WARDAIR CANADA INC. v. FLORIDA DEPARTMENT OF REVENUE
No. 84-902
Supreme Court of the United States
Argued March 31, 1986—Decided June 18, 1986
Walter D. Hansen argued the cause and filed briefs for appellant.
Albert G. Lauber, Jr., argued the cause for the United States as amicus curiae urging reversal. With him on the brief were Solicitor General Fried, Deputy Solicitor General Wallace, Abraham D. Sofaer, and Jim J. Marquez.
Joseph C. Mellichamp III, Assistant Attorney General of Florida, argued the cause for appellee. With him on
JUSTICE BRENNAN delivered the opinion of the Court.
Appellant Wardair Canada Inc., a Canadian airline that operates charter flights to and from the United States, maintains in this action that the Commerce Clause1 of the Constitution precludes Florida from applying to it a tax on aviation fuel purchased in that State. Wardair also asserts that the Florida tax must fall because it violates a “clear unequivocal directive of Congress,” allegedly implicit in the Federal Aviation Act,
We disagree with appellant‘s view and analysis of the operation of the Commerce Clause, and find that Congress has not acted to pre-empt state taxes such as that imposed by Florida. Accordingly, we affirm the judgment of the Supreme Court of Florida upholding the tax.
I
Florida has for many years taxed the sale of fuel to common carriers, including airlines, within the State. Prior to April 1, 1983, the tax was prorated on a mileage basis, so that a carrier was liable for only the portion of the otherwise payable tax that was equal to the ratio of its Florida mileage to its worldwide mileage for the previous fiscal year.
Shortly after the new law was enacted, appellant filed suit in state court attacking its validity insofar as it authorized the assessment and collection of a tax on fuel used by foreign airlines exclusively in foreign commerce. Wardair argued, among other things, that the law was unconstitutional under the Commerce Clause and that it was inconsistent with the Nonscheduled Air Services Agreement, May 8, 1974, United States-Canada, Art. XII, 25 U. S. T. 787, T. I. A. S. No. 7826 (U. S.-Canadian Agreement or Agreement), a bilateral agreement between the Governments of Canada and the United States regulating air charter service between the two countries. Wardair‘s case was consolidated for trial with a similar suit brought by a number of other foreign airlines.
In a separate order addressing only Wardair‘s claims, the trial court rejected the Commerce Clause arguments but found that the U. S.-Canadian Agreement expressed a “federal policy” to exempt foreign airlines from fuel taxes. The court further found that this “policy” precluded the individual States from acting in this area and thus preventing the
The case was certified to the Supreme Court of Florida, which reversed, in part, the trial court. 455 So. 2d 326 (1984). The Supreme Court first noted that the U. S.-Canadian Agreement by its terms exempted carriers only from national, as opposed to state or local (or, in the case of Canada, provincial) excise taxes, inspection fees, and other charges, and thus held that the Agreement did not pre-empt state sales taxes. Nor was the court persuaded that the Florida tax was invalid under the Foreign Commerce Clause. The court again referred to the fact that the Agreement exempted only national taxes, and “presume[d] this has been done intentionally.” Id., at 329. Having determined that the Federal Government had, in effect, itself elected not to prohibit the States from taxing aviation fuel, the court rejected the contention that the state tax “prevents our federal government from speaking with one voice,” ibid., and thus distinguished Japan Line. We noted probable jurisdiction, 474 U. S. 943 (1984), and now affirm.
