American Trucking Associations, Inc v. Scheiner

• Decision Date: 23 June 1987
• Docket Number: No. 86-357,86-357
• Parties: AMERICAN TRUCKING ASSOCIATIONS, INC., et al., Appellants, v. James I. SCHEINER, Secretary, Department of Revenue, et al
• Court: U.S. Supreme Court

483 U.S. 266

107 S.Ct. 2829

97 L.Ed.2d 226

AMERICAN TRUCKING ASSOCIATIONS, INC., et al., Appellants,

v James I. SCHEINER, Secretary, Department of Revenue, et al.

No. 86-357.

Argued April 28, 1987.

Decided June 23, 1987.

Syllabus

This case presents the question whether the Commerce Clause of the Federal Constitution is violated by two Pennsylvania statutes which impose lump-sum annual taxes on the operation of trucks on Pennsylvania's highways. One challenged statute requires that an identification marker be affixed to every truck over a specified weight, and imposes an annual flat fee ($25 from 1980 through March 1983) for such marker. The statute exempts trucks registered in Pennsylvania by providing that the marker fee shall be deemed a part of the vehicle registration fee (which was increased when the $25 marker fee was enacted). The marker fee was reduced to $5 (the administrative cost of issuing the marker) in 1982, when Pennsylvania enacted the second challenged statute, which, in general, imposes an annual axle tax on all trucks over a specified weight using Pennsylvania highways, and is assessed at the rate of $36 per vehicle axle. The same statute that enacted the axle tax also reduced the registration fees for pertinent vehicle-weight classes by the amount of the axle tax usually applicable to vehicles in such classes. Appellant organizations, which represent interstate motor carriers whose vehicles are registered outside of Pennsylvania and who paid the $25 marker fee while it was in effect and are subject to the axle tax, brought separate actions in the Commonwealth Court of Pennsylvania challenging the constitutionality of the $25 marker fee and of the axle tax on the ground, inter alia, that both taxes discriminated against interstate commerce since the entire economic burden of each tax fell on out-of-state vehicles because the 1980 statute "deemed" the marker fee for Pennsylvania vehicles to be a part of the registration fee, and the 1982 legislation granted Pennsylvania vehicles a reduction in registration fees that offset the newly imposed axle tax. The court accepted appellants' argument and held that the challenged taxes were unconstitutional. The Pennsylvania Supreme Court considered the cases together and reversed.

Held:

1. The challenged taxes are unconstitutional because the methods by which they are assessed discriminate against interstate commerce in a way that contradicts the Commerce Clause's central purpose of guaran- teeing a free trade area among States. The Clause prohibits a State, as here, from imposing a tax that places a much heavier burden on out-of-state businesses that compete in an interstate market than it imposes on its own residents who also engage in interstate commerce. The challenged taxes do not pass the "internal consistency" test under which a state tax must be of a kind that, if applied by every jurisdiction, there would be no impermissible interference with free trade. The challenged taxes' inevitable effect is to threaten the free movement of commerce by placing a financial barrier around Pennsylvania. Pp. 280-287.

2. The challenged taxes cannot be upheld on the ground that they reflect a reasonable charge for the privilege of using Pennsylvania's roads when considered alongside the high price that Pennsylvania-based trucks pay in registration fees. There is no merit to the contention that the axle tax does not discriminate against interstate commerce because domestic trucks, through payment of the registration fees, pay a higher price to use Pennsylvania's highways than those registered in other States. Pp. 287-289.

3. Nor can the challenged taxes be upheld on the ground that they are no different from flat user fees recently upheld in other cases. Evansville-Vanderburgh Airport Authority District v. Delta Airlines, Inc., 405 U.S. 707, 92 S.Ct. 1349, 31 L.Ed.2d 620, and Commonwealth Edison Co. v. Montana, 453 U.S. 609, 101 S.Ct. 2946, 69 L.Ed.2d 884, distinguished. Pp. 289-292.

4. Earlier cases that support a State's authority to impose flat use taxes can no longer suffice to uphold flat taxes with the blatantly discriminatory consequences associated with Pennsylvania's marker fee and axle tax. More recent decisions have rejected the approach to the Commerce Clause taken in the earlier cases that focused primarily on the character of the privilege rather than the practical consequences of the tax. A flat tax may not be upheld merely because the particular formula by which its charges are reckoned extends the same nominal privilege to interstate commerce that it extends to in-state activities. Although out-of-state carriers obtain a privilege to use Pennsylvania's highways that is nominally equivalent to that which local carriers receive, imposition of the challenged taxes for a privilege that is several times more valuable to a local business than to its out-of-state competitors is unquestionably discriminatory and thus offends the Commerce Clause. While flat taxes may be valid when administrative difficulties make collection of more finely calibrated user charges impracticable, such justification is unavailable with regard to Pennsylvania's unapportioned marker fee and axle tax. Pp. 292-297.

