Amoco Oil Co. v. U.S., Slip Op. 99-91.

• Decision Date: 01 September 1999
• Docket Number: Court No. 95-07-00971.,Slip Op. 99-91.
• Citation: 63 F.Supp.2d 1332
• Parties: AMOCO OIL COMPANY, Plaintiff, v. The UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

63 F.Supp.2d 1332

AMOCO OIL COMPANY, Plaintiff, v. The UNITED STATES, Defendant.

Slip Op. 99-91.

Court No. 95-07-00971.

United States Court of International Trade.

September 1, 1999.

COPYRIGHT MATERIAL OMITTED

Barnes, Richardson, & Colburn (Robert E. Burke, Lawrence M. Friedman, Christopher E. Pey, Melissa Miller, Aaron Gothelf, Chicago, IL) for plaintiffs.

David W. Ogden, Acting Assistant Attorney General, David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Jeanne E. Davidson, Todd M. Hughes and Lara Levinson), Richard McManus, Office of the Chief Counsel, United States Customs Service, Washington, DC, of counsel, for defendant.

OPINION

RESTANI, Judge.

This matter is before the court on Defendant's Motion to Dismiss for Failure to State a Claim Upon Which Relief Can Be Granted pursuant to USCIT R. 12(b)(5). In this action, Plaintiff challenges the constitutionality of the Harbor Maintenance Tax ("HMT"), established by 26 U.S.C. §§ 4461, 4462 (1994), on its imports into the United States.

I. JURISDICTION

This court has jurisdiction pursuant to 28 U.S.C. § 1581(a).¹ See Thomson Consumer Electronics v. United States, 62 F.Supp.2d 1182, ___ _ ___, slip op. 99-84 at 4-5 (C.I.T.1999).

II. STANDARD OF REVIEW

On a motion to dismiss for failure to state a claim, factual allegations made in the complaint are assumed to be true and all inferences are drawn in favor of the plaintiff. See, e.g., Mitchell Arms, Inc. v. United States, 7 F.3d 212, 215 (Fed.Cir. 1993). Dismissal is proper only "where it appears beyond doubt that plaintiff can prove no set of facts which would entitle him to relief." Constant v. Advanced Micro-Devices, Inc., 848 F.2d 1560, 1565 (Fed.Cir.1988).

III. BACKGROUND

The HMT is an ad valorem tax on commercial cargo involved in "any port use," including imports. See 26 U.S.C. § 4461(a) (1996). The HMT is contained in Title XIV² of the Water Resources Development Act of 1986 ("WRDA" or "Act"), Pub.L. No. 99-662, 100 Stat. 4082 (1986). The HMT was intended to finance the general maintenance of U.S. ports.³ S.Rep. No. 99-126, at 9-10 (1985), reprinted in 1986 U.S.C.C.A.N. 6639, 6646-47.

Plaintiff Amoco Oil Company ("Amoco") imports goods by sea and alleges that, between 1993 and 1995, it made HMT payments upon imports in excess of $1,000,000. Amoco claims that the HMT on imports, 26 U.S.C. § 4461(c)(1)(A), is unconstitutional in light of the Supreme Court's decision in United States v. U.S. Shoe Corp., 523 U.S. 360, 118 S.Ct. 1290, 140 L.Ed.2d 453 (1998), aff'g 114 F.3d 1564 (Fed.Cir.1997), aff'g 19 CIT 1284, 907 F.Supp. 408 (1995). In U.S. Shoe, 523 U.S. at 370, 118 S.Ct. 1290, the Supreme Court held that the export provision of the HMT, 26 U.S.C. § 4461(c)(1)(B), violates the Export Clause of the Constitution. U.S. Const. art. I, § 10, cl. 2.

Amoco argues that the HMT on imports should be declared invalid because it is not severable from the unconstitutional HMT on exports. Defendant, United States Customs Service ("Customs"), argues that this court, in Carnival Cruise Lines v. United States, 20 CIT 704, 706-11, 929 F.Supp. 1570, 1572-77 (1996), already held that the HMT on exports is severable, and therefore, Plaintiff's complaint fails to state a claim upon which relief can be granted.

Amoco also argues the HMT violates the Uniformity Clause, U.S. Constitution, art.1, § 8, cl. 1., and the Port Preference Clause, U.S. Constitution, art. 1, § 9, cl. 6.⁴

IV. DISCUSSION

A. Severability

It is well-established that unconstitutional provisions of a statute are severable if: (1) the remaining provisions of the statute are independently operative as law, and (2) the remaining statute will function in a manner consistent with the intent of Congress. See Alaska Airlines, Inc. v. Brock, 480 U.S. 678, 684-85, 107 S.Ct. 1476, 94 L.Ed.2d 661 (1987); INS v. Chadha, 462 U.S. 919, 931-35, 103 S.Ct. 2764, 77 L.Ed.2d 317 (1983); Buckley v. Valeo, 424 U.S. 1, 108-09, 96 S.Ct. 612, 46 L.Ed.2d 659 (1976); United States v. Jackson, 390 U.S. 570, 585-91, 88 S.Ct. 1209, 20 L.Ed.2d 138 (1968); Champlin Refining Company v. Corporation Commission of Oklahoma, 286 U.S. 210, 234, 52 S.Ct. 559, 76 L.Ed. 1062 (1932) ("Unless it is evident that the Legislature would not have enacted those provisions which are within its power, independently of that which is not, the invalid part may be dropped if what is left is fully operative as a law."). Cf. Minnesota v. Mille Lacs Band of Chippewa Indians, 526 U.S. 172, ___ _ ___, 119 S.Ct. 1187, 1198-99, 143 L.Ed.2d 270 (1999) (applying two-part test in context of Executive Order).