II
Wardair suggests that by enacting the Federal Aviation Act (Act), Congress “left no room for local government participation” with respect to foreign air travel. Brief for Appellant 39. Appellant does not expressly label this a pre-emption argument; rather, it relies on metaphor and tells us that “in the field of foreign air commerce it is the Federal Government that calls the tune. It is the Federal Government that is the conductor of the music, deciding how it is to be played and who are the players.” Id., at 44. We
It is of course true, as appellant notes, that Congress has, through the Act, regulated aviation extensively. The agencies charged by Congress with regulatory responsibility over foreign air travel exercise power, as appellant observes, over licensing, route services, rates and fares, tariffs, safety, and other aspects of air travel. However, state law is not pre-empted whenever there is any federal regulation of an activity or industry or area of law. The Supremacy Clause, among other things, confirms that when Congress legislates within the scope of its constitutionally granted powers, that legislation may displace state law, and this Court has throughout the years employed various verbal formulations in identifying numerous varieties of pre-emption. See, e. g., Louisiana Public Service Comm‘n v. FCC, 476 U. S. 355, 368-369 (1986). But we have consistently emphasized that the first and fundamental inquiry in any pre-emption analysis is whether Congress intended to displace state law, and where a congressional statute does not expressly declare that state law is to be pre-empted, and where there is no actual conflict between what federal law and state law prescribe, we have required that there be evidence of a congressional intent to pre-empt the specific field covered by the state law. Pacific Gas & Electric Co. v. State Energy Resources Conservation and Development Comm‘n, 461 U. S. 190 (1983); Silkwood v. Kerr-McGee Corp., 464 U. S. 238 (1984). In the present case, not only is there no indication that Congress wished to preclude state sales taxation of airline fuel, but, to the contrary, the Act expressly permits States to impose such taxes. Section 1113 of the Act, as added, 87 Stat. 90, and as amended,
III
In cases involving the so-called dormant Commerce Clause, both interstate and foreign, the Federal Government has not affirmatively acted, and it is the responsibility of the judiciary to determine whether action taken by state or local authorities unduly threatens the values the Commerce Clause was intended to serve. See Southern Pacific Co. v. Arizona, 325 U. S. 761 (1945). As we have previously observed: “The few simple words of the Commerce Clause . . . reflected a central concern of the Framers that was an immediate reason for calling the Constitutional Convention: the conviction that in order to succeed, the new Union would have to avoid the tendencies toward economic Balkanization that had plagued relations among the Colonies and later among the States under the Articles of Confederation.” Hughes v. Oklahoma, 441 U. S. 322, 325-326 (1979). In recognition of the importance of this conviction, we have acknowledged the self-executing nature of the Commerce Clause and held on countless occasions that, even in the absence of specific action taken by the Federal Government to disapprove of state regulation implicating interstate or foreign commerce, state
When a state tax is challenged as violative of the dormant Interstate Commerce Clause, we have asked four questions: is the tax applied to an activity with a substantial nexus with the taxing State; is the tax fairly apportioned; does the tax discriminate against interstate commerce; and is the tax fairly related to the services provided by the State. Complete Auto Transit, Inc. v. Brady, 430 U. S. 274, 279 (1977). In Japan Line, supra, we noted that when the state tax allegedly interferes with the Federal Government‘s authority to regulate foreign commerce, two additional questions must be asked: “first, whether the tax, notwithstanding apportionment, creates a substantial risk of international multiple taxation, and, second, whether the tax prevents the Federal Government from speaking with one voice when regulating commercial relations with foreign governments.” Id., at 451.
In the present case, appellant concedes that Florida‘s tax satisfies the four-part test set out in Complete Auto. In
Appellant and the United States maintain that the policy of tax exemption for the instrumentalities of international air traffic is manifested by, among other things, (1) the Chicago Convention on International Civil Aviation, opened for signa-
Nor does the Resolution provide support for appellant‘s contention that there is a clear national policy of exempting aviation fuel from state sales taxes. While the Resolution undeniably does endorse an international scheme whereby fuel would be exempt ” ‘from all customs and other duties,’ ” which it defines as including ” ‘import, export, excise, sales, consumption and internal duties and taxes of all kinds levied
