Evansville-Vanderburgh Airport Authority District v. Delta Airlines, Inc. – Oral Argument – February 24, 1972

Media for Evansville-Vanderburgh Airport Authority District v. Delta Airlines, Inc.

Audio Transcription for Oral Argument – February 23, 1972 in Evansville-Vanderburgh Airport Authority District v. Delta Airlines, Inc.

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Warren E. Burger:

We’ll hear arguments next in 70-212, Northeast Airlines against New Hampshire Aeronautics Commission.

Mr. Mallory, you may proceed whenever you are ready.

John K. Mallory, Jr.:

Mr. Chief Justice, may it please the Court.

This case is somewhat similar to the case just argued, here on appeal from the judgment of Supreme Court of New Hampshire, holding constitutional a New Hampshire State Statute.

The appellant airlines sought to enjoin enforcement of the statute which imposes on the airlines, this tax is imposed on the airline not the passenger, imposes on the airline a charge of $1 per passenger enplaned from New Hampshire airports.

The airlines contended that the statute was unconstitutional under the constitutional right to travel, Commerce Clause and Equal Protection Clause.

The Trial Court in New Hampshire transferred the case, including stipulated facts to the Supreme Court without any — without determining any issues as it can do.

The Supreme Court in January 29, 1971 held a charge, it was charged on the airline, not the passenger and that it is not a “Service Fee” on common carriers of passengers for hire on a regular schedule.

That — it held also that the incidence of the charge is on the enplanement of passengers, but it held that enplanement is a wholly intrastate event.

It held the statute constitutional.

The statute in New Hampshire as I have said imposes on the airline a charge of $1 per passenger for all passengers enplaning from the New Hampshire airport.

If however a scheduled airline uses planes with a gross weight of less than 12500 pounds, it charges 50 cents per enplaning passenger.

Charter carriers, contract carriers or charter carriers, not scheduled airlines, of over 12500 pounds are similarly taxed and charter carriers with planes of less than 12500 pounds do not pay.

The charge or tax on charter carriers ends when the funds contributed by the states — by the state of New Hampshire to the airports has been repaid.

The charge on schedule carriers has no terminal time.

The collections from this charge or tax are remitted to the Aeronautics Commission, State Aeronautics Commission which distributes 50% of the funds to the state aeronautical fund and the remaining 50% to the municipality or Airport Authority owning the landing area.

There is no requirement that the municipality spend the monies received on airport facilities.

Under the — the municipalities must place in aeronautical funds, funds collected under Chapter 423 of the New Hampshire laws, but the revenue collected under this particular section that we are talking about is not collected under 423, it is collected under 422.

Harry A. Blackmun:

Mr. Mallory, am I correct in my impression that the New Hampshire Supreme Court made no reference to this allocation of 50% to the general fund?

John K. Mallory, Jr.:

That is correct Your Honor.

Harry A. Blackmun:

Was it argued below?

John K. Mallory, Jr.:

It was argued on the motion for rehearing Your Honor and it is in the appendix as I recall at the very end, page — starts at page 36, 36 A and runs over to page 42.

The particular argument is —

Harry A. Blackmun:

Well, it wasn’t raised prior to the motion for the rehearing?

John K. Mallory, Jr.:

That is correct, Your Honor, it was not raised prior to the motion for rehearing.

Harry A. Blackmun:

So that accept for the denial of the motion it was not treated in any depth at all by the New Hampshire Court?

John K. Mallory, Jr.:

No, the New Hampshire Court simply says that the money goes to the aeronautics fund which is making the statement appear that 100% goes to the aeronautics fund, that just isn’t — that isn’t acted under the terms of the statute itself which lays out that 50% goes to the aeronautics fund and 50% to the municipality.

Again —

Byron R. White:

Does the record indicate how the facilities are —

John K. Mallory, Jr.:

There is in the record just the statement about landing fees and rentals and that type of state, but not in detail Your Honor.

Byron R. White:

Does the municipality contribute any funds to the airports authority?

John K. Mallory, Jr.:

Oh!

Yes, I think it does.

I think it does clearly.

Byron R. White:

Does the record show that?

John K. Mallory, Jr.:

I do not — I can not say that the record specifically shows that I think —

Byron R. White:

Does the State Aeronautical Fund finance anything for airport?

John K. Mallory, Jr.:

No, the State Aeronautical Fund under the 1959 Statute, which I will come to in a minute, it is an older statute, did earmark the fund received under that statute for paying off bonds and notes incurred at the various airports.

The 1969 statute which is a one we are talking about now does not have that same provision and the State Aeronautical Commission can expand its funds for general aviation or for improving navigational facilities throughout the states that type of expenditure.

It does not have to spend the money on any particular airport, or the airport from which the funds were received.

Potter Stewart:

How many — what are they — three airports in New Hampshire, Lebanon, Keene, and Manchester?

John K. Mallory, Jr.:

No, then there is a Berlin and addition to that Berlin and Laconia.

Potter Stewart:

Laconia?

John K. Mallory, Jr.:

Yes Your Honor.

Potter Stewart:

Berlin has one too?

John K. Mallory, Jr.:

Yes, Your Honor.

