Opinion of the Justices

• Decision Date: 13 October 1977
• Docket Number: No. 7848,7848
• Citation: 379 A.2d 782,117 N.H. 749
• Parties: OPINION OF THE JUSTICES. Request of the Senate,
• Court: New Hampshire Supreme Court

Page 782

379 A.2d 782

117 N.H. 749

OPINION OF THE JUSTICES.

Request of the Senate,

No. 7848.

Supreme Court of New Hampshire.

Oct. 13, 1977.

The following resolution was adopted by the Senate on July 12, 1977, and filed with the supreme court on July 14, 1977:

"Whereas, there is pending in the Senate, House Bill Number 439, 'An Act authorizing the water supply and pollution control commission to implement the provisions of RSA 146-A relative to oil spillage; establishing the New Hampshire Oil Pollution Control Fund; and making an appropriation therefor'; and

"Whereas, doubt has been expressed as to the constitutionality of the provisions of said bill; now, therefore, be it

"Resolved by the Senate, that the justices of the supreme court be respectfully requested to give their opinion on the following important questions of law:

"1. Can the general court within the provisions of the constitution of New Hampshire enact a statute as proposed by House Bill 439, which provides for the establishment of an oil pollution control fund to be funded by license fees, penalties or other fees and changes (sic) generated by the chapter as well as any federal or other funds which are made available for the purposes of oil pollution control?

"2. Can the general court impose a contingent annual license fee on an operator of an oil terminal facility having a storage capacity in excess of 500 barrels, within the framework of the provisions of the constitution of New Hampshire?

"3. Would the provisions of this bill impose any unwarranted restrictions on interstate commerce in violation of the commerce clause of the constitution of the United States?

"4. Would any provision of the constitution of the United States or of this state be violated by the provisions of this bill?

"Further resolved that the clerk of the Senate be instructed to transmit to the clerk of the supreme court 6 copies of this resolution and 6 copies of House Bill 439 as amended by the Senate Finance Committee."

The following answers were returned:

To the Honorable Senate:

The undersigned justices of the supreme court submit the following answers to the questions contained in your resolution submitted to this court on July 14, 1977.

I

House bill 439 creates a specific tax of one cent per barrel on the operators of oil terminal facilities having storage capacities over 500 barrels. The purpose of the tax is to establish a fund to finance the activities of the pollution control commission. Our constitution requires that all taxes be proportionate and reasonable, N.H.Const. pt. II, art. 5 that is, equal in valuation and uniform in rate, Opinion of the Justices, 82 N.H. 561, 574, 138 A. 284, 291 (1927), and just. Opinion of the Justices, 4 N.H. 565, 570 (1829). The legislature has liberal powers to create classifications among taxable property, which will be upheld if a classification is "sufficiently inclusive to constitute a distinctive class . . . ." Opinion of the Justices, 114 N.H. 174, 177, 317 A.2d 568, 570 (1974).

We have held that refined petroleum products constitute a sufficiently distinctive class for taxation. Opinion of the Justices, 114 N.H. at 177-78; 317 A.2d at 570. That in itself strongly suggests that the raw material from which they are derived is sufficiently distinct to be taxed. Oil facilities possess "a characteristic event not common to other property," and their separate taxation is constitutional. Opinion of the Justices, 114 N.H. at 178, 317 A.2d at 570.

The classification between facilities according to storage capacity in effect creates an exemption for those facilities of less than 500 barrels. If that distinction is reasonable, it is constitutional. Opinion of the Justices, 114 N.H. at 178, 317 A.2d at 570-71; Opinion of the Justices, 97 N.H. 533, 536, 81 A.2d 845, 848 (1951). This bill does not prohibit the state from aiding a smaller facility to clean up its spillage. But the legislature could conclude that such a facility would be more likely to be able to clean up its own spillage or that the small amount of oil that could be released would pose no substantial danger. Because the danger at which the bill is directed would arise principally from the larger facilities, the classification is constitutional.

A flat rate tax on each barrel of oil, regardless of the differing values among barrels purchased from various sources is unconstitutional because unapportioned. Opinion of the Justices, 114 N.H. at 179, 317 A.2d at 571; see Opinion of the Justices, 82 N.H. at 563, 138 A. at 286. However, strictly construed, the proposed exaction is not a tax. A tax is an enforced contribution to raise revenue and not to reimburse the state for special services rendered to a given party. Gunby v. Yates, 214 Ga. 17, 19, 102 S.E.2d 548, 550 (1958); In re Trust of Shurtz, 242 Iowa 448, 454, 46 N.W.2d 559, 562 (1951). Our cases implicitly recognize this distinction. In Opinion of the Justices, 81 N.H. 552, 120 A. 629 (1923), we distinguished between a tax levied upon the privilege of selling gasoline and a charge exacted from motorists for using the state's highways, collected by imposing a price increment on gasoline at the pump, only the former being unconstitutional. The "tax" exacted by House bill 439 is more in the nature of a charge on oil facilities to reimburse the state for maintaining, and if necessary employing pollution control equipment for their benefit. The monies collected from this tax do not go into the general fund revenues, but in fact the tax abates when the pollution control fund is sufficiently capitalized. Thus, House bill 439 imposes no "tax" in the sense employed by the constitution; hence, it need not be apportioned.