In Carnival Cruise Lines, the court held that the unconstitutional HMT on exports is severable from "the remainder of the HMT, in particular those portions of the statute that involve [Carnival's] operations as shippers providing passenger services." 20 CIT at 712, 929 F.Supp. at 1577.⁵ The court determined that the HMT on exports was severable because (1) the HMT statute still functioned absent the export provision, see 20 CIT at 706-07, 929 F.Supp. at 1572-73, and (2) plaintiffs failed to provide "strong evidence" that Congress did not intend the export provision to be severable, particularly in light of the WRDA's severability clause. 20 CIT at 709, 929 F.Supp. at 1575.

Amoco argues that Carnival Cruise Lines is not dispositive because the court did not address Congressional concerns regarding potential violations of international obligations under the General Agreement on Tariffs and Trade ("GATT"). As the extent to which the court should apply stare decisis principles is unclear, and as this is a new argument, the court will consider the issue of severability.

With respect to the first inquiry, the court has held that the HMT, as a whole, still functions without the HMT on exports. See Carnival Cruise Lines, 20 CIT at 707, 929 F.Supp. at 1573 ("[N]either of the `export' provisions are essential to the functioning of the [HMT] in relation to the remaining categories of liability for port use."). Plaintiff makes no argument to the contrary. It is the second question, that of Congressional intent, upon which Plaintiff's claims primarily rely. With respect to Congressional intent, the standard is clear: "the unconstitutional provision must be severed unless the statute created in its absence is legislation that Congress would not have enacted." Alaska Airlines, 480 U.S. at 685, 107 S.Ct. 1476 (emphasis added).

Where Congress has included a severability clause, the objectionable provision must be severed unless there is "strong evidence" that Congress intended otherwise. Alaska Airlines, 480 U.S. at 686, 107 S.Ct. 1476. See also Chadha, 462 U.S. at 932, 103 S.Ct. 2764; Champlin Refining, 286 U.S. at 234-35, 52 S.Ct. 559. Thus, the enactment of a severability provision within the WRDA, 33 U.S.C. § 2304,⁶ creates a presumption that Congress did not intend the validity of the HMT as a whole to depend on the validity of constitutionally-offensive provisions. In Carnival Cruise Lines, the court found that the legislative history of the WRDA did not provide sufficient evidence to rebut this presumption of severability. 20 CIT at 708-11, 929 F.Supp. at 1574-77. Amoco argues that proof of Congressional concerns regarding international obligations would have provided the strong evidence necessary to reject severability.⁷ According to Amoco, Article VIII of the GATT requires signatory countries to reciprocate "national treatment" by ensuring that taxes and other charges are not applied to goods imported from member countries in a way that protects a domestic industry.⁸ The core of Amoco's argument, therefore, is that Congress would not have passed the HMT on imports without the HMT on exports because the result would be inconsistent with United States obligations under GATT.

Amoco's argument is based on the premise that an HMT on imports alone violates the GATT because it would necessarily protect the domestic industry (exporters), which is not required to pay the tax.⁹ Curiously, Amoco's own Congressional excerpts support the opposite: "While an import surcharge may not be GATT illegal, it is true that most countries have been reluctant to impose them due to possible adverse GATT implications." The Problems with Import Surcharges, 131 Cong. Rec. 3533, 3533 (Feb 26, 1985) (emphasis added).

Even if an HMT upon imports and not exports would violate the GATT, it is entirely within Congress' power to pass such a tax. If a statute is inconsistent with international obligations, "it is a matter for Congress and not [the] court to decide and remedy." Suramerica de Aleaciones Laminadas, C.A. v. United States, 966 F.2d 660, 668 (Fed.Cir.1992). See also Federal-Mogul Corp. v. United States, 63 F.3d 1572, 1581 (Fed.Cir.1995); Campbell Soup Co., Inc. v. United States, 18 CIT 440, 453, 853 F.Supp. 1443, 1453 (1994). Therefore, the issue is not whether an HMT on imports alone violates the GATT, but whether Congress was so fearful of negative GATT implications that it would not have enacted the HMT on imports without the HMT on exports.

There is some evidence to support such an argument. A report issued by the House Merchant Marine and Fisheries Committee explicitly recognized the possibility of conflict with the United States' GATT obligations if the HMT were to be "construed [as] a revenue-raising measure." H.R.Rep. No. 99-251(IV), at 24 (1985). In testimony before the House Ways and Means Committee, one witness even stated that the export provision had been included for the sole of purpose of avoiding conflicts with the GATT.¹⁰ See Water Resources Conservation, Development, and Infrastructure Improvement Act of 1985: Hearing Before the House Committee on Ways and Means on H.R. 6, 99th Cong. 37 (1985).

The inclusion of a general severability clause, however, suggests that Congress did envision an Act without the HMT on exports. See Alaska Airlines, 480 U.S....