Potter Stewart:

Berlin —

John K. Mallory, Jr.:

The court in New Hampshire, the Supreme Court, refused to follow Crandall and Nevada and the passenger cases, specifically stating that its reason for not following those were that those involved a tax directly on the passenger and not on the carrier as the court said was the case here.

It also refused to follow the Montana case and distinguished the Indiana case that we have just argued, the Evansville case, again on the ground that there the tax was on the passenger and here it is on the carrier and it distinguished the New Jersey case which had been decided by the Trial Court and the state withdrew its appeal on the ground that there the statute allowed the monies collected to go into the general funds of the cities which didn’t own the airports.

The court noted that in 1959, it had rendered an advisory opinion on a similar statute, but one applicable only to carriers engaged in intrastate commerce.

It had upheld that statute and had noted in its opinion, in its advisory opinion that objection by anyone to the effect on interstate commerce was unlikely in view of the Aero Mayflower Transit case, 332 US and Terrell against Johnson, 86 New Hampshire.

We contend here that the New Hampshire Supreme Court erred in holding that the right to travel cases, including Crandall do not apply because the tax in New Hampshire is on the carrier rather than on the passengers.

We contend that, that is an error of law in determining that the tax in New Hampshire was on the carrier, not the passengers.

We contend that it also erred in failing to follow the Crandall line of cases because of its view that those cases were merely based on the theory of power to tax as a power to destroy.

We submit that it erred in holding that the act of enplanement, which it found was the incidence of taxation, is wholly an intrastate event.

William H. Rehnquist:

Mr. Mallory?

John K. Mallory, Jr.:

Yes Your Honor.

William H. Rehnquist:

You I take it at least in the Indiana case concede that the state can impose a use tax to make interstate commerce pay its fair share.

John K. Mallory, Jr.:

I — yes sir.

William H. Rehnquist:

And yet you object that the type of taxes we’re dealing with here are on the act of enplanement or on the commerce, and I grant that you can find that sort of distinction in some of our prior cases, it seems to me a very metaphysical kind of distinction?

John K. Mallory, Jr.:

I would submit Your Honor, that where the — what I conceive be the right to travel is involved, that it is in fact a metaphysical.

That here a state in imposing a tax, but in this case on the carrier measured by the number of passengers but I think that it should be considered as one directly on the passenger when its the tax of this kind, where it can where doubt — it do that.

I think that it clearly has the power, that it is exercising the power to control and to some extent suppress the right to travel or which is a right that I believe has more than just — is based on more than just the Commerce Clause.

William H. Rehnquist:

Yet, you concede that a passenger doesn’t have the right to travel at the state’s expense?

John K. Mallory, Jr.:

Oh!

I concede that it doesn’t have the right to travel on state’s expense, yes.

Warren E. Burger:

I thought you have virtually conceded that there were probably a good many ways in which the state or the local authority can do exactly what they’re doing here in the same amount without a constitutional problem?

John K. Mallory, Jr.:

Indeed, Your Honor, I urge that they can and I think that the cases cited in all of the briefs that have been filed show the vast number of ways in which the state or a community can raise money.

Yesterday, the question of landing fees came up, clearly the state of an airport can impose landing fees that will raise a substantial amount of money.

The (Inaudible) can certainly be increased and raise money and both proceeds —

Warren E. Burger:

Do you think these other ways of accomplishing the same end would be less burden on the right to travel?

John K. Mallory, Jr.:

Yes, Your Honor, I certainly do, I certainly do.

Warren E. Burger:

Even if it is ultimately attached onto each individual passenger?

John K. Mallory, Jr.:

–It is bound to be ultimately attached onto the — in some fashion to the price of transportation, but it is not attached sort of dollar or penny for penny on the head of the person traveling from for example Laconia to Boston.

The Laconia airport which I am fairly familiar is a very small airport.

It could stand I am sure a great deal of improvement and could probably would be a fairly small amount of traffic.

That could justify a very high enplanement charge without that charge being excessive.

It would certainly burden travel between Laconia and Boston if it did that.

Now, a gross receipts and a properly apportioned gross receipts tax or properly apportioned income tax, some other type of personal property tax on Airlines that would be borne by passengers traveling throughout the United States, instead of simply borne by those traveling, seeking to leave Laconia and get to Boston would be a very different thing, and it would also be under the regulatory control of the Civil Aeronautics Board which has the obligation and the power to allocate routes and to regulate these, so they can carry out its purpose in seeing that the nation is served by commercial carriers rather than just a particular route.

William H. Rehnquist:

Well, why isn’t a landing fee which I take it under your line of reasoning would be a tax on the act of landing just as much of a burden on commerce or a tax on commerce as this head tax on the act of enplanement?

John K. Mallory, Jr.:

Well, Your Honor, I view a landing as a fee for the use of a airport and I think that basically that’s what it is rather than —

Byron R. White:

Can you explain what are the acts that people do when they are using the airport?

John K. Mallory, Jr.:

It is certainly one of the acts that people do after they have used the airport, they get out after they have used the terminal, they are using the runway.

Byron R. White:

They are using it when they enter?

John K. Mallory, Jr.:

Yes sir, they are using it.

Byron R. White:

What is enplanement, it’s getting on the airplane?

John K. Mallory, Jr.:

Enplanement by definition is the act of boarding the airplane with the intent to depart.

