UNITED STATES OF AMERICA 

DEPARTMENT OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

WASHINGTON, D.C. 

 

IN RE HAWAIIAN INSPECTION FEE ) 

PROCEEDING ) Docket DOT-OST-2010-0243 

 ) 

 

REPLY COMMENTS OF THE AIR TRANSPORT 

ASSOCIATION OF AMERICA, INC. 

IN SUPPORT OF THE PETITION FOR DECLARATORY ORDER 

Roy Goldberg 

Sheppard Mullin Richter & 

Hampton, LLP 

1300 I Street, N.W. 

Suite 1100 East 

Washington, D.C. 20005-3314 

Tel. (202) 218-0007 

Facsimile (202) 312-9425 

Email: rgoldberg@sheppardmullin.com

David A. Berg 

Doug Mullen 

Air Transport Association of 

 America, Inc. 

1301 Pennsylvania Avenue, N.W. 

Suite 1100 

Washington, D.C. 20004-1278 

Tel. (202) 626-4234 

Facsimile (202) 626-4139 

Email: dberg@airlines.org

 dmullen@airlines.org

Dated: November 16, 2010 
INTRODUCTION AND SUMMARY

 The Air Transportation Association of America, Inc. (“ATA”), on behalf of itself 

and its air carrier members, hereby submits the following reply comments in connection 

with the Department’s investigation into the lawfulness of Hawaii Revised Statute § 

150A, as amended by Act 173, S.B. No. 2523 (2010) (hereafter the “Freight Fee Law”), 

as applied to air carriers. ATA specifically replies herein to the “Comments of the State 

of Hawai’i Department of Agriculture” (the “State”), filed November 1, 2010, in support 

of its Freight Fee Law (the “State Comments”). Nothing in the State Comments rebuts 

the showing by the ATA in its Opening Comments, filed November 1, 2010 (“ATA 

Opening Comments”), that the Freight Fee Law is preempted and prohibited by the AntiHead Tax Act, 49 U.S.C. § 40116 (“AHTA”), and the Airline Deregulation Act, 49 

U.S.C. § 41713 (“ADA”). 

 The issue before the Department is not whether it is appropriate for the State to 

inspect cargo transported into the State. The ATA does not question the legitimacy of 

that objective on the part of Hawaii. However, the desire of the State to guard against 

invasive pest species does not change the fact that the Freight Fee Law: (1) imposes a 

“charge” on the “sale of air transportation,” and therefore is preempted by the AHTA; 

and (2) is “related to” the “price,” “service” and/or “routes” of air carriers serving 

Hawaii, and therefore is preempted by the ADA. The State of Hawaii has multiple means 

at its disposal to fund inspections of cargo being shipped to the State, including, without 

limitation, sales taxes, property taxes and other taxes that are imposed on the population 

as a whole. It is understandable that State officials are wary of the political ramifications 

of levying a tax on the general population to fund inspections. However, even if it is 
-2- 

more politically expedient for State officials to target the airline industry for revenue 

raising purposes, it is not lawful under the AHTA or the ADA to do so. 

 1. With regard to the Anti-Head Tax Act, the State does not deny that the Act 

prohibits a “charge” on the “sale of air transportation” (49 U.S.C. § 40116(b)(3)), or that 

the term “air transportation” includes the transportation of “property by aircraft” (49 

U.S.C. § 40102(a)(5), (23), (25)). However, the State insists that “property” does not 

include air freight; rather it is limited to the luggage and carry-on items accompanying an 

airline passenger.1 This argument is contrary to the plain meaning of the term “property” 

– which is not restricted to baggage and carry-on items of passengers that are being 

transported. Such a limited construction of the term “property” also is entirely 

unsupported by any legislative history and is at odds with the manner which the FAA 

uses the term “property” throughout its regulations (to include freight). 