Our reluctance in this regard is bolstered by the fact that the United States has, since the time that the Convention came into force, become a party to more than 70 bilateral aviation agreements, and in not one of these agreements has the United States agreed to deny the States the power asserted by Florida in this case. Most of these agreements explicitly commit the United States to refrain from imposing national taxes on aviation fuel used by airlines of the other contracting party, see Brief for United States as Amicus Curiae 14-17, 19, but as the United States concedes, “none of our bilateral aviation agreements explicitly interdicts state or local taxes on aviation fuel used by foreign airlines in international traffic.” Id., at 17. Most strikingly as it relates to the case before us, the U. S.-Canadian Agreement itself limits the tax exemption to be afforded to foreign air carriers to “national duties and charges.” App. A-58. Taxation by political subdivisions of either the United States or Canada are not mentioned, an omission which must be understood as representing a policy choice by the contracting parties, especially in light of the fact that the Resolution addressed this concern eight years before the United States and Canada en-
What all of this makes abundantly clear is that the Federal Government has not remained silent with regard to the question whether States should have the power to impose taxes on aviation fuel used by foreign carriers in international travel. By negative implication arising out of more than 70 agreements entered into since the Chicago Convention, the United States has at least acquiesced in state taxation of fuel used by foreign carriers in international travel. Again, in the U. S.-Canadian Agreement only “national” charges are barred, and we presume that drafters from two federalist nations understood this as representing a choice not to preclude local taxation. It would turn dormant Commerce Clause analysis entirely upside down to apply it where the Federal Government has acted, and to apply it in such a way as to reverse the policy that the Federal Government has elected to follow. For the dormant Commerce Clause, in both its interstate and foreign incarnations, only operates where the Federal Government has not spoken to ensure that the essential attributes of nationhood will not be jeopardized by States acting as independent economic actors. However, the Federal Government is entitled in its wisdom to act to permit the States varying degrees of regulatory authority. In our view, the facts presented by this case show that the Federal Government has affirmatively decided to permit the States to impose these sales taxes on aviation fuel. Accord-
In Japan Line, 441 U. S., at 451, we explained that Foreign Commerce Clause analysis requires that a court ask whether a state tax “prevents the Federal Government from ‘speaking with one voice when regulating commercial relations with foreign governments.’ ” But we never suggested in that case or any other that the Foreign Commerce Clause insists that the Federal Government speak with any particular voice.
In light of the above, the judgment of the Supreme Court of Florida is
Affirmed.
CHIEF JUSTICE BURGER, concurring in part and concurring in the judgment.
The Court acknowledges in its discussion in Part II concerning the scope of the Federal Aviation Act that “not only is there no indication that Congress wished to preclude state sales taxation of airline fuel, but, to the contrary, the Act expressly permits States to impose such taxes.” Ante, at 6. That being so I see no reason for the discussion in Part III.
While
Remarkably, the Court nevertheless refuses to “rely on the existence of this section to answer the Commerce Clause issue raised here” because it believes it is “plausible that Congress never considered whether States should be permitted to impose sales taxes on foreign, as opposed to domestic, carriers.” Ante, at 7 (emphasis added). Accordingly, the Court continues with an extended discussion of “the so-called dormant Commerce Clause,” which applies to cases involving
The conclusion the Court reaches in Part II is illuminated by the Court‘s curious failure to even mention any of the extensive legislative history or this Court‘s recent precedent concerning the enactment of § 1513, which followed our decision in Evansville-Vanderburgh Airport Authority Dist. v. Delta Airlines, Inc., 405 U. S. 707 (1972). In that case the Court upheld a $1-per-passenger “head tax” on all passengers boarding airplanes at the Evansville airport, after rejecting a Commerce Clause attack because the tax did not discriminate between interstate and intrastate commerce.
Congress reacted immediately to our decision by holding hearings on local taxation of air transportation. See Hearings on S. 2397 et al. before the Subcommittee on Aviation of the Senate Committee on Commerce, 92d Cong., 2d Sess., 129-198 (1972) (hereafter Senate Hearings); Hearings on H. R. 2337 et al. before the Subcommittee on Transportation and Aeronautics of the House Committee on Interstate and Foreign Commerce, 92d Cong., 2d Sess. (1972) (hereafter House Hearings). The result of these hearings was the enactment of § 7(a) of the Airport Development Acceleration Act of 1973, see Pub. L. 93-44, § 7(a), 87 Stat. 90, which added § 1113 to the Federal Aviation Act, and which is now codified, as amended, at
We subsequently addressed the scope of § 1513(a)‘s prohibition when confronted with Hawaii‘s state tax on the gross income of airlines operating within that State. See Aloha Airlines, Inc. v. Director of Taxation, 464 U. S. 7 (1983). Reviewing the legislative history, the Court pointed out that § 1513 was enacted out of congressional concern that “the proliferation of local taxes burdened interstate air transportation.” Id., at 9 (citing S. Rep. No. 93-12, pp. 17, 20-21 (1973), and H. R. Rep. No. 93-157, pp. 4-5 (1973)). We concluded unanimously that Hawaii‘s tax was expressly pre-
“when a federal statute unambiguously forbids the States to impose a particular kind of tax on an industry affecting interstate commerce, courts need not look beyond the plain language of the federal statute to determine whether a state statute that imposes such a tax is pre-empted.” Id., at 12 (footnote omitted).