Byron R. White:

Yes, and —

John K. Mallory, Jr.:

For the purpose of departure, not with the intent to depart, but the purpose of departure.

Byron R. White:

Once your client is called that you go to the (Inaudible) engaged in enplanement?

John K. Mallory, Jr.:

I think you are engaged in enplanement when you board the aircraft You Honor for the propose of departure.

Byron R. White:

They are using the airport and that terminal?

John K. Mallory, Jr.:

Yes you are, you are.

Byron R. White:

They are using the airport when they land ?

John K. Mallory, Jr.:

You are, indeed you are and you are using it when you go there for any purpose.

Under these taxes, if you go to the airport, have your ticket, sit and wait, the plane is canceled for some reason, there is no tax.

If you board the plane and it takes off, there is a tax.

I do not know what happens with tax under those conditions.

Thurgood Marshall:

What about some of the trips on the Eastern coast where you take off and come back to the same airport, what would happen then?[Laughter]

Harry A. Blackmun:

What was the significance of your comments prior to last few questions about CAB allocating funds for the benefit of National Travel as whole?

Are you suggesting that all this is under-written by Federal funds?

John K. Mallory, Jr.:

I didn’t mean to say, Your Honor, that the CAB allocates funds.

They allocate routes and have the obligation of determining rates that will resolved in a serve — in a airline service throughout the country rather than the local government being — or a State Government being able to impose a tax or a charge that will influence or it can influence the fares to such an extent that it restricts the right to travel from that state.

Harry A. Blackmun:

Well, let me rephrase my question.

You are here representing a number of airlines on these two cases?

John K. Mallory, Jr.:

Yes, Your Honor.

Harry A. Blackmun:

What do the airlines suggest is the solution for these cost problems?

John K. Mallory, Jr.:

I think the airline suggests some type of uniform charge.

Harry A. Blackmun:

By the facilities?

John K. Mallory, Jr.:

By — well, by a uniform charge that would be imposed, that would flow back to facilities that need the money rather than publicly rather than a uniform charge by facilities themselves.

That would avoid the problem of the differing amounts and the differing incidence of taxation.

Byron R. White:

So they might be satisfied with higher landing fees?

John K. Mallory, Jr.:

Your honor, I say that higher landing fees are a way in which the airports can raise money without in my judgment violating the constitution.

Byron R. White:

Now, if they just raised the landing fees charged to the airlines, you would say, they may not like it, but you wouldn’t have a constitutional argument?

John K. Mallory, Jr.:

I do not think I have a constitutional argument Your Honor, no.

Harry A. Blackmun:

Because airlines just do not like landing fees anyway, do they?

John K. Mallory, Jr.:

They certainly do not, Your Honor.

Harry A. Blackmun:

Going back to my other question now, where would you impose that charge that you speak off?

Are you saying again, I guess I am repeating, are you suggesting all of this be underwritten by Federal taxation?

John K. Mallory, Jr.:

When you say I am suggesting that there be a — if it be deemed desirable to do it this way, that the Federal Government — indeed the Secretary of Transportation, Secretary Wolfe (ph) at one point suggested to the House Ways and Means Committee, a Bill under which Congress would authorize the states to impose a reasonable charge on enplaning passengers if they could get the airline serving that airport to agree to that charge.

John K. Mallory, Jr.:

He talked in terms of $1 charge, then it would be a uniform charge.

Now I think that the question of obtaining uniformity here is extremely important in this — in any way of raising money on the — through any kind of enplaning tax.

William H. Rehnquist:

You mean that now of necessity the same charge should be made for using San Francisco International Airport as per the Evansville Airport or the Laconia Airport?

John K. Mallory, Jr.:

Under my proposal it would be, yes.

The charge would be the same.

William H. Rehnquist:

Even though the cost of construction per passenger might vary greatly?

John K. Mallory, Jr.:

That — it may vary very greatly and the amount of the money that would then flow back to the San Francisco Airport may — would vary, would definitely vary greatly from that flows to Laconia.

To go back to the New Hampshire Court’s refusal to follow Crandall because it stated that here the tax was on the carrier, not passenger.

We believe that the Court — the Court also found in New Hampshire that the act, there was a service charge as I said.

I think a fair reading of the Court’s opinion indicates that its finding, that it was a service charge, depends greatly, in substantial measure on its finding that the act of enplanement is a wholly intrastate act, which we contend is wrong under the cases.

Now the stipulation in New Hampshire again shows that a majority of the users are not taxed and it also shows that the use by the minority who are taxed is substantially no different from that of the majority who are not taxed.

Byron R. White:

I would think you would have the — if your fundamental objection here or part of it is that this kind of a tax loads on to passengers and hence on new air travel generally, the cost of expanding an airport rather than spreading the cost on to the other users likewise, I don’t know how you could — why you wouldn’t have the same objection to higher landing fees?

John K. Mallory, Jr.:

Because — excuse me.

Higher landing fees at all airports simply go into the cost of operating an airline.

Byron R. White:

Well, I understand but this is —

John K. Mallory, Jr.:

They do not — Excuse me I am sorry.

Byron R. White:

But if the airport, if the airport authorities determined, well we have to have so much money to finance an expansion.