 The State’s alternative argument under the AHTA – that the Freight Fee is 

authorized by 49 U.S.C. § 40116(e)(1)2 – disregards the fact that the Freight Fee is a 

“fee” rather than a “tax.” It is not imposed on the general population but instead 

specifically targets shippers of freight into the State and their transportation service 

providers. Even assuming, arguendo, that the Freight Fee is a “tax,” it is not authorized 

by Subsection 40116(e)(1) because it is prohibited by Subsection 40116(b) as a tax on the 

“sale of air transportation.” The Freight Fee is also not the type of customary and usual 

tax that would be permitted under Subsection 40116(e)(1) (if not prohibited by 

Subsection 40116(b)). 

 

1

State Comments, at 19-20. 

2

Id. at 21-23. 
-3- 

 2. In arguing that the Freight Fee Law is not preempted by the ADA, the 

State contends that if the ADA applies to the Freight Fee then it would also prohibit 

airports from charging fees for the use of the airport. See State Comments, at 9 (“Under 

the ATA’s reasoning, any fee imposed by an airport would violate the Deregulation 

Act”). This is fallacious because the ADA contains an exception for publicly owned 

airports that are carrying out their “proprietary powers and rights,” which includes 

requiring airlines to pay reasonable fees for use of the airport facilities (e.g., runways and 

terminal space). See 49 U.S.C. 41713(b)(3); ATA v. DOT, 613 F.3d 206, 216 (D.C. Cir. 

2010). Notably, however, Congress did not create a similar exception in the ADA for 

states to impose fees when exercising other powers. Here, the State is not acting as an 

airport proprietor. 

 The State also contends that the Freight Fee Law is not preempted by the ADA 

because, according to the State, the Freight Fee Law is not related to the price charged 

for transportation of freight by air. This contention ignores the obvious fact that the 

Freight Fee must either be paid by the shipper as a surcharge to the freight rate that the 

shipper owes for the transportation, or must be assumed by the air carrier, in which case it 

will have to be passed on at some point to its customers. Either way the Freight Fee 

cannot be divorced from the price of the air transportation that is being sold. See Buck v. 

American Airlines, Inc., 476 F.3d 29, 36 (1st Cir. 2007) (an “airline must account for the 

fees when setting its own rates”). 

 The State raises a hollow argument when it asserts that Buck “did not address 

whether the imposition of the taxes and fees at issue were themselves preempted by the 
-4- 

Deregulation Act.”3 The taxes and fees at issue in Buck were not themselves subject to 

preemption because they were expressly authorized by federal statute – e.g., Customs 

fees, APHIS fees, passenger facility charges – or were imposed by a foreign government. 

The key aspect of Buck – namely, the recognition that fees are inextricably intertwined 

with the price charged for air transportation – applies fully here. 

 The State fares no better with its contention that the Freight Fee Law is not 

preempted by the ADA because it bears no relation to services provided by airlines. 

Nothing in the State’s Comments refutes the obvious fact that the Freight Fee Law 

mandates that air carriers provide the service of billing, collecting and remitting the 

Freight Fee – as well as a periodic “written statement” of the Freight Fees over a given 

time period.4

 The State’s argument that the ADA does not apply to such state-mandated 

services cannot be squared with recent ADA precedent such as Rowe v. New Hampshire 

Motor Transp. Ass’n, 552 U.S. 364 (2008). Just as the motor carriers in Rowe [which 

were protected by the same preemption language as in the ADA] could not be forced to 

provide the service of verifying the age of the recipient of tobacco shipments, the air 

carriers subject to the Hawaii Freight Fee Law cannot be forced to provide the service of 

billing, collecting and remitting the Freight Fee. In addition, the State does not refute the 

fact that the imposition of the Freight Fee Law on air carriers may affect their routes by 

impacting their decision whether to serve Hawaii (and expose themselves to significant 

financial penalties if they choose not to undertake the burden of billing, collecting and 

remitting the Freight Fees). 

