U.S. v. United States Shoe Corporation

• Decision Date: 31 March 1998
• Docket Number: 97372
• Citation: 523 U.S. 360,130 L.Ed.2d 453,118 S.Ct. 1290
• Parties: UNITED STATES, Petitioner, v. UNITED STATES SHOE CORPORATION
• Court: U.S. Supreme Court

523 U.S. 360

118 S.Ct. 1290

130 L.Ed.2d 453

UNITED STATES, Petitioner,

v UNITED STATES SHOE CORPORATION.

No. 97-372.

Supreme Court of the United States

Argued March 4, 1998.

Decided March 31, 1998.

Syllabus^*

The Harbor Maintenance Tax (HMT) obligates exporters, importers, and domestic shippers, 26 U.S.C. §4461(c)(1), to pay 0.125 percent of the value of the commercial cargo they ship through the Nation's ports, §4461(a). The HMT is imposed at the time of loading for exports and unloading for other shipments. §4461(c)(2). It is collected by the Customs Service and deposited in the Harbor Maintenance Trust Fund (Fund), from which Congress may appropriate amounts to pay for harbor maintenance and development projects and related expenses. §9505. Respondent United States Shoe Corporation (U.S.Shoe) paid the HMT for articles the company exported during the period April to June 1994 and then filed a protest with the Customs Service alleging that, to the extent the toll applies to exports, it violates the Export Clause, U.S. Const., Art. I, §9, cl. 5, which states: "No Tax or Duty shall be laid on Articles exported from any State.'' The Customs Service responded to U.S. Shoe with a form letter stating that the HMT is a statutorily mandated user fee, not an unconstitutional tax on exports. U.S. Shoe then sued for a refund, asserting that the HMT violates the Export Clause as applied to exports. In granting U.S. Shoe summary judgment, the Court of International Trade (CIT) held that it had jurisdiction under 28 U.S.C. §1581(i) and that the HMT qualifies as a tax. Rejecting the Government's characterization of the HMT as a user fee, the CIT reasoned that the tax is assessed ad valorem directly upon the value of the cargo itself, not upon any services rendered for the cargo. The Federal Circuit affirmed.

Held:

1.The CIT properly entertained jurisdiction in this case. Section 1581(i)(4) gives that court residual jurisdiction over "any civil action . . . against the United States . . . that arises out of any [federal] law . . . providing for . . . administration and enforcement with respect to the matters referred to in [§1581(i)(1)],'' which in turn applies to "revenue from imports.'' This dispute involves such a law. The HMT statute, although applied to exports here, applies equally to imports. That §1581(i) does not use the word "exports'' is hardly surprising in view of the Export Clause, which confines customs duties to imports. Moreover, 26 U.S.C. §4462(f)(2) directs that the HMT "be treated as . . . a customs duty'' for jurisdictional purposes. Such duties, by their very nature, provide for revenue from imports and are encompassed within §1581(i)(1). Accordingly, CIT jurisdiction over controversies regarding HMT administration and enforcement accords with §1581(i)(4). Pp. ____-____.

2.Although the Export Clause categorically bars Congress from imposing any tax on exports, United States v. International Business Machines Corp., 517 U.S. 843, 116 S.Ct. 1793, 135 L.Ed.2d 124 (IBM), it does not rule out a "user fee'' that lacks the attributes of a generally applicable tax or duty and is, instead, a charge designed as compensation for government-supplied services, facilities, or benefits, see Pace v. Burgess, 92 U.S. 372, 375-376, 23 L.Ed. 657. The HMT, however, is a tax, and thus violates the Export Clause as applied to exports. Pp. ____-____.

(a) The HMT bears the indicia of a tax: Congress expressly described it as such, 26 U.S.C. §4461(a), codified it as part of the Internal Revenue Code, and provided that, for administrative, enforcement, and jurisdictional purposes, it should be treated "as if [it] were a customs duty,'' §§4462(f)(1),(2). Prior cases in which this Court upheld flat and ad valorem charges as valid user fees do not govern here because they involved constitutional provisions other than the Export Clause. IBM plainly stated that the Export Clause's simple, direct, unqualified prohibition on any taxes or duties distinguishes it from other constitutional limitations on governmental taxing authority. 517 U.S., at 851, 852, 857, 861, 116 S.Ct., at ----, ----, ----, ----. Pp. ____-____.