We’re going to increase landing fees so we can pay for them, so we can pay off the bonds we’re going to issue.

And they don’t, and they are stuck with their long-term leases on all the airport facilities in the airport, and so they have to load it on to air travel and they decide they will do it by landing fees.

John K. Mallory, Jr.:

That goes into the general cost of operating of the airlines —

Byron R. White:

I understand that but if —

John K. Mallory, Jr.:

— and the fee — and the fare from Laconia to Boston is not based entirely or even in large measure on the landing fee at the Laconia Airport.

Those costs are then — you adjust your fares to recoup those costs.

Byron R. White:

But sooner or later it’s going to cost people more to travel?

John K. Mallory, Jr.:

It’s going to cost people more to travel, but it’s not going to cost -– it’s not going to be a direct burden on the passenger from Laconia to Boston.

Byron R. White:

Well how do you —

John K. Mallory, Jr.:

By the —

Byron R. White:

How do you even compounds the error?

John K. Mallory, Jr.:

I am sorry.

Byron R. White:

That compounds the error, doesn’t it?

Byron R. White:

This means that you’re loading onto a lot people who shouldn’t be paying it, the cost of the Laconia facility.

John K. Mallory, Jr.:

I am not — well, once you make the judgment that they shouldn’t be paying it, I think that it would follow, your conclusion would follow.

I think that any of the costs, or right now the costs at Laconia on landing fees of $50 for Fairchild 227 and $75 for DC-9.

Now those costs are not just divided by the number of passengers carried from the airport in New Hampshire.

If that’s wrong, it’s wrong, but it’s certainly not done that way.

Thurgood Marshall:

Mr. Mallory, suppose you combine the Evansville one with this one and this one in New Hampshire every dollar that was collected went into the airport, do we have any problem with that?

John K. Mallory, Jr.:

Yes sir, I do Your Honor.

I think that —

Thurgood Marshall:

I still can’t see that difference between the landing fee and this?

John K. Mallory, Jr.:

Perhaps another lawyer will be arguing the landing —

Thurgood Marshall:

Except that [Voice Overlap]

John K. Mallory, Jr.:

— but I am not prepared to —

Thurgood Marshall:

Well, I understand it’s, your argument is the word enplaning, that one word?

John K. Mallory, Jr.:

That the tax — no, well it’s more than that one one word Your Honor.

Thurgood Marshall:

Well, what else?

John K. Mallory, Jr.:

The fact that it’s a tax on enplanement, I think it takes it out of the use tax category in the Indiana case.

The fact that the taxable advantage, the act of enplanement, I submit brings it under Crandall against Nevada, the Passenger Cases, and a number of other cases, and indeed brings into play the —

Thurgood Marshall:

Well, on the landing — the landing fee, you land for what purposes?

Two purposes, to let somebody off, and let somebody “enplane” —

John K. Mallory, Jr.:

Yes, Your Honor.

Thurgood Marshall:

— but that’s alright?

John K. Mallory, Jr.:

The landing fee?

Thurgood Marshall:

Yeah.

John K. Mallory, Jr.:

As far as I am prepared to say today, as I view the landing fee, it’s alright, yes.

As I say, some other lawyer maybe here arguing the constitutionality of the landing fee with you, it’s fine, but I am prepared to say that landing fee is alright under my view of the constitutionality.

Thurgood Marshall:

But the landing fees are paid for the use of the facilities at the airport?

John K. Mallory, Jr.:

That is correct, Your Honor.

It’s not a direct paid tax — it’s not a direct tax on the passenger.

Thurgood Marshall:

And what is the enplaning fee?

John K. Mallory, Jr.:

The enplaning fee is a direct tax on the passenger.

John K. Mallory, Jr.:

The fact —

Thurgood Marshall:

Well, I thought here they collected it from Northeast?

John K. Mallory, Jr.:

Well — I am coming to that the — if I may Your Honor, see in the Passenger Cases, in Crandall, in Henderson against Mayor of New York, all of those were taxes in which it was argued that the tax was on the carrier.

There is no — in the Crandall case the tax, in fact, was on the passenger, but it was argued that it was a tax on the carrier.

In the Passenger Cases, it was a tax on the master or the owner.

In Henderson against the Mayor of New York, it was a tax on the master or the owner.

In the Shay Wong (ph) case it was the tax on the master.

In People versus Compagnie Générale Transatlantique, it was a tax on the owner.

In each one of those cases, the Court was met with the argument that here is a tax on the carrier, it’s not the passenger.

It’s a use tax or it’s a tax on the privilege of doing business.

In each one of those cases the Court looked through that, and specifically held that as a legal matter, as a constitutional matter a tax of this type on the carrier measured by flat rate per head on the passenger is to be viewed for constitutional purposes as a tax directly on the passenger.

Now the Supreme Court of New Hampshire ignored those cases.

It didn’t — they were brief, it did not discuss them at all in its opinion.

In the Passenger Cases, Chief Justice Taney in dissenting, but in discussing at the interstate, an intrastate tax, a tax on citizens moving from one state to another was also covered in those statutes and finding that that was unconstitutional specifically dealt with whether or not a tax of this type was one to be viewed is on the carrier or the passenger.