 

3

State Comments, at 9. 
-5- 

ARGUMENT

I. BECAUSE THE FREIGHT FEE IS IMPOSED ON THE SALE OF AIR 

 TRANSPORTATION – WHICH INCLUDES TRANSPORTATION OF 

 “PROPERTY” – THE FREIGHT FEE IS PREEMPTED AND 

 PROHIBITED BY THE ANTI-HEAD TAX ACT. 

In its Opening Comments, ATA demonstrated that the Anti-Head Tax Act 

preempts and prohibits the Freight Fee Law as applied to air carriers. Nothing in the 

State’s Comments refutes that showing. 

A. Application of the Anti-Head Tax Act to “Property” Transported 

 by Aircraft is Not Limited to Passenger Luggage and Carry-On Items. 

 There is no merit to the State’s assertion that the Anti-Head Tax does not apply to 

the Freight Fee Law because the Freight Fee Law targets solely air passengers and their 

luggage and carry-on items, and does not apply to any tax, fee or other charge levied 

upon the transportation of air freight. The Anti-Head Tax Act prohibits a “charge” on the 

“sale of air transportation,” 49 U.S.C. § 40116(b)(3), and “air transportation” includes 

the transportation of “property by aircraft,” 49 U.S.C. § 40102(a)(5), (23), (25). 

“Property” includes “air freight.” The State acknowledges, as it must, that “an argument 

can be made that the prohibition of charges on the sale of air transportation applies to 

freight.”5

 However, the State nevertheless asserts that the term “property” should not 

include “freight.”6 Rather, according to the State, “property” should be limited to 

 

4Memorandum from C. Okada, Manager, Plant Quarantine Branch, July 7, 2010 (Exhibit 2 to 

Petition for Declaratory Order), at 3.

5

State Comments, at 19. Note also that in a case cited by the State – Burbank-Glendale-Pasadena 

Airport Auth. v. City of Burbank, 64 Cal. App. 4th 1217, 1221-22, n. 1., 76 Cal. Rptr. 297 (2d 

Dist. 1998), the court looked to 49 U.S.C. § 40102(a)(3), (22) and (24), to define the term “air 

commerce” as used in the AHTA. 

6

State Comments, at 19-20. 
-6- 

“tangible things owned or possessed by air passengers, such as luggage or baggage to be 

transported by or with a passenger.”7

 

 The State’s proffered construction of the phrase “sale of air transportation” and 

the term “property” – to restrict them to luggage or other items accompanying a 

passenger – cannot be accepted. The plain meaning of the term “property” includes 

freight transported aboard an airline. The property belongs to either the shipper or the 

consignee, but it is property nonetheless. The State points to nothing in the AHTA or the 

Federal Aviation Act of 1958 (which contains the definition of “air transportation”), or 

their respective legislative histories, to support its theory that “property” does not include 

air freight. There is equally nothing to support the State’s conjecture that, in enacting the 

AHTA, Congress was only guarding against fees imposed on the sale of air transportation 

to passengers (as opposed to air transportation in general). If the State’s construction of 

the AHTA were adopted, it could open the floodgates for all 50 states to impose a 

surcharge to the transportation of air cargo. This would be directly contrary to the 

express purpose behind the AHTA. 

 In addition, throughout its regulations, the FAA uses the term “property” in a 

manner that clearly demonstrates that it is not defined solely as the luggage or carry-on 

items of an airline passenger. See, e.g., 14 C.F.R. § 1.1 (“Interstate air transportation 

means the carriage by aircraft of persons or property as a common carrier for 

compensation or hire, or the carriage of mail by aircraft in commerce”) (emphasis added); 

14 C.F.R. § 216.1(a) (“Revenue traffic means persons, property or mail carried for 

compensation or hire”) (emphasis added); 14 C.F.R. § 296.3 (“An indirect cargo air 

 

