United States v. United State Shoe Corporation

PETITIONER: United States
RESPONDENT: United State Shoe Corporation
LOCATION: United States Shoe Corporation

DOCKET NO.: 97-372
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: United States Court of Appeals for the Federal Circuit

CITATION: 523 US 360 (1998)
ARGUED: Mar 04, 1998
DECIDED: Mar 31, 1998

ADVOCATES:
James R. Atwood - Argued the cause for the respondent
Lawrence G. Wallace - Department of Justice, argued the cause for the petitioner

Facts of the case

The Harbor Maintenance Tax (HMT) obligates exporters, importers, and domestic shippers to pay 0.125 percent of the value of the commercial cargo they ship through the Nation's ports. From April to June 1994, United States Shoe Corporation paid the HMT for articles it exported. U.S. Shoe then filed a protest with the Customs Service alleging that, to the extent the toll applies to exports, the HMT violates the Export Clause of the Constitution, which provides that "No Tax or Duty shall be laid on Articles exported from any State." The Customs Service refuted the accusation, stating that the HMT is a statutorily mandated user fee. U.S. Shoe then sued for a refund in the Court of International Trade (CIT). Granting U.S. Shoe summary judgment, the CIT held that the HMT qualifies as a tax, reasoning that the tax is assessed ad valorem directly upon the value of the cargo itself, not upon any services rendered for the cargo. The Court of Appeals for the Federal Circuit affirmed.

Question

Does the Harbor Maintenance Tax, as applied to goods loaded at U.S. ports for export, violate the Export Clause?

Media for United States v. United State Shoe Corporation

Audio Transcription for Oral Argument - March 04, 1998 in United States v. United State Shoe Corporation

Lawrence G. Wallace:

[Laughter]

--that spent years of study on this.

He was not... these are not views stated individually.

No, but doesn't his statement boil down to saying that a fee which is a real user fee is going to have an economic impact that we don't want.

Isn't that what it boils down to?

Lawrence G. Wallace:

Well, it depends... I mean, it's not a real user fee... tonnage is not the only measure of economic value that someone secures from facilities in these days of containerized--

It's a measure of use, isn't it?

Lawrence G. Wallace:

--It is a measure--

Isn't it closer to being a measure of use than value?

Lawrence G. Wallace:

--It is a measure of use.

If I may just, in answering this, the very next sentence says that a fee based on tonnage also would disadvantage export-dependent ports in contrast to import-dependent ports.

One of their concerns was that our export trade would be hurt by a user fee based on this.

Much of our export was and is bulk commodities, grains, iron ore, which was having difficulty competing in international trade from the Great Lakes ports, which were suffering some depression at the time, lumber, as is pointed out, and other wood products.

The bipartisan group also rejected a port-specific approach to fees because it would have the effect of disadvantaging ports with higher operation and maintenance costs and could cause consolidation of port facilities to a few super ports.

This could have severe economic implications for scores of communities across the country.

So then he explains that the approach they finally chose to adopt is a nationally uniform single-tier fee based on a percentage of cargo value, and this ad valorem concept, as he explains it, equitably balances containerized versus bulk cargoes, places all ports on an equal footing, and does not affect the marketability of any product or commodity.

It also treats all coastal ranges of the continental U.S. in the same manner, East and West Coast, Great Lakes, and Gulf Coasts.

Mr. Wallace, I guess--

--And if they pay for it out of the... suppose they pay for it out of the highway trust fund.

It's part of transportation.

Is the gas tax now... it's really a user fee.

Is that right?

Lawrence G. Wallace:

That is--

I mean, I guess... all your arguments would say, we don't even have a gas tax.

We have a highway user fee, is that right, even though they call it a gas tax.

Lawrence G. Wallace:

--It is very similar.

In fact, the trust fund--

So if we accept your argument there is no gas tax.

It's really a highway user fee and if, in fact, they decided to pay for the ports out of the highway trust fund, then the whole thing's a highway user fee.

Maybe it's an income user fee, a facilities user fee, income tax is really a user fee for using the country's facilities.