And he held that it was stated that, it was on holding that it was to be viewed as a tax on the passenger.

In Henderson against New York, the state was specifically trying to avoid the holding in the Passenger Cases.

And they made it absolutely clear that the charge was not on the passenger, but on the master gave them an alternative to post a bond or pay $1.50 for each passenger.

New York argued in that case that the tax, the Act I am sorry, the Act to be passed now by the Court does not impose a tax on the passenger.

The Act — the state also argued that the Act cannot be tortured into an indirect mode of imposing a tax or duty upon the passenger as such.

The Court noted that argument and specifically stated, in whatever language a statute maybe framed its purpose must be determined by its natural reasonable effect, and if it is apparent that the object of this statute is judged by that criterion, is to compel the owners of vessels to pay sum of money for each passenger brought by them from a foreign shore and landed at the port of New York, it is as much a tax on the passengers, if collected from them, or a tax on the vessel owner for the exercise of the right of landing their passengers in that city, as was the statute held void in the Passenger Cases.

In Crandall against Nevada, the same argument was made, that it was a tax on the carrier.

In fact there the statute I think was fairly clear but it was on —

Thurgood Marshall:

Suppose the statute or the ordinance said that everybody that uses our runways shall pay $1 fees, everybody including the pilot, co-pilot, baggage handlers, everybody?

John K. Mallory, Jr.:

And private aviation as well and so on?

Thurgood Marshall:

Yes.

John K. Mallory, Jr.:

Well, I would suspect that under those views, the tax would probably be excessive that if in fact now.

Once you impose the tax generally it’s going to be a much smaller amount.

In Indiana, for example, you had 85,000 take offs and landings by civil aviation and only 14 by commercial aviation.

Warren E. Burger:

Your time is consumed, Mr. Mallory.

John K. Mallory, Jr.:

Thank you, Your Honor.

Warren E. Burger:

Mr. Dunn.

Marans. W. Michael Dunn:

Mr. Chief Justice, may it please the Court.

This particular case which we are discussing now, the New Hampshire statute, Chapter 391 is different from the previous case, at least in form and in fact I think it’s different in substance.

Chapter 391 levies against a scheduled air passenger carrier, a service fee for the use of the state’s facilities.

Now I would like to make one point here that our airports in New Hampshire are very similar to the — currently the Indiana airport.

We have three airport authorities with which we are concerned here and two municipalities.

But for the most part, the expense of the airport, the operating expense and to a large extent the capital improvement expense is carried directly by the municipality or by the airport authority by some sort of, in that particular situation a property tax for the most part.

The Aeronautics Commission through — the legislature does appropriate money for various activities at the airport, and the Aeronautics Commission has money that it receives through fees and so forth, which is expended to these airports.

Potter Stewart:

That’s state-wide, the Aeronautics Commission?

Marans. W. Michael Dunn:

That’s right, that’s state-wide.

However, this fee only affects at the present time five airports and before a fee is collected at these airports, it’s a condition precedent, that both the state and the municipality or the airport authority contribute money to the operating expenses or construction expenses, not just one of them.

The statute is set out, it is a levy against the carrier in it’s terms, the Attorney General is authorized to — in a civil suit to sue the carrier, if the carrier does not remit the service fee, returns are made by the carrier.

The proceeds are to go, 50% to the airport authority or municipality from which the fee is measured and 50% to the Aeronautics Commission or to the treasury to be covered into the aeronautical fund.

Now, this aeronautical fund can only be used for air navigational aids.

Now the money that goes to the municipality for the airport authority for the most part, I tend to agree there was not a restriction that it must be used for air navigational aids as such.

But as you look at the total picture, they are paying most of the bill to the airport anyway and the fee would never replenish the amount that they are paying out.

Harry A. Blackmun:

And now is that fact, a weakness in your case and the structure of the tax?

Marans. W. Michael Dunn:

Not in my opinion, because the —

Byron R. White:

Does that say that you are supported by the record in this case?

Marans. W. Michael Dunn:

Well, unfortunately, the tax was not — the landing or service fee was not tax on the basis that it was excessive, so there was no record whatsoever.

Now that we come in and prove that it was not, it was never attacked.

I think without doubt we could show that it’s not excessive at all.

Byron R. White:

But both the municipality and the state aeronautics board contribute to this airport or to each airport more than they are getting out of this tax?

Marans. W. Michael Dunn:

Well, they certainly contributed more than they were receiving before and there is certainly too with regard to the municipality that a trip contributing more than they are going to get out of this tax.

With the regard to the aeronautical fund perhaps there might be some money that could come in but it must be used to maintain or operate.

If there is any surplus, it must be used for air navigational aids.

Byron R. White:

Well, we’re just in no position on this record to put that question?

Marans. W. Michael Dunn:

No, not really and the reason is it was not attacked as excessive and there was — the state had no burden in my opinion of showing how the money was actually used and proving in fact that it was not excessive.

Now the fee under the New Hampshire statute, the fee is against the air carrier for the use of state and municipally funded facilities, and it is measured by two criteria, the weight of the aircraft, and the benefit for right of the carrier in terms of the number of enplanements, or the number of people who would get on it.

I would like to go back to a question that was posed by Mr. Justice White and discussed further by Mr. Justice Blackmun yesterday, with regard to the Indiana case.