7

Id. 
-7- 

carrier is any U.S. citizen who undertakes to engage indirectly in air transportation of 

property . . .”); 14 C.F.R. § 297.3(a) (“Foreign air freight forwarder means a foreign 

indirect air carrier that is responsible for the transportation of property from the point of 

receipt to point of destination . . .”) (emphasis added); 14 C.F.R. § 204.2(a) (“All-cargo 

air carrier or section 41103 carrier means an air carrier holding an all-cargo air 

transportation certificate issued under section 41103 of the Statute authorizing the 

transportation by aircraft in interstate air transportation of only property or only mail, or 

both”) (emphasis added); 14 C.F.R. § 61.58(f) (“a person may act as pilot in command of 

a flight under day VFR conditions or day IFR conditions if no person or property is 

carried, other than as necessary to demonstrate compliance with this part”) (emphasis 

added); 14 C.F.R. § 91.313(c) (“No person may operate a restricted category civil aircraft 

carrying persons or property for compensation or hire”) (emphasis added). 

 Furthermore, excluding freight from the application of the AHTA is directly 

contrary to the result in Aloha Airlines, Inc. v. Director of Taxation of Hawaii, 464 U.S. 7 

(1983). That case was filed by Aloha Airlines and Hawaiian Airlines as “commercial 

airlines that carry passengers, freight, and mail among the islands of Hawaii.” Id. at 10 

(emphasis added). The air carriers challenged imposition of a Hawaii four-percent tax on 

the “gross income each year from the airline business.” Id. The Supreme Court ruled 

that the gross receipts tax violated the AHTA. The Court reasoned that the “manner in 

which the state legislature has described and categorized [the tax] cannot mask the fact 

that the purpose and effect of the provision is to impose a levy upon the gross receipts of 

airlines,” which “constitutes at least an ‘indirect’ tax on the gross receipts of airlines.” Id. 

at 13-14. The Court did not limit its ruling to the carriage of passengers. To the contrary, 
-8- 

the Court stated that the AHTA “proscribes the imposition of state and local taxes on 

gross receipts derived from air transportation or the carriage of persons in air commerce.” 

Id. at 14-15 (emphasis added). Thus, the Court recognized that the prohibition in the 

AHTA is “either/or” – either applicable to the carriage of persons or the sale of air 

transportation. Accordingly, the prohibition in the AHTA is not confined to taxes, fees or 

charges on the “carriage of persons.” Rather, the Supreme Court made it clear in Aloha 

Airlines that the prohibition also applies to the sale of air transportation beyond merely 

the carriage of persons. Accordingly, the State of Hawaii’s effort to exempt air freight 

from the scope of the AHTA cannot succeed. 

 The State’s argument that the AHTA does not apply to air freight is also contrary 

to Tinicum Township Privilege Fee Proceeding, Order 2008-3-18, Docket OST-2007-

29341 (March 19, 2008), aff’d, 582 F.3d 482 (3rd Cir. 2009), where the Department 

stated that the privilege fee at issue there was not “a prohibited charge on the sale of air 

transportation, under the AHTA, because it [was] not imposed in connection with the 

sale of a ticket or waybill.” Id. at *3 (emphasis added). The flip side of this statement is 

that the AHTA applies to the sale of air transportation if an air waybill is issued in 

connection with the transportation. Here, it is undisputed by the State that the Freight 

Fee is “imposed in connection with the sale of a . . . waybill.” Indeed, the State even 

attached a copy of an air waybill to its Comments and expressly acknowledged that such 

waybills are used in connection with air transportation that is subject to the Freight Fee 

Law. 
-9- 

 For the reasons set forth above, the State’s argument that “property” is restricted 

to passenger luggage or carry-on items is contrary to the plain meaning of the term 

“property” and has no support in the law or case precedent. 

B. Alaska Airlines Does Not Support Application of the 

 Hawaiian Freight Fee Law to Air Carriers. 

