American Trucking Associations v. Goldstein

ELDRIDGE, Judge. The principal issue in this case is whether Maryland Code (1957, 1980 Repl.Vol., 1983 Cum.Supp.), Art. 81, § 423(a), which imposes an annual twenty-five dollar registration or “marker” fee upon all motor carriers that operate in Maryland, violates the Commerce Clause of the United States Constitution, Art. I, § 8, cl. 3. Section 423(a) is part of Maryland’s “Road Tax on Motor Carriers” Act, Art. 81, §§ 412-430, which requires that every commercial motor vehicle 1 operated by a motor carrier 2 in Maryland pay certain road taxes and fees to support Maryland’s transportation system. Under § 423(a), all motor carriers must annually register their commercial motor vehicles with the State Comptroller for fuel tax reporting ³⁷⁵ purposes and obtain an identification marker for each vehicle so registered.

The annual charge imposed for issuance of this marker is twenty-five dollars per vehicle, regardless of whether the vehicle is titled in Maryland or elsewhere. 3 The plaintiffs, a national organization of motor carriers as well as individual carriers subject to the registration fee under Art. 81, § 423(a), filed suit in the Circuit Court for Anne Arundel County challenging the constitutionality of the twenty-five dollar fee required by § 423(a). They sought declaratory and injunctive relief, claiming that the fee violated the Commerce Clause, the Equal Protection Clause, the Privileges and Immunities Clause of Art. IV, and the Supremacy Clause of the United States Constitution. The circuit court, rejecting all of these arguments, rendered a judgment declaring that Art. 81, § 423(a), is constitutional. The plaintiffs appealed, and we granted their petition for a writ of certiorari prior to any proceedings in the Court of Special Appeals.

In this Court, the plaintiffs attack Art. 81, § 423(a), on the same federal constitutional grounds raised below, although their primary reliance is upon the Commerce Clause. We shall affirm. 4 ³⁷⁶ I. Commerce Clause Before dealing with the relevant cases involving the Commerce Clause, and the plaintiffs’ specific argument under that clause, it would be useful to review the statutory background in connection with the twenty-five dollar registration fee prescribed by Art. 81, § 423(a). A. As previously indicated, the registration fee required by § 423(a) is part of the “Road Tax on Motor Carriers” subtitle of Art. 81. The road use tax, provided for in Art. 81, § 413, taxes each motor carrier based on the amount of fuel purchased outside of Maryland but consumed in operations on Maryland highways.

The rate of the road use tax is the same as the motor fuel tax, Art. 56, § 136, which is imposed on every gallon of motor fuel sold in the State. These taxes, along with other taxes and fees in connection with transportation facilities, generate revenues that are statutorily dedicated to the Maryland Transportation Trust Fund and used to build and maintain Maryland’s highways and other transportation facilities. See Code (1977, 1984 Cum.Supp.), § 3-216 of the Transportation Article; Code (1957, 1983 Repl.Vol.), Art. 56, § 137; Code (1957, 1980 Repl.Vol., 1983 Cum.Supp.), Art. 81, § 412 A. The “Road Tax on Motor Carriers” Act, containing the annual registration fee, was first enacted in 1957. Ch. 842 of the Acts of 1957.

At that time, each motor carrier operating within Maryland was required to register its motor vehicles with the Comptroller for one dollar per vehicle, which registration was effective for the life of the vehicle. A metal tag was affixed to each vehicle indicating compliance with the Act. ³⁷⁷ In 1959 the General Assembly amended the registration provision of the Act. Ch. 495 of the Acts of 1959. The registration fee for each vehicle became due on an annual basis.

In addition, the metal tag signifying compliance with the Act was replaced by an identification marker to be placed visibly on the vehicle, along with a registration card to be kept in the cab. The registration provision was further amended in 1963 and again in 1967. Annual registration fees remained at one dollar per vehicle, but fleet registration was instituted, whereby a carrier could register all of its vehicles for five dollars per year. Trip permits were also provided, allowing carriers who travelled sporadically in Maryland to receive temporary registration, in lieu of marker and road use taxes. 5 Ch. 541 of the Acts of 1963; Ch. 539 of the Acts of 1967.

In 1981 § 423 was again amended to delete fleet registration, to impose an annual registration fee of three dollars per vehicle, and to change the beginning of the annual registration period from April 1 to January 1. Any motor carrier operating a vehicle whose registration was scheduled to expire on March 31, 1982, could extend the registration to December 31, 1982, by paying $2.25 per vehicle. Ch. 783 of the Acts of 1981. Following the 1981 legislative session, Maryland’s transportation system faced a financial crisis caused by increasing maintenance and capital costs of its highway system during a period of high inflation, which costs were not being met by the State’s motor vehicle fuel fax revenue.