Marans. W. Michael Dunn:

And the question was, why not simply increase the landing fees?

Now, the New Hampshire answer to that question, because it does seem like a far more simple thing to do without perhaps any constitutional problems, was posed to the Commission and their answer was this.

This would be an inequitable burden against the air carrier to simply double or triple the landing fee.

Now, the fact that we are opposing each other here and the fact that the state indicates that the fee is constitutionally airlines in the case that it is not, does not mean that there is not some harmony with the regard to the Aeronautics Commission and the airlines.

We do not want to burden the airlines to such an extent they cannot do business in New Hampshire.

Byron R. White:

You say it would be inequitable.

Well, why would it be an inequitable way of raising this money?

Marans. W. Michael Dunn:

Because the airlines, as the Aeronautics Commission have looked at it, cannot afford to have their landing fee doubled or tripled, at this point.

Therefore, they instead indicated that they would rather have this sort of a used fee, which would allow the airlines to grow and would not immediately tomorrow or a year ago double the cost of doing businesses on Laconia —

Byron R. White:

This would just obviate necessity of getting a rate increase?

Marans. W. Michael Dunn:

That’s right, perhaps it’s practical.

Byron R. White:

This is — rather than increasing their expenses and making less profit under the existing rates, this would be an alternative way of raising the money and charging the passengers?

Marans. W. Michael Dunn:

Well, no, as far —

Byron R. White:

Without affecting either rates of profit?

Marans. W. Michael Dunn:

Now there is no doubt that under the New Hampshire statute —

Byron R. White:

Was that right?

Marans. W. Michael Dunn:

Right.

I am now speaking for the Commission, I am not a member of the Commission and I am — the answer that was given to me was that it would be too burdensome on the to double or triple rate.

Thurgood Marshall:

Mr. Dunn, you are trying to convince me that it’s easier for me to pay the dollar than Northeast Airlines?

Marans. W. Michael Dunn:

Now I think, it’s not, it not easy if you were to pay the dollar to the Northeast Airlines, however, in the end, I think [Voice Overlap].

Thurgood Marshall:

There is no real problem, you are afraid if you raise then they’ll all overfly your airport, do you agree?

Marans. W. Michael Dunn:

Well, I am not — I think the real problem is the fact that the landing fees are negotiated.

They are apparently an extremely touching subject.

They are frequently renegotiated as the certified air carrier relinquishes its commitment to a lower class carrier and they are extremely touching and the practical problem is that service, they fear their service will diminish considerably if a double or triple landing fees is imposed.

It’s very, very touchy area.

William H. Rehnquist:

But if you’re talking about raising the same amount of money by two alternative ways, one by increasing the landing fee, and one by imposing a type of tax that New Hampshire imposed, isn’t the ultimate burden on the airlines going to be the same?

Marans. W. Michael Dunn:

The ultimate burden on the airline, I think ultimately will be the same.

However under the New Hampshire statutory scheme, as more people use the airline, the burden will become somewhat greater.

Byron R. White:

Oh yes, but didn’t your law ought to say that the airline may pass it on to the customer?

Marans. W. Michael Dunn:

Yes.

Marans. W. Michael Dunn:

Now the —

Byron R. White:

So that it doesn’t increase the burden on the airline?

Marans. W. Michael Dunn:

Oh!

No.

Byron R. White:

If they pass it onto the customer?

Marans. W. Michael Dunn:

No, our law says nothing herein shall prohibit such fee from being passed onto the customer.

Byron R. White:

And the fee is being passed on —

Marans. W. Michael Dunn:

Well, now that’s — the two appellants are passing it on, yes, but with regard to the other air carriers that are not litigating this matter, one air carrier is not passing it on and one air carrier is.

Now, as far as passing on this particular dollar fee, the statute simply levies a charge measured by two items now, the weight of the carrier and the number of people that get on.

Now, they may very well pass it on or they might not pass it on.

I think after —

Byron R. White:

But if they do pass it on, there is a difference between the landing fee and this kind of a tax.

It is too much of burden on the airline?

Marans. W. Michael Dunn:

Yes, I would agree —

Byron R. White:

Quite a bit?

Marans. W. Michael Dunn:

— if they do pass it on.

However, if their expenses are going to increase necessarily for a short time and their profits will diminish if there is a landing but a landing fee however, it will be raised, and I think that —

Byron R. White:

If they can get a rate increase out of the CAB?

Marans. W. Michael Dunn:

Now it would, perhaps.

I mean I think that’s — they certainly may get a rate increased out of CAB, that is beyond — we cannot control that.

William H. Rehnquist:

But that is the only way they can pass on a landing fee basically is to get a rate increase out the CAB?

Marans. W. Michael Dunn:

I would agree with it.

With regard to the fact that this tax is levied against the air passenger carrier and against the contract carrier which is not in litigation here, there is particularly is good reason for this.

Number 1, that the carriers derive their livelihood, they use regulatory routes, they are in and out all the time.

And secondly, all of the expansion in the New Hampshire Airports can almost be traced directly to the change of facilities of the air carrier.

For instance, the DC-3, it was changed to the DC-6.

It needed a longer runway and now that I believe they are changing to a DC-9.