 In its Comments, the State asserts that Alaska Airlines, Inc. v. Dep’t of Food and 

Agriculture, 33 Cal. App. 4th 506, 39 Cal. Rptr. 2d 426 (1995), supports the State’s 

position that the AHTA does not preempt the Freight Fee Law.8 In its Opening 

Comments, the ATA explained why Alaska Airlines does not preclude a finding that the 

Freight Fee Law is preempted by the AHTA.9

 In contrast to the situation here – where 

the Freight Fee is based on the net weight of each item of freight being shipped – the fee 

in Alaska Airlines was a flat-fee “service charge” which “bore no relation” to the quantity 

of “cargo on the aircraft.”10 Accordingly, the AHTA deemed not to apply. See 39 Cal. 

Rptr. 2d at 430 “(“[The] facts establish that the inspection fee is not a direct head tax. It 

bears no relation to the number of passengers or cargo on the aircraft”) (emphasis 

added). 

 In any event, the service charge in Alaska Airlines was subsequently deemed to be 

unconstitutional as applied to maritime and air carriers.11 In its Comments, the State 

acknowledges that in Alaska Airlines the “flat fee of $85” “bore no relation to the number 

 

8

State Comments, at 15-16. 

9

See ATA Opening Comments, at 25-28. 

10Id. at 26-28. 

11Id. 
-10- 

of passengers or cargo on the aircraft.”12 And, although the State asserts that its Freight 

Fee “is unrelated to the number of passengers on a flight,”13 it does not deny the direct 

correlation to the amount of the fees and the quantity of cargo on the aircraft. 

 Thus, clearly the decision in Alaska Airlines – a case in which the Department 

played no role – does not support the State’s position here.14

C. The Freight Fee Law Imposes a Financial and Administrative Burden 

 on Air Carriers Transporting Freight into Hawaii. 

The State’s argument that the Freight Fee Law “should not increase . . . the outof-pocket cost of the airline,”15 and “does not significantly affect any aspect of the air 

carriers’ business,”16fails to accurately reflect the true nature of the freight billing 

systems and processes utilized by air carriers and the financial and administrative burden 

that the Freight Fee Law imposes on such systems and processes. As set forth in the 

ATA Opening Comments (at 8-17), and the declarations from United Air Lines and 

Federal Express provided in Exhibits A, B and C thereto, among other things: 

• The metric that the Freight Fee Law requires air carriers to use to determine the 

Freight Fee raises overwhelming practical problems and imposes large financial 

burdens on the carriers shipping freight to Hawaii because the requirement to 

calculate the fee “on the basis of 50 cents for every one thousand pounds of 

freight brought into the state, or part thereof” is not consistent with the industry 

practice throughout much of the world outside of the United States -- whereby air 

carriers charge their cargo shippers based on the weight of the shipment as 

measured by kilograms. This means that air carriers must incur considerable 

 

12State Comments, at 16. 

13Id. at 17. 

14The State also relies on Arizona v. Cochise Airlines, 128 Ariz. 432, 435, 626 P.2d 596, 599 

(1980). State Comments, at 19-20. As set forth in the ATA Opening Comments, at 28-30, 

Cochise does not support the finding of no preemption here. 

15State Comments, at 17. 

16Id. at 7 (emphasis in original). 
-11- 

expense to modify their systems to process invoices for the Fees based on every 

thousand pounds, rather than kilograms. 

• The imposition of a minimum charge 50 cents per 1000 pounds is a completely 

non-standard way of pricing air cargo and is not easily meshed into carrier pricing 

systems that either price per pound, per kilo, or per piece. 

• The modifications to the airline internal systems will be extremely expensive. 

• Different billing processes and systems exist for domestic cargo transported in the 

United States, often billed directly to shippers, and international cargo, typically 

billed through individual country “Cargo Accounts Settlement System” (“CASS”) 

processes. 