The General Assembly, aware of the shortage of road rehabilitation funds and desiring to generate increased revenues, authorized a highway cost allocation study. The ³⁷⁸ study examined state expenditures on the Maryland highway system, and usage of the highway system by various classes of vehicles, to determine which expenditures were attributable to which classes of vehicles and whether these various classes of vehicles, through their user tax payments, paid their fair share of highway expenditures. Utilizing two accepted cost allocation methodologies, the study disclosed that by either methodology there was a significant underpayment by the heavy truck and tractor-trailer class in tax responsibility for the costs of highway construction and maintenance. In response to this study, the Legislature passed and the Governor signed Senate Bill 413 (Ch. 238 of the Acts of 1982), which imposed an increase in the motor vehicle fuel tax, an increase in the trip permit fee, and an increase in the annual registration fee from three dollars to twenty-five dollars per vehicle.

The amendment also mandated that the increases in these taxes, while credited to the Transportation Trust Fund, were to be treated as highway user revenues and specifically earmarked for maintenance and repair of the State’s highways and bridges. See Ch. 238 of the Acts of 1982, and Code (1977, 1984 Cum.Supp.), § 3-216(d)(3) of the Transportation Article. The plaintiffs’ argument in this case is that the 1982 increase in the annual registration fee, from three dollars to twenty-five dollars, “discriminates against and constitutes a burden on interstate commerce” (petitioners’ brief, p. 30). B. The Supreme Court has dealt with Commerce Clause challenges to state highway user flat fees on several occasions since 1935.

In reviewing the validity of a flat fee, the Court has examined whether the fee was excessive in relation to the services provided by' the State and whether it discriminated between intrastate and interstate commerce. In determining whether a flat highway user tax was exces ³⁷⁹ sive, the Court has considered its amount and whether it was used for highway purposes. The first of the “flat fee” cases was Aero Mayflower Transit Co. v. Georgia Public Service Commission, 295 U.S. 285 , 55 S.Ct. 709 , 79 L.Ed. 1439 (1935), which upheld a state statute that imposed an annual registration fee of twenty-five dollars per vehicle on all motor carriers operating on any highway in Georgia. The taxes collected were statutorily dedicated to the maintenance and repair of the state highways.

The plaintiff, a private interstate motor carrier, challenged the state tax on the ground that it unlawfully burdened interstate commerce by, inter alia, imposing the same fee on interstate carriers as on local carriers, when interstate carriers used the roads less often. The Supreme Court rejected this argument, holding as follows ( 295 U.S. at 289 , 55 S.Ct. at 711 ): “The statute in imposing an annual license fee for the maintenance of the highways does not lay an unlawful burden on interstate commerce. “The fee is moderate in amount; it goes into a fund for the upkeep of highways which carriers must use in the doing of their business; it is exacted without hostility to foreign or interstate transactions, being imposed also upon domestic vehicles operated in like conditions. “Its validity in this aspect is attested by decisions so precisely applicable alike in facts and in principle as to apply a closure to debate____ “The appellant urges the objection that its use of roads in Georgia is less than that by other carriers engaged in local business, yet they pay the same charge. The fee is not for the mileage covered by a vehicle. There would be administrative difficulties in collecting on that basis.

The fee is for the privilege of a use as extensive as the carrier wills that it shall be. There is nothing unreasonable or oppressive in a burden so imposed ____ One who receives a privilege without limit is not wronged by his own refusal to enjoy it as freely as he may.” ³⁸⁰ The decision in Aero Mayflower was followed in the subsequent flat fee cases. Morf v. Bingaman, 298 U.S. 407 , 56 S.Ct. 756 , 80 L.Ed. 1245 (1936); Ingels v. Morf, 300 U.S. 290 , 57 S.Ct. 439 , 81 L.Ed. 653 (1937); Clark v. Paul Gray, Inc., 306 U.S. 583 , 59 S.Ct. 744 , 83 L.Ed. 1001 (1939); Aero Transit Co. v. Comm’rs., 332 U.S. 495 , 68 S.Ct. 167 , 92 L.Ed. 99 (1947); Capitol Greyhound Lines v. Brice, 339 U.S. 542 , 70 S.Ct. 806 , 94 L.Ed. 1053 (1950). Flat fees ranging from fivé dollars to twenty-five dollars were found to be proper. 6 Moreover two different flat taxes “laid 'in consideration of the use of the highways,’ ” totaling twenty-five dollars per year and imposed along with gasoline and other road taxes, were upheld in Aero Transit Co. v. Comm’rs., supra, 332 U.S. at 497 , 68 S.Ct. at 168 .