The change of facilities of the air carriers appears to be one step ahead of the change of the airport.

So most of the capital expense and a great deal of the operating expense is directly due to the fact that these airports are used by commercial air carriers.

Number 2, is the safety devices that must be maintained because the cargo here is passengers, and this is — although some safety devices of course would be there even if they had non-commercial flights.

Marans. W. Michael Dunn:

I think it would definitely be increased by the fact that you have the commercial flights.

I think when this statute is analyzed, it is possible to look at it as a correct and proper use fee levied against the carrier measured by the weight of the — measured by two criteria, the weight of the carrier, that is the wear and tear presumptively on the runway, and number 2, the benefit provided by the use of the facility.

Now the benefit might not necessarily be equivalent to the number of times they land, particularly in New Hampshire, or Laconia or Berlin.

They may very well land and takeoff with no one.

They may have not received a terrific benefit, they may land in Manchester and pick up more people.

So the benefit here is and the fact number 1, the use, the wear and tear, the weight of the aircraft, and the benefit is reflected by actually the number of people that they pick up.

Potter Stewart:

This is a take-off fee, not a landing fee.

Is not it?

It’s a take-off fee imposed on a carrier depending on two things, the weight of the aircraft and how many people got aboard at that airport, is that right?

Marans. W. Michael Dunn:

Yes, you are right.

However, I would like to make one comment about the characterization as a take-off fee.

It is our opinion and contention that this is a simple way to measure the benefit derived and it would be immaterial for instance whether we call it a deplaning fee or an enplaning fee, or a take-off fee or whatever because we’re only using it as a yardstick to measure the benefit.

Therefore, in my opinion, it would be excessive for instance for us to tax the enplanements, and then tender a tax on deplanements and so forth, because the benefit would then be doubled and it would be out of proportion.

Potter Stewart:

Now, I am just trying to understand your theory that this a use tax imposed on a carrier and — for the the incident is a take-off and the measure the tax is two things, the weight of the plane, and how many people got aboard at that airport, is it right?

Marans. W. Michael Dunn:

That is our contention, Your Honor.

Potter Stewart:

And the carrier has the option of passing on the tax to the — spreading it among the people who got aboard at that airport at a dollar a head, is that it?

Marans. W. Michael Dunn:

That’s right.

Potter Stewart:

And these carriers do — the common carriers do as I understand?

Marans. W. Michael Dunn:

Well —

Potter Stewart:

Well, how can Northeast —

Marans. W. Michael Dunn:

That’s right.

The two —

Potter Stewart:

Does executive still run up there?

Marans. W. Michael Dunn:

Among certain, it is a week-to-week basis.

Potter Stewart:

I know, it was last time, I know.

Marans. W. Michael Dunn:

I think executive —

Potter Stewart:

But, there are contract carriers?

Marans. W. Michael Dunn:

There are contract carriers and they are well — there is a change in the — however they are not taxed or the use fee does not apply if they are under a certain weight.

But, if they are a large contract carrier, it applies and they pay use fee, some absorb the fee and some do not.

Byron R. White:

Has there been any suggestion by any of the airlines that this kind of tax is forbidden as inconsistent with the regulating authorities of CAB?

Marans. W. Michael Dunn:

No, I do not think.

There has been — they were suggesting in the brief that — I mean, perhaps I should say yes.

There was a suggestion in the brief that Congress because of the need for uniformity has a right to speak and even though they have not spoken in the sense that they can make the rights that are demanded, they have been made for all.

Byron R. White:

(Inaudible) that an airline pass on the landing fee?

Marans. W. Michael Dunn:

As it was regard to the state law and in my opinion, it was recently regard to the constitutional, well — I think they could pass it.

Byron R. White:

Well, how about statutory or how about the — that’s normally been considered an expense, that it is taken into consideration of setting a fare, hasn’t it?

Marans. W. Michael Dunn:

That’s right.

Now, the answer is I do not know if they are forbidden by the CAB to pass on.

Byron R. White:

Wouldn’t you be surprised if that was permissible for the carrier to have an authorized rate and then suddenly take some of these expenses on which the rate is based instead of charging it directly to the passengers?

Marans. W. Michael Dunn:

Yes, I would —

Byron R. White:

Wouldn’t you think that would be very odd?

Marans. W. Michael Dunn:

I would.

Byron R. White:

Now how about a take off fee?

Marans. W. Michael Dunn:

Rather than a landing fee or other than an enplanement fee?

Byron R. White:

Yes.

Marans. W. Michael Dunn:

You mean an enplanement fee as we are discussing here?

Byron R. White:

Yes, anytime you charge an air carrier something for the use of an airport, it seems to me like it would be charging the same sort of thing as a landing fee.

It is an expense for the air carrier.

Marans. W. Michael Dunn:

Yeah, I agree.

I agree.

Byron R. White:

What business does the airline company got passing it onto the passenger?

It is an expense that is supposed to be reflected in their fare?

Marans. W. Michael Dunn:

Now, I could —

Byron R. White:

Some of the airlines are not doing it, are they?

Marans. W. Michael Dunn:

That’s right.

Warren E. Burger:

Why?

Marans. W. Michael Dunn:

I do not know if it is an administrative problem or if it is a legal problem.