• The FedEx Service Guide provides that where the dimensional weight measure is 

used for FedEx Express packages, the dimensional weight is determined by 

multiplying a package’s length by width by height in inches and dividing by 194 

(for shipments within the U.S. and shipments between the U.S. and Puerto Rico) 

or 166 (for international shipments). This is obviously not consistent with the 

Freight Fee Law, that requires the fee to be based on the net weight in terms of 

1,000 pound increments. The second method FedEx uses when it measures the 

weight of the packages is to capture the actual weight. This “actual weight” 

measure includes the weight of the packaging and its contents and, in contrast to 

the Freight Fee Law, would not be the “net weight” of the goods being shipped. 

• FedEx does not have any means of measuring the “net weight” of the packages 

that it transports and that measurement serves no relevant business purpose. 

FedEx also does not measure any weight for some of the packages that it 

transports, including some of the packages that it transports to Hawaii. In such 

instances, FedEx relies upon the weight provided by the customer at time of 

shipment. 

• The process for billing and collecting the Hawaiian Freight Fee becomes even 

more administratively complex, and for all practical purposes, uncollectible, with 

regard to interline cargo into Hawaii.17

See also “Supplemental Declaration of Jesse Cohen, United Air Lines, Inc.” (“Cohen 

Suppl. Decl.”) Exhibit A hereto, ¶¶ 2-9. 

 

17See ATA Opening Comments, at 8-17 and Exhibits A, B and C thereto. 
-12- 

 The State’s contention that there is no measurable cost to air carriers to comply 

with the Freight Fee Law fails to recognize the fact that air carriers must develop and 

utilize accounting and billing systems and processes to collect the non-standard Freight 

Fee on a global basis. For example, United has freight customers all over the world and 

they are accustomed to being invoiced for the cost of shipping their freight to destinations 

around the world, including Hawaii. There is no prior system or process in place 

whereby United also bills these customers for the Hawaiian Freight Fee based on a metric 

of 50 cents per 1,000 pounds of freight (net weight). It is not as if United can merely 

press another button and have this information included on each of the invoices. Rather, 

United would need to modify its accounting and invoicing systems and processes to 

create new fields to reflect these additional charges, and to incur labor expenses to have 

personnel calculate the Freight Fees owed by the shippers.18

 The argument by the State that there is no burden to air carriers from having to 

modify their accounting and billing systems and processes and to dedicate employees to 

these functions reflects a failure to appreciate the global nature of the air carrier business. 

For example, during the last twelve-month period, United transported air freight into 

Hawaii from approximately thirty different countries. The air freight charges for these 

transactions were priced in either pounds or kilograms and in approximately 30 different 

currencies. It would be extremely burdensome for United to be required to use a nonstandard metric of 50 cents per 1,000 pounds across all of these different countries of 

origin and fluctuating currencies. To make these calculations and use them to invoice 

customers for the Freight Fee would be an administratively complex and expensive 

 

18Cohen Suppl. Decl. ¶¶ 3-4. 
-13- 

service that United does not choose to perform on its own volition, and there is nothing in 

the Hawaiian freight fee provision which compensates air carriers such as United for that 

expense.19 

 The burden to the airlines is not confined to billing, collecting and remitting the 

Freight Fees. The State also requires air carriers to provide a “written statement” to 

HDOA-PQ that reflects the collection period dates; port of entry for the freight for which 

the fees were collected; net weight of the freight for which each fee was collected, by 

flight/voyage; total net weight of all freight reported for the collection period; and the 

total fee amount paid.”20

 The State did not present any direct evidence which is contrary to the airlines’ 

demonstration that the Freight Fee Law imposes a significant financial and administrative 

burden on them. The State did, however, attach an air waybill issued by United Air Lines 

in January 2010 for the shipment of produce from Los Angeles to Honolulu. Although 

the air waybill appears to list (in handwriting) the gross weight and net weight of the 

shipment in pounds, it must be emphasized that this was a domestic shipment. Therefore 

it is not surprising that weight is listed in pounds. As stated in the ATA Opening 