In the course of our discussion of
“We find no paradox between
§ 1513(a) and§ 1513(b) .Section 1513(a) pre-empts a limited number of state taxes, including gross receipts taxes imposed on the sale of air transportation or the carriage of persons traveling in air commerce.Section 1513(b) clarifies Congress’ view that the States are still free to impose on airlines and air carriers ‘taxes other than those enumerated in subsection (a),’ such as property taxes, net income taxes, and franchise taxes. While neither the statute nor its legislative history explains exactly why Congress chose to distinguish between gross receipts taxes imposed on airlines and the taxes reserved in§ 1513(b) , the statute is quite clear that Congress chose to make the distinction, and the courts are obliged to honor this congressional choice.” Ibid.
Careful review of the legislative history indicates that it is not entirely silent as to why Congress chose to make this particular distinction. The Senate‘s first proposal to
Most relevant to the issue before us in this case is the fact that nowhere in that legislative history is there any indication that Congress intended to limit the applicability of
The language of the Act bears this out.
Just as we need not look beyond the plain language “when a federal statute unambiguously forbids the States to impose a particular kind of tax on an industry affecting interstate commerce,” Aloha Airlines, 464 U. S., at 12 (emphasis added), we need not look beyond the plain language of a federal statute which unambiguously authorizes the States to impose a particular kind of tax.
By refusing to decide this case solely on the express language of
In Japan Line, Ltd. v. County of Los Angeles, 441 U. S. 434 (1979), this Court recognized that the Commerce Clause commits to the exclusive authority of the Federal Government the regulation of those aspects of foreign commerce that by their very nature “necessitate a uniform national rule.” Id., at 449. In regulating commercial relations with foreign governments, ” ‘the Federal Government must speak with one voice.’ ” Ibid., quoting Michelin Tire Corp. v. Wages, 423 U. S. 276, 285 (1976). As a result, the Court in Japan Line held that the imposition of California‘s ad valorem property tax on foreign-owned containers used exclusively in foreign commerce was unconstitutional. The tax imposed in this case by Florida on fuel is indistinguishable, for Commerce Clause purposes, from the tax imposed by California on containers in Japan Line. Because a State‘s taxation on fuel used in foreign commerce will prohibit the Federal Government from speaking with “one voice,” I believe that this application of Florida‘s tax violates the Constitution.
The Court, however, finds Japan Line inapposite, asserting that “we do not confront federal governmental silence of the sort that triggers dormant Commerce Clause analysis.” Ante, at 9. To the Court, that the Federal Government has addressed some aspects of foreign aviation taxation, but has not expressly prohibited the imposition of state and local taxes, see ante, at 10-11, is a sufficient basis for upholding the tax at issue here. Apparently, the Court believes that once the Federal Government has spoken at all in an area, the Commerce Clause operates to permit States to act except if such action is expressly prohibited. But we have never permitted validation of state burdens on foreign commerce through this sort of implication.
For a state regulation to be removed from the reach of the dormant Commerce Clause, the intent of the Federal Government to permit state activity “must be unmistakably
The Government‘s efforts in the international sphere reveal an overarching and coherent policy directed at the creation of reciprocal tax exemptions in the area of foreign aviation. The Nation‘s aviation relations with foreign governments are implemented through a comprehensive network of treaties, bilateral executive agreements, informal arrangements, and federal statutes. Although these provisions stop short of explicitly banning state levies on aircraft fuel used in foreign travel, the indisputable pattern that emerges is one of a policy of reciprocal tax exemptions for instrumentalities of international commerce, like the containers in Japan Line and the fuel at issue here. The Government‘s inability to date to achieve full international consent to reciprocal tax exclusions neither negates nor demonstrates the absence of federal policy; it simply means that the United States has not fully succeeded, as yet, in transforming its policy into law. Indeed, the “aspiration . . . to eliminate all impediments to foreign air travel” (emphasis deleted), recognized by the Court, ante, at 10, is precisely the federal policy that renders the application of Florida‘s tax to the fuel here unconstitutional.
The decision today leaves Florida and other States free to tax foreign aviation, and will hinder the United States in