(b) The guiding precedent for determining what constitutes a bona fide user fee in the Export Clause context remains this Court's time-tested Pace decision. The Pace Court upheld a fee for stamps placed on tobacco packaged for export. The stamp was required to prevent fraud, and the charge for it, the Court said, served as "compensation given for services [in fact] rendered.'' 92 U.S., at 375. In holding that the fee was not a duty, the Court emphasized that the charge bore no relationship to the quantity or value of the goods stamped for export. Ibid. Pace establishes that, under the Export Clause, the connection between a service the Government renders and the compensation it receives for that service must be closer than is present here. Unlike the fee at issue in Pace, the HMT is determined entirely on an ad valorem basis. The value of export cargo, however, does not correlate reliably with the federal harbor services, facilities, and benefits used or usable by the exporter. The Court's holding does not mean that exporters are exempt from any and all user fees designed to defray the cost of harbor development and maintenance. It does mean, however, that such a fee must fairly match the exporters' use of port services and facilities. Pp. ____-____.

114 F.3d 1564, affirmed.

GINSBURG, J., delivered the opinion for a unanimous Court.

Lawrence G. Wallace, Washington, DC, for petitioner.

James R. Atwood, Washington, DC, for respondent.

Justice GINSBURG delivered the opinion of the Court.

The Export Clause of the Constitution states: "No Tax or Duty shall be laid on Articles exported from any State.'' U.S. Const., Art. I, §9, cl. 5. We held in United States v. International Business Machines Corp., 517 U.S. 843, 116 S.Ct. 1793, 135 L.Ed.2d 124 (1996) (IBM), that the Export Clause categorically bars Congress from imposing any tax on exports. The Clause, however, does not rule out a "user fee,'' provided that the fee lacks the attributes of a generally applicable tax or duty and is, instead, a charge designed as compensation for government-supplied services, facilities, or benefits. See Pace v. Burgess, 92 U.S. 372, 375-376, 23 L.Ed. 657 (1876). This case presents the question whether the Harbor Maintenance Tax (HMT), 26 U.S.C. §4461(a), as applied to goods loaded at United States ports for export, is an impermissible tax on exports or, instead, a legitimate user fee. We hold, in accord with the Federal Circuit, that the tax, which is imposed on an ad valorem basis, is not a fair approximation of services, facilities, or benefits furnished to the exporters, and therefore does not qualify as a permissible user fee.

I

The HMT, enacted as part of the Water Resources Development Act of 1986, 26 U.S.C. §§4461-4462, imposes a uniform charge on shipments of commercial cargo through the Nation's ports. The charge is currently set at 0.125 percent of the cargo's value. Exporters, importers, and domestic shippers are liable for the HMT, §4461(c)(1), which is imposed at the time of loading for exports and unloading for other shipments, §4461(c)(2). The HMT is collected by the Customs Service and deposited in the Harbor Maintenance Trust Fund (Fund). Congress may appropriate amounts from the Fund to pay for harbor maintenance and development projects, including costs associated with the St. Lawrence Seaway, or related expenses. §9505.

Respondent United States Shoe Corporation (U.S.Shoe) paid the HMT for articles the company exported during the period April to June 1994 and then filed a protest with the Customs Service alleging the unconstitutionality of the toll to the extent it applies to exports. The Customs Service responded with a form letter stating that the HMT is a statutorily mandated fee assessment on port users, not an unconstitutional tax on exports. On November 3, 1994, U.S. Shoe brought this action against the Government in the Court of International Trade (CIT). The company sought a refund on the ground that the HMT is unconstitutional as applied to exports.

Sitting as a three-judge court, the CIT held that its jurisdiction was properly invoked under 28 U.S.C. §1581(i); on the merits, the CIT agreed with U.S. Shoe that the HMT qualifies as a tax. 907 F.Supp. 408 (1995). Rejecting the Government's characterization of the HMT as a user fee rather than a tax, the CIT reasoned: "The Tax is assessed ad valorem directly upon the value of the cargo itself, not upon any services rendered for the cargo . . . . Congress could not have imposed the Tax any closer to exportation, or more immediate to the articles exported.'' Id., at 418. Relying on the Export Clause, the CIT entered summary judgment for U.S. Shoe.

The Court of Appeals for the Federal Circuit, sitting as a five-judge panel, affirmed. 114 F.3d 1564 (1997). On auxiliary questions, the Federal Circuit upheld the CIT's exercise of jurisdiction under §1581(i) and agreed with the lower court that the HMT applied to goods in export transit. ¹ Concluding that the HMT is not based on a fair approximation of port use, the Federal Circuit also agreed that the HMT imposes a tax, not a user fee. In making this determination, the Court of Appeals emphasized that the HMT does not depend on the amount or manner of port use, but is determined solely by the value of cargo. Judge Mayer dissented; in his view, Congress properly designed the HMT as a user fee, a toll on shippers that supplies funds not for the general support of government, but exclusively for the facilitation of commercial navigation.

Numerous cases challenging the constitutionality of the HMT as applied to exports are currently pending in the Court of International Trade and the Court of Federal Claims. ² We granted certiorari, 522 U.S. ----, 118 S.Ct. 361, 139 L.Ed.2d 281 (1997), to review the Federal...