Comments, the industry practice for air shipments from foreign countries to Hawaii is in 

kilograms rather than pounds.21 Moreover, the fact that domestic waybills list freight in 

 

19The burden on air carriers from having to comply with the Freight Fee Law is further 

complicated by the fact that Hawaii requires that fees be paid by check rather than electronic 

payments. This adds yet another layer of bureaucratic detail and process cost that air carriers 

must attend to because of the Freight Fee Law. Id. ¶ 5. 

20Memorandum from C. Okada, Manager, Plant Quarantine Branch, July 7, 2010 (Exhibit 2 to 

Petition for Declaratory Order), at 3.

21See ATA Opening Comments, at 8-9; Declaration of Jesse Cohen, United Air Lines, Exhibit A 

to Opening ATA Comments, ¶ 4. 
-14- 

pounds is of no use to major cargo carrier Fedex, which “does not have the means of 

obtaining the weight data necessary to implement” the Freight Fee.22

 The State’s contention that “each waybill should contain all the information 

required by” the Freight Fee Law23 significantly underestimates the complexity that the 

Freight Fee creates for air carriers in attempting to invoice shipper customers for the 

Freight Fee.24 To begin with, the waybill is not the billing document that United uses to 

invoice its shipper customers for the transportation of their air freight to Hawaii. Rather, 

United’s billing department prepares a separate document that invoices the shipper 

customers for the cost of transporting the air freight. Significantly, the waybill does not 

even include a section for listing the Hawaiian freight fee charge based on increments of 

1,000 pounds of net freight.25 

 The State of Hawaii contends that “kilograms can easily be converted to pounds . 

. . .”.26 However, in the case of United such a conversion would require revisions to its 

internal billing systems and the personal attention by an employee in the billing 

department. To have to do so for each shipment into Hawaii is a labor intensive service 

that United does not choose to provide and for which the Freight Fee Law provides 

United no compensation.27 Moreover, Hawaii’s statement fails to reflect the common 

type of situation in which the freight weight is measured in kilograms and the freight 

 

22Declaration of Thomas Parker, Federal Express Corporation, Exhibit A to ATA Opening 

Comments, ¶¶ 3-8. 

23State Comments, at 3. 

24Cohen Suppl. Decl. ¶ 7. 

25Id. 

26State Comments, at 5. 

27Cohen Suppl. Decl. ¶ 8. 
-15- 

charges are invoiced in a foreign currency, such as Japanese Yen or Korean Won. To 

make this further conversion requires yet another revision to the billing systems and more 

personal attention of employees. There is no automatic or easy way to translate such a 

weight measurement and foreign currency into the Hawaiian Freight Fee.28 

 The State of Hawaii’s Comments do not address how United and the other air 

carriers would be compensated for modifying their billing systems to arrange for 

collection of the Freight Fee. Nor do the Comments explain how the Freight Fee can be 

easily billed in connection with the individual “Cargo Accounts Settlement System” 

(“CASS”) processes. The Comments also do not explain how air carriers will be able to 

communicate the nature of the Fee to their customers without incurring a major 

administrative expense. There also is no section of the Hawaii Comments which 

addresses the complexities in trying to impose the Fee on shippers that are part of an 

interlining arrangement between carriers for the shipment of air freight to Hawaii.29 

 Finally, if Hawaii is correct in asserting that the Freight Fee can be collected costfree, and it has access to the air waybills at destination airports in Hawaii as demonstrated 

by its exhibit of an United air waybill, it should collect the Freight Fee on its own and not 

require air carriers to do so. 

 D. Both the State and the Federal Government Inspect Cargo from 

 Foreign Destinations for Agricultural Quarantine Purposes. 