Byron R. White:

Well, I would think they will probably go to the — whatever it is they are absorbing, they will say it is part of their expense for the next go around for the raise?

Marans. W. Michael Dunn:

I am certain they will, I am certain they will.

Now, I think it could be argued by, perhaps by someone who is in a position to do so that they shouldn’t pass it onto the passengers.

Marans. W. Michael Dunn:

Now, our statute in no way tells them or demands that they do pass it on.

Byron R. White:

Alright, but again I would say — and I just wonder if — I just wonder if there just hasn’t been any question that the airline at this kind of a tax which requires the airline to charge a customer more than its public fares, is it consistent with this federal statute?

Marans. W. Michael Dunn:

Now, my answer is I do not know that it is or is not consistent.

William H. Rehnquist:

Of course it is not and exactly I could say this tax requires the airline to tax (Inaudible)

Marans. W. Michael Dunn:

Well, in the sense, no.

I would even say no, it does not authorize them, so it says nothing herein shall prevent them from doing, as it is as if nothing was said whatsoever.

Now, I am talking about New Hampshire law.

Byron R. White:

You can increase your landing fee without interfering with anything that Congress is doing, and here you are charging an airline more for using the airport?

Marans. W. Michael Dunn:

We are, that’s right, absolutely.

Byron R. White:

Now, the airline is free to do what it wants to with it?

Marans. W. Michael Dunn:

Yes.

Well, we say that —

Byron R. White:

It may not be —

Warren E. Burger:

But it is free until the CAB tells them they can’t do it, is that about it?

Marans. W. Michael Dunn:

Yes.

That is our position.

We are not — we are not demanding that they pass it on, and we don’t restrict the fact that they are —

Byron R. White:

Well, in this respect, you are different from the Indiana case?

Marans. W. Michael Dunn:

Oh!

Yes.

In my opinion we are considerably different from the Indiana case.

William H. Rehnquist:

Presumably, no part of the New Hampshire statute is violated if it turns out if the CAB says the airline can’t pass on the tax?

Marans. W. Michael Dunn:

That’s true.

That would be my —

The New Hampshire statute and the statutory scheme which was — we attempted — that the legislature attempted to pass, simply is a use fee against a carrier non-discriminantly imposed that is against all carriers whether intrastate or interstate, whether the flight is intrastate or whether the flight is interstate.

For the benefits they have received and will receive, all of the funds, all of the funds of the state receives must go to air navigational aid and regard to the funds, regard to the municipality, that simply either goes to air navigational aid or replaces money that has been spent for air navigational aid.

Byron R. White:

Could I ask a just a question?

Are the airlines who are represented here all passing the tax on or not?

Marans. W. Michael Dunn:

It is my opinion that they are passing the tax on in my assumption from the last time I find from the case.

The New Hampshire position simply is this is a use fee against the airline, non-discriminantly imposed and it is not excessive, and it is not necessarily a fee against a passenger.

Marans. W. Michael Dunn:

Nor we all do —

Thurgood Marshall:

It is none of your business whether it is passed on or not?

Marans. W. Michael Dunn:

That’s right.

Thurgood Marshall:

You could not stop them from there —

Marans. W. Michael Dunn:

No, in my opinion we couldn’t —

Thurgood Marshall:

And you could not force them to pass it on?

Marans. W. Michael Dunn:

Not under the statute, no and we do not force them to pass it on.

Warren E. Burger:

Are there any other facilities at the airport for which a charge is made, an observation platform, is this practiced in —

Marans. W. Michael Dunn:

Well, we have in my opinion, what I know about fix based operators at some of the airports.

They do work on airplanes, they pay a fee.

We have a fee with regard to landing of general aviation.

Now, that fee —

Warren E. Burger:

On private planes?

Marans. W. Michael Dunn:

Private planes.

Now, that fee is remarkable as it seems is about 8 times greater at some airports than the landing fee with regard to the commercial aviation.

It is a quite a bit more than landed general private plane for a landing.

Warren E. Burger:

The only thing that prevents a state or a local airport from raising the landing fee is the process of negotiation with the airline and the risk that they may curtail their service, isn’t that a problem?

Marans. W. Michael Dunn:

Now this — I agree.

Now, this is not necessarily a legal point and I do not even think it is a constitutional point by any stretch of imagination but it is an extremely valid practical point that these are negotiated and they are terrifically afraid of, terrifically poor service if the landing fee is too high.

Now, this is just a fact of life with which the Aeronautics Commission and the municipalities and the airport authorities are faced with.

With regard to other fees at the airport, there are rentals at some airport which is no different than any other building which rents space.

But, the interesting point is that where — for instance at Lebanon, a landing fee for a scheduled passenger carrier might be approximately $1.67 per landing.

It would be for the same carrier over $12,512 for general aviation aircraft to land.

So that there is a certain amount of harmony between the municipalities and the air carriers.

We need — we want their business, we need their facilities where we are trying to provide facilities further.

This is not a necessarily, strictly advisory thing when you get out of the airport so to speak.

This is strictly a use fee levied against a carrier for facilities provided.

Warren E. Burger:

Thank you Mr. Dunn and thank you Mr. Mallory.

The case is submitted.