Hartley Marine Corp. v. Mierke

• Citation: 196 W.Va. 669,474 S.E.2d 599
• Decision Date: 12 July 1996
• Docket Number: Nos. 23052,23053,s. 23052
• Court: Supreme Court of West Virginia
• Parties: , 65 USLW 2155 HARTLEY MARINE CORPORATION, A Delaware Corporation, Petitioner Below, Appellant, v. Alan L. MIERKE, State Tax Commissioner of West Virginia, Respondent Below, Appellee. HARTLEY MARINE CORPORATION, A Delaware Corporation, Petitioner Below, Appellant, v. Alan L. MIERKE, State Tax Commissioner of West Virginia, Respondent Below, Appellee. The OHIO RIVER COMPANY, A West Virginia Corporation, Petitioner Below, Appellant, v. James H. PAIGE III, State Tax Commissioner of West Virginia Respondent Below, Appellee. CROUNSE CORPORATION, A Kentucky Corporation, Petitioner Below, Appellant, v. James H. PAIGE III, State Tax Commissioner of West Virginia, Respondent Below, Appellee.

Page 599

474 S.E.2d 599

196 W.Va. 669, 65 USLW 2155

HARTLEY MARINE CORPORATION, A Delaware Corporation, Petitioner Below, Appellant, v. Alan L. MIERKE, State Tax Commissioner of West Virginia,

Respondent Below, Appellee.

HARTLEY MARINE CORPORATION, A Delaware Corporation, Petitioner Below, Appellant, v. Alan L. MIERKE, State Tax Commissioner of West Virginia,

Respondent Below, Appellee.

The OHIO RIVER COMPANY, A West Virginia Corporation, Petitioner Below, Appellant, v. James H. PAIGE III, State Tax Commissioner of West Virginia

Respondent Below, Appellee.

CROUNSE CORPORATION, A Kentucky Corporation, Petitioner Below, Appellant, v. James H. PAIGE III, State Tax Commissioner of West Virginia,

Respondent Below, Appellee.

Nos. 23052, 23053.

Supreme Court of Appeals of West Virginia.

Submitted Jan. 16, 1996.

Decided July 12, 1996.

[196 W.Va. 671] Syllabus by the Court

The fuel use tax that is imposed pursuant to West Virginia Code § 11-15A-13 (1995), as it relates to fuel consumed on the inland waterways, does not violate the federal constitution or any other law.

G. Thomas Battle, Spilman, Thomas & Battle, Charleston, Paul H. Frankel, Morrison & Foerster, New York City, for Appellants.

Barry L. Koerber, Assistant Attorney General, Charleston, for Appellee.

WORKMAN, Justice.

Hartley Marine Corp. ("Hartley Marine"), The Ohio River Company ("ORCO"), and Crounse Corporation ("Crounse") appeal ¹ from orders entered by the Circuit Court of Kanawha County on January 30, 1995, and West Virginia Code § 11-15A-13(a)(2) (1995) imposes an excise tax ² on the "use or consumption in this state of gasoline or special fuel purchased outside this state at the rate of five percent of the average wholesale price of such gasoline or special fuel...." A minimum wholesale price for purposes of computing the tax is fixed by statute at ninety-seven cents per gallon. W. Va.Code § 11-15A-13(a)(1). Every motor carrier operating in West Virginia is required to pay the excise tax on all gasoline or special fuel used within the state. W. Va.Code § 11-15A-13(d).

[196 W.Va. 672] February 8, 1995, affirming the administrative decisions of the State Tax Commissioner which denied Appellants' petitions seeking refunds of West Virginia fuel use tax payments and affirmed an assessment of additional fuel use tax against Hartley Marine. Appellants contend that imposition of the fuel use tax against them violates the Supremacy, Commerce, Due Process, Equal Protection, and Duty of Tonnage Clauses of the United States Constitution, and is further prohibited by the Northwest Ordinance of 1787 and the Virginia Compact of 1789. Upon review of these claims, we find no impediment, constitutional or otherwise, to the imposition of the fuel use tax against Appellants. Accordingly, we affirm the decision of the lower court.

Appellants are motor carriers as defined by West Virginia Code § 11-15-18(c)(6) (1995) ³ who are engaged in the business of transporting products by watercraft in interstate commerce on the Ohio and Mississippi River systems. Appellants' watercraft ⁴ operate within this state while traveling on the Ohio River. ⁵ The sole means of propulsion for Appellants' watercraft is either gasoline or special fuel. ⁶ Appellants pay a federal use tax on the same fuel subject to the fuel use tax imposed by the State of West Virginia. ⁷ See 26 U.S.C. § 4042 (1994). Appellants do not pay a state use tax based on fuel consumed in their towboats in any state other than West Virginia.

Appellants filed West Virginia fuel use tax returns with respect to all fuel consumed during the period for which they seek their respective refunds. ⁸ Along with each of the During the periods for which Appellants seek refunds, they engaged in one point, two point, and pass-through business in West Virginia. One point traffic occurs when the origin of a transport is in one state and the destination in another. Thus, one point traffic occurs whenever either the origin or the destination of transport is in West Virginia. Two-point traffic occurs where both the origin and destination of the transport are both in West Virginia. Pass-through traffic, as the name implies, involves neither an origination or destination within this state.

[196 W.Va. 673] returns, Appellants filed separate letters of protest indicating objections to the fuel use tax.

