mr. Allan A. Ryan, Jr.: If it was asked to pay a toll on Massachusetts toll booth --
Justice Thurgood Marshall: One what the judge (Inaudible) here.
Mr. Allan A. Ryan, Jr.: I am informed and we thought we might get it, and including this area, the federal military convoys do pay state highway tolls.
Justice Thurgood Marshall: Not all do that.
Mr. Allan A. Ryan, Jr.: It is the policy.
Justice Thurgood Marshall: I had a court-martial involvement throughout --
Mr. Allan A. Ryan, Jr.: May be that is why it is not a policy.
Chief Justice Warren E. Burger: Do you think there is a difference because of the toll fees are explicitly impounded for the purpose of discharging the bonds issued to build the road and situation presented by this case?
Mr. Allan A. Ryan, Jr.: I think the question is, is it a user charge ;or is it not?
I think the --
Chief Justice Warren E. Burger: My question is broader than that.
Mr. Allan A. Ryan, Jr.: Yes I realize that.
I think your question goes to --
Chief Justice Warren E. Burger: Are you going to make them pay the capital costs, that is what the toll roads do.
The toll charged on a toll road is to pay the capital cost of building the road.
You are not dealing with the capital cost here precisely, are you?
Mr. Allan A. Ryan, Jr.: Well, I think it is not entirely a capital cost but it is certainly to the extent that the Act finances the building of airports and air facilities, to that extent it is a capital cost.
The Act is quite explicit and that it says the expenses in the Trust Fund go to improving and operating and maintaining as well as establishing.
Justice William H. Rehnquist: What is it that the government owns that is being charged for the use of here?
Mr. Allan A. Ryan, Jr.: It regulates the navigable air space of the United States.
Justice William H. Rehnquist: I know that.
Mr. Allan A. Ryan, Jr.: In terms of what it owns in a proprietary sense, nothing.
Justice William H. Rehnquist: Nothing.
Mr. Allan A. Ryan, Jr.: I think, once you accept the proposition that this is a user charge, the doctrine of intergovernmental immunity simply need not be faced.
That was the rationale of the Court of Appeals, and we think that this court can affirm on the same rationale, however if the court feels it necessary or desirable to face that question, we think that it need go no further than to reaffirm the case of New York v. United States, and we believe that an affirmance on that ground would still result in an affirmance of the judgment of the Court of Appeals.
We still uphold the tax.
The case of New York v. United States as this court is aware was decided without a majority of the court as such.
Well, Chief Justice Stone's opinion can be read as the opinion of the court.
Justice Potter Stewart: Is that the mineral water case?
Mr. Allan A. Ryan, Jr.: Yes Sir it was.
The tax involved there was a federal tax on mineral waters which New York sold from its springs at Saratoga.
The State of New York contended that it was disposing of its natural resources and in a classic case of exercising its sovereign functions and this court did not disagree, but the test that Chief Justice Stone formulated in that opinion was whether a tax even though non-discriminatory ?May nevertheless so affect the state merely because it is a state that is being taxed as to interfere unduly with the state's performance of its sovereign functions of government? Chief Justice Stone, it should be added, voted to sustain the tax and the tax was sustained.
As I understand, the Commonwealth's case, they are essentially relying on this statement by Mr. Chief Justice Stone, but there is no evidence in this case nor is there any claim as to what that evidence might be, as to how this tax unduly interferes with Massachusetts performance of its sovereign function.
We think the reason for that is that it does not interfere at all.
Massachusetts in its complaint which is taken as true for present purposes simply made no allegation, nor do I understand the Commonwealth to make any allegation in their brief now that this tax interferes with the performance of their sovereign duties.
Justice John Paul Stevens: Mr. Ryan can I just ask two other questions.
Suppose by analogy, the United States decided to propose the tax on the use of the interstate highway system that could charge a flat sum for all vehicles including state-owned vehicles.
All the water systems, boats owned by the states, I mean, that same sort of thing could be done, couldn't it?
Mr. Allan A. Ryan, Jr.: Yes, Mr. Justice Stevens, that falls.
Justice John Paul Stevens: Right.
Mr. Allan A. Ryan, Jr.: I understood the Commonwealth, my brother Mr. O'Malley to take the position in his opening statement that legitimate user fee such as for toll road or river tolls, so forth are not within the scope of governmental immunity and the Commonwealth would not be immune from paying those tolls but here he said it's different because it is a tax and it is not something that is voluntarily paid by Commonwealth of Massachusetts, once of course, they decide to buy a helicopter.
I would infer from what he says that a toll or tax or a duty or levy or whatever it's labeled of a dollar per hour would not be objectionable to the Commonwealth of Massachusetts or to take a more concrete example that Massachusetts would see no problem with the fuel tax of so many cents per gallon being imposed on it because that is a very closely correlated tax, correlating the amount paid to use.
So, I think that given that view of the facts by the Commonwealth to then turn around and say, well, this is levied directly against the state and therefore comes in under the intergovernmental immunities doctrine whatever present status of that doctrine may be, is an elevation of form of nicety over the facts of the case.
That the airspace is there, the facilities are there, as a practical matter they are used.
I think that can safely be said. And this is nothing more than the federal governments seeking too fairly and equitably charge those users whether they be an individual, or corporation, or national government or a state government for the use of those facilities.
Saying it in that way I think requires that the judgment of the District court and the Court of Appeals be affirmed.
Chief Justice Warren E. Burger: Does this record show or do you know what's the total amount of revenue that the federal government achieves under this program over the whole country.
Mr. Allan A. Ryan, Jr.: The record doesn't show it, I don't know it.
Chief Justice Warren E. Burger: But very much money I suspect, is it?
It is not a great sum of money in the todays fiscal arrangements between states and federal government.
Mr. Allan A. Ryan, Jr.: The amount of tax raised by imposing the tax on state governments.
Chief Justice Warren E. Burger: Total.
Mr. Allan A. Ryan, Jr.: I assume it is small Mr. Chief Justice.
The Act authorizes well over a billion dollars to be spent for the improvements in Title 1 but that of course is gathered from all sources and I don't know how that's broken down in terms of what the different states pay.
Justice Potter Stewart: Your brother Mr. O'Malley mentioned National League of Cities, I think have you?
Mr. Allan A. Ryan, Jr.: I have not mentioned it Mr. Justice Stewart.
Justice Potter Stewart: I suppose there was reason why you didn't feel that was relevant.
Mr. Allan A. Ryan, Jr.: I didn't mention it because I think it is not a part of this case.
I thank the court.
Chief Justice Warren E. Burger: Anything further Mr. O'Malley.
Thank you gentlemen.
The case is submitted.