The Supreme Court in that case first held that the two flat taxes did not discriminate against interstate commerce, saying (id. at 501-502, 68 S.Ct. at 170-171 ): “Each applies alike to local and interstate operations. Neither undertakes to tax traffic or movements taking place outside of Montana or the gross returns from such movements or to use such returns as a measure of the amount of the tax. Both levies apply exclusively to operations wholly within the state or the proceeds of such operations, although those operations are interstate in character.” The Court continued, addressing whether the presence of other road taxes in the revenue scheme would affect the validity of the flat highway user taxes (id. at 502-503, 68 S.Ct. at 171 ): “Moreover, it is not material to the validity of either tax that the state also imposes and collects the vehicle registration and license fee and the gallonage tax on gasoline purchased in Montana. The validity of thosé taxes neither is questioned nor well could be....

Nor does their ³⁸¹ exaction have any significant relationship to the imposition of the taxes now in question .... “It is far too late to question that a state, consistently with the commerce clause,- may lay upon motor vehicles engaged exclusively in interstate commerce, or upon those who own and so operate them, a fair and reasonable nondiscriminatory tax as compensation for the use of its highways.” A state highway flat tax was most recently challenged in Capitol Greyhound Lines v. Brice, 339 U.S. 542 , 70 S.Ct. 806 , 94 L.Ed. 1053 (1950). There the Court upheld a Maryland tax of two percent of the fair market value of specified motor vehicles, as a condition of operating such vehicles in Maryland. This tax also was imposed in conjunction with titling, gasoline and mileage taxes. The plaintiffs in Capitol Greyhound, however, challenged the taxing formula instead of the amount.

Relying on the prior flat tax cases, the Supreme Court held that the formula used in reaching the tax was not crucial. Instead, the Court stated that the relevant inquiry was whether the amount of the tax was excessive ( 339 U.S. at 544-545 , 70 S.Ct. at 808 ): “The taxes upheld have taken many forms. Examples are taxes based on mileage, chassis weight, tonnage-capacity, or horsepower, singly or in combination — a list which does not begin to exhaust the innumerable factors bearing on the fairness of compensation by each carrier to a state. The difficulty in gearing taxes to these factors was recognized by this Court as early as Kane v. New Jersey, 242 U.S. 160, 168 [ 37 S.Ct. 30, 32 , 61 L.Ed. 222 (1916) ], where it said that so long as fees are reasonable in amount ‘it is clearly within the discretion of the State to determine whether the compensation for the use of its highways by automobiles shall be determined by way of a fee, payable annually or semi-annually, or by a toll based on mileage or otherwise.’ Later, in rejecting contentions that the validity of taxes must be determined by formula rather than result, the Court held that a flat fee on the privilege of using state highways ‘is not a ³⁸² forbidden burden on interstate commerce’ unless ‘unreasonable in amount.’ Morf v. Bingaman, 298 U.S. 407, 412 [ 56 S.Ct. 756, 758 , 80 L.Ed. 1245 ], See also Aero Transit Co. v. Comm’rs, 332 U.S. 495 [ 68 S.Ct. 167 , 92 L.Ed. 99 ], and annotation thereto, 92 L.Ed. 109 , 119-120.

Yet clearly a flat fee is not geared to mileage, weight or-any other factor relevant in considering the fairness of compensation for road use. Thus, unless we are to depart from prior decisions, the Maryland tax based on the cost of the vehicles should be judged by its result, not its formula, and must stand unless proven to be unreasonable in amount for the privilege granted.” Although no flat highway user taxes have been challenged in recent years, the Supreme Court reaffirmed the above-discussed cases in Evansville-Vanderburgh Airport Authority District v. Delta Airlines, 405 U.S. 707 , 92 S.Ct. 1349 , 31 L.Ed.2d 620 (1972). There the plaintiff airlines challenged a flat “head tax” of one dollar per commercial airline passenger enplaning from certain airports in Evansville, Indiana. The airlines were required to collect and remit the tax, which was dedicated to a fund used to defray costs of improving and maintaining the airports.

The airlines challenged the flat tax as violative of the Commerce Clause. The Supreme Court held that the tax did not unreasonably burden interstate commerce, stating ( 405 U.S. at 715 , 92 S.Ct. at 1354-55 ): “Our decisions concerning highway tolls are instructive. They establish that the States are empowered to develop ‘uniform, fair and practical' standards for this type of fee____ “We have also held that a State may impose a flat fee for the privilege of using its roads, without regard to the actual use by particular vehicles, so long as the fee is not excessive. Aero Mayflower Transit Co. v. Georgia Public Service Comm’n, 295 U.S. 285 [ 55 S.Ct. 709 , 79 L.Ed. 1439 ] (1935); Morf v. Bingaman, 298 U.S. 407 [ 56 S.Ct. 756 , 80 L.Ed. 1245 ] (1936); Aero Mayflower Transit Co. ³⁸³ v. Board, of Railroad Comm’rs, 332 U.S. 495 [ 68 S.Ct. 167 , 92 L.Ed. 99 ] (1947).” C. While conceding that the above-discussed flat fee cases are inconsistent with their position in the present case, the plaintiffs urge