Finally, there is nothing in the law or the constitution to prevent this state's acceptance of federal funds in a scheme of cooperative federalism. This state participates in other such programs and uses federal highway funds. That provision of this bill poses no difficulties.

II

Proposed House bill 439 is subject, as are all state enactments, to the limitations of the due process and equal protection clauses of the fourteenth amendment. Because New Hampshire contains no indigenous oil reserves, see 20 Encyclopedia Americana 165-68 (1970), the operator of any oil terminal facility subject to licensure and taxation under this bill must be engaged in interstate or foreign commerce. A license tax on the operator of such a facility is the equivalent of a tax on interstate or foreign commerce for purposes of constitutional analysis. See, e. g., Complete Auto Transit v. Brady, 430 U.S. 274, 97 S.Ct. 1076, 51 L.Ed.2d 326 (1977); Nippert v. City of Richmond, 327 U.S. 416, 66 S.Ct. 586, 90 L.Ed. 760 (1946). We conclude that insofar as questions of law control, House bill 439 can withstand federal constitutional scrutiny.

A. The due process clause. Scrutiny of measures affecting only economic interests under the substantive aspect of the due process clause is narrow. Opinion of the Justices, N.H., 376 A.2d 118, 120 (1977). Such a law directed to furthering the public interest or general welfare is constitutional unless it is wholly irrational. Opinion of the Justices, 102 N.H. 106, 108, 151 A.2d 236, 238 (1959); see Ferguson v. Skrupa, 372 U.S. 726, 729-31, 83 S.Ct. 1028, 10 L.Ed.2d 93 (1963). The proposed law would satisfy even a much higher standard. It is directed toward "coping with the problem of pollution from the spillage of oil" and the resulting damage to "vegetable, marine, animal and bird life." RSA 146-A:1 (Supp.1975). State interest in the quality of its environment is long standing and traditional. See Minnesota Rate Cases, 230 U.S. 352, 402-03, 33 S.Ct. 729, 57 L.Ed. 1511 (1912); Georgia v. Tennessee Copper Co., 206 U.S. 230, 27 S.Ct. 618, 51 L.Ed. 1038, 237-38 (1907). House bill 439 directly furthers this interest though the creation of a fund to finance the costs of hiring and paying personnel, purchasing and maintaining equipment to clean up oil spillage, and effecting the regulatory purposes of RSA ch. 146-A (Supp.1975). Consequently, the proposed bill infringes on no substantive rights protected by the due process clause.

Such a finding does not terminate our due process inquiry. With regard to taxation of interstate business, "due process requires some definite link, some minimum connection, between a state and the person, property or transaction sought to be taxed." Miller Bros. v. Maryland, 347 U.S. 340, 344-45, 74 S.Ct. 535, 539, 98 L.Ed. 744 (1954). This nexus requirement, however, is not difficult to satisfy. See National Geographic Soc'y v. California Bd. of Equalization, 430 U.S. 551, 97 S.Ct. 1386, 51 L.Ed.2d 631 (1977). The contacts between this state and the licensees subject to tax are substantial. Only those who maintain facilities capable of transferring, processing, transporting or storing oil in New Hampshire are subject to tax liability. RSA 146-A:2 II (Supp.1975). Those facilities derive the actual and substantial benefits of police and fire protection and port operations. This tax satisfies all norms of due process.

B. The equal protection clause. The standard employed for review under the equal protection clause is similar to that of due process. Enactments that promote public health and safety and do not infringe on fundamental rights or create invidious classifications are valid if rationally related to the state's interest. Opinion of the Justices, N.H., 376 A.2d at 120; City of New Orleans v. Dukes, 427 U.S. 297, 303, 96 S.Ct. 2513, 49 L.Ed.2d 511 (1976). The general court could rationally conclude that only producers with a storage capacity over 500 barrels pose a substantial danger to New Hampshire's waters. The maximum spillage of those with a lesser capacity could be found relatively harmless and within the control of the pollutor himself to remedy. The legislation may address itself to only that phase of a problem that appears most acute....