510 Pa. 430, 509 A.2d 838 (1986), reversed and remanded.

STEVENS, J., delivered the opinion of the Court, in which BRENNAN, WHITE, MARSHALL, and BLACKMUN, JJ., joined. O'CONNOR, J., filed a dissenting opinion, in which REHNQUIST, C.J., and POWELL, J., joined, post, p. ----. SCALIA, J., filed a dissenting opinion, in which REHNQUIST, C.J., joined, post, p. ----.

Stephen M. Shapiro, Chicago, Ill., for appellants.

Suellen M. Wolfe, Philadelphia, Pa., for appellees.

Justice STEVENS delivered the opinion of the Court.

Again we are "asked to decide whether state taxes as applied to an interstate motor carrier run afoul of the commerce clause, Art. I, § 8, of the Federal Constitution." Aero Mayflower Transit Co. v. Board of Railroad Comm'rs, 332 U.S 495, 496, 68 S.Ct. 167, 168, 92 L.Ed. 99 (1947). That statement of the question presented might equally well have introduced the Court's opinion in either Spector Motor Service, Inc. v. O'Connor, 340 U.S. 602, 71 S.Ct. 508, 95 L.Ed. 573 (1951), or Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 97 S.Ct. 1076, 51 L.Ed.2d 326 (1977), which overruled Spector. In this case we review the Supreme Court of Pennsylvania's judgment upholding the constitutionality of two Pennsylvania statutes which impose lump-sum annual taxes on the operation of trucks and truck tractors. Our task is by no means easy; the uneven course of decisions in this field reflects the difficulties of reconciling unrestricted access to the national market with each State's authority to collect its fair share of revenues from interstate commercial activity.

Appellants claim that these Pennsylvania statutes violate the principle that no State may discriminate against interstate commerce by enacting a tax which provides a competitive advantage to local business.¹ The Pennsylvania Supreme Court upheld the taxes, interpreting them as facially neutral and in accord with a line of our decisions in the pre-Spector era approving flat taxes imposed on interstate truckers for the privilege of using a State's highway system. Before turning to the judgment of the State Supreme Court, we first describe the challenged taxes in some detail in the context of the State's revenue-gathering system and explain why we find persuasive appellants' claims of discrimination. Despite appellees' defense of the revenue provisions as valid compensatory, user-fee, or flat taxes, the judgment of the State Supreme Court must be reversed.

I

The Commonwealth of Pennsylvania spends large sums of money to improve and maintain its highways and bridges.² Passenger and cargo vehicles travel billions of miles on these highways every year.³ Operators of large trucks and tractor trailers engaged in interstate commerce make particularly heavy use of the State's highways. Their vehicles, which may be classified by the number of their axles or by their gross weight—ranging from less than 5,000 pounds for the smallest class to 79,001-80,000 pounds for the 25th class—not only transport cargo between Pennsylvania and out-of-state locations, but also use Pennsylvania's highways extensively as corridors connecting the States of the Northeast, the Southeast, and the Midwest.⁴ Because of their weight and size, trucks using the State's roads require the State to make higher road-related expenditures than would use of the roads by smaller vehicles alone. App. 30. The State's hilly terrain and frequently severe weather conditions enhance the costs of highway maintenance. 510 Pa. 430, 433, 509 A.2d 838, 840 (1986).

These expenditures are financed, in substantial part, by three types of levies on users of Pennsylvania's highways: vehicle registration fees, fuel consumption taxes, and lump-sum annual fees which we will describe as "flat taxes." Although the two taxes at issue in this litigation are both flat taxes—a $25 "marker fee" assessed from August 18, 1980, through March 31, 1983, and an "axle tax" imposed thereafter—registration fees and fuel taxes are principal sources of revenue for road-related purposes and therefore the mechanics of their collection provide necessary background for our analysis of the economic significance and constitutional validity of the challenged flat taxes.

Registration Fees

Owners of motor vehicles that are based in Pennsylvania must register them with the Department of Transportation and pay an annual registration fee. The weight of a truck or truck tractor ⁵ determines the amount of the annual fee. Prior to 1980, there were 20 weight classifications, and the corresponding fees ranged from $39 to $606 per vehicle. App. 260. In 1980, the registration fees were increased and five new weight classes for heavier vehicles were added to the statutory schedule; from 1...