PREEMPTION

We turn first to the circuit court's determination that West Virginia Code § 11-15A-13 is not preempted by federal law. As this is a conclusion of law, our review is de novo. See Syl. Pt. 1, Appalachian Power Co. v. State Tax Department, 195 W.Va. 573, 466 S.E.2d 424 (1995) (holding that statute interpretation presents legal question subject to de novo review); Kollar v. United Transp. Union, 83 F.3d 124, 125 (5th Cir.1996) (recognizing that "preemption is a question of law reviewed de novo ").

The preemption doctrine has its origin in the Supremacy Clause of the United States Constitution, which states:

This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.

U.S. Const. art. VI, cl. 2. As interpreted by Chief Justice Marshall, state laws are invalid under the Supremacy Clause if they "interfere with, or are contrary to the laws of congress, made in pursuance of the constitution." Wisconsin Pub. Intervenor v. Mortier, 501 U.S. 597, 604, 111 S.Ct. 2476, 2481, 115 L.Ed.2d 532 (1991) (quoting Gibbons v. Ogden, 9 Wheat. 1, 211, 6 L.Ed. 23 (1824)). Despite the existence of this doctrine, however, preemption is disfavored in the absence of convincing evidence warranting its application: "As we have frequently indicated, '[p]re-emption of state law by federal statute or regulation is not favored "in the absence of persuasive reasons--either that the nature of the regulated subject matter permits no other conclusion, or that the Congress has unmistakably so ordained." ' " Commonwealth Edison Co. v. Montana, 453 U.S. 609, 634, 101 S.Ct. 2946, 2962, 69 L.Ed.2d 884 (1981) (quoting Chicago & N.W. Transp. Co. v. Kalo Brick & Tile Co., 450 U.S. 311, 317, 101 S.Ct. 1124, 1130, 67 L.Ed.2d 258 (1981), quoting Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142, 83 S.Ct. 1210, 1217, 10 L.Ed.2d 248 (1963)).

Initially, we recognize "the presumption that Congress does not intend to preempt areas of traditional state regulation." FMC Corp. v. Holliday, 498 U.S. 52, 62, 111 S.Ct. 403, 410, 112 L.Ed.2d 356 (1990). As explained in WLR Foods, Inc. v. Tyson Foods, Inc., 65 F.3d 1172 (4th Cir.1995), cert. denied, --- U.S. ----, 116 S.Ct. 921, 133 L.Ed.2d 850 (1996), "[t]here is a strong presumption against federal preemption of state law." Id. at 1179; see also CSX Transp., Inc. v. Easterwood, 507 U.S. 658, 663-64, 113 S.Ct. 1732, 1737, 123 L.Ed.2d 387 (1993) (noting that "court[s] interpreting a federal statute pertaining to a subject traditionally governed by state law will be reluctant to find pre-emption" "[i]n the interest of avoiding unintended encroachment on the authority of the States"). This presumption, however, can be rebutted by a clear declaration of legislative intent to preempt state law. See Hillsborough County, Fla. v. Automated Medical Labs., Inc., 471 U.S. 707, 715-16, 105 S.Ct. 2371, 2376, 85 L.Ed.2d 714 (1985) (noting that presumption governs unless preemption " 'was the clear and manifest purpose of Congress' ") (quoting Rice v. Santa In any preemption analysis, the focus of the inquiry is on congressional intent. See Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516, 112 S.Ct. 2608, 2617, 120 L.Ed.2d 407 (1992) (stating that " ' "[t]he purpose of Congress is the ultimate touchstone" ' of preemption analysis") (quoting Malone v. White Motor Corp., 435 U.S. 497, 504, 98 S.Ct. 1185, 1190, 55 L.Ed.2d 443 (1978), quoting Retail Clerks v. Schermerhorn, 375 U.S. 96, 103, 84 S.Ct. 219, 223, 11 L.Ed.2d 179 (1963)); accord Morales v. Trans World Airlines, 504 U.S. 374, 383, 112 S.Ct. 2031, 2036-37, 119 L.Ed.2d 157 (1992). Preemption "is compelled whether Congress' command is explicitly stated in the statute's language or implicitly contained in its structure and purpose." Morales, 504 U.S. at 383, 112 S.Ct. at 2036 (quoting FMC Corp., 498 U.S. at 56-57, 111 S.Ct. at 407) (internal quotation marks omitted). Thus,

[196 W.Va. 674] Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 1152, 91 L.Ed. 1447 (1947)).

[i]n the absence of explicit statutory language signaling an intent to pre-empt, we infer such intent where Congress has legislated comprehensively to occupy an entire field of regulation, leaving no room for the states to supplement federal law, or where the state law at issue conflicts with federal law, either because it is impossible to comply with both or because the state law stands as an obstacle to the accomplishment and execution of congressional objectives[.]

Northwest Cent. Pipeline Corp. v. Kansas Corp. Comm'n, 489 U.S. 493, 509, 109 S.Ct. 1262, 1273, 103 L.Ed.2d 509 (1989) (citations omitted).

Although "there can be no one crystal clear distinctly marked formula" for determining whether a state statute is preempted, Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 404, 85 L.Ed. 581 (1941), the United States Supreme Court has identified two ways in which preemption may be accomplished: expressly or impliedly. Gade v. National Solid Wastes Management Ass'n, 505 U.S. 88, 98, 112 S.Ct. 2374, 2383, 120 L.Ed.2d 73 (1992); Jones v. Rath Packing Co., 430 U.S. 519, 525, 97 S.Ct. 1305, 1309-10, 51 L.Ed.2d 604 (1977). To establish a case of express preemption requires proof that Congress, through specific language, preempted the specific field covered by state law. See Interstate Towing Ass'n, Inc....