 The State contends that its Freight Fee “does not duplicate any of the benefits 

derived from existing federal air transport taxes, and with inspections, the federal 

CBP/APHIS is responsible for enforcing regulations related to imports only from foreign 

 

28Id.
-16- 

countries, while the state of Hawai’i enforces regulations related to foreign and domestic 

imports.”30 This assertion ignores the fact that the Freight Fee Law applies not only to air 

shipments from the mainland United States to Hawaii, but also to air shipments from 

foreign countries to Hawaii. The State has not carved out such international shipments 

despite the fact that both APHIS/CBP and Hawaii are inspecting foreign-originating 

cargo that is being transported into Hawaii. 

 E. The Freight Fee is Not Authorized by 49 U.S.C. § 40116(e)(1). 

The State argues that even if “property” includes air freight, the Freight Fee is 

nevertheless not preempted by the AHTA because it is authorized under 49 U.S.C. § 

40116(e)(1).31 However, that is clearly not the case. Subsection 40116(e)(1) states that 

“Except as provided in subsection (d) of this section, a State or political subdivision of a 

State may levy or collect . . . taxes (except those taxes enumerated in subsection (b) of 

this section), including property taxes, net income taxes, franchise taxes, and sales or use 

taxes on the sale of goods or services . . . .” (Emphasis added) Subsection 40116(e)(1) 

does not apply to the Freight Fee for several reasons: 

 First, the Freight Fee, as its name reflects, is a “fee” rather than a “tax.” “The 

mere fact that a statute raises revenue does not imprint upon it the characteristics of a law 

by which the taxing power is exercised.” State v. Block, 717 F.2d 874, 887 (4th Cir. 

1983) (50 cent deduction on proceeds from sale of commercial sold milk was a fee rather 

than a tax because primary purpose of statute was to “reduce overproduction of milk and 

 

29Cohen Suppl. Decl. ¶ 9. 

30State Comments, at 18. 

31State Comments, at 21-23. 
-17- 

shift some of the financial burden of the price support program”). The Freight Fee is not 

imposed on the general population as a whole (like a typical tax) but instead is an 

inspection fee directed solely at shippers of freight into Hawaii (and the airlines and 

maritime companies that transport the freight). See Leggett v. Missouri State Life Ins. 

Co., 342 S.W.2d 833, 876 (Mo. 1961) (“It is generally held that an inspection fee does 

not constitute a tax”); Outdoor Amusement Business Ass’n, Inc. v. Massachusetts, 26 

Mass. L. Rptr. 471 (Mass. Super. Ct. 2010) (charge imposed for inspection of amusement 

park rides was “fee” rather than “tax”). 

 Second, even assuming, arguendo, that the Freight Fee is a “tax,” it is a tax 

“enumerated in subsection (b)” – and therefore not authorized by Subsection 

40116(e)(1)) – because it is a tax “on the sale of air transportation.” As set forth above, 

the State imposes the Freight Fee each time that an air carrier sells the transportation of 

property by air into the State. 

 Third, even assuming, arguendo, that the Freight Fee is a “tax” and is not a tax 

“enumerated in subsection (b)” (which it clearly is), it is not authorized by Subsection 

40116(e)(1) because it is not in the category of the usual and unobjectionable “property 

tax[es],” “net income tax[es],” franchise tax[es],” or “sales or use tax[es]” described in 

Subsection (e)(1). In Tinicum the Department rejected Tinicum Township’s argument 

that its “privilege fee” was authorized by 49 U.S.C. 40116(e)(1). The Department stated 

that “the only taxes . . . permitted [under the AHTA] are in the category of the ‘usual’ and 

‘unobjectionable’ property taxes, net income taxes, franchise taxes and sales taxes, 

encompassed in the ‘savings’ clause of subsection (e)(1) of § 40116.” Tinicum, at *25 

(citing Wardair Canada, Inc. v. Florida Dep’t of Rev., 477 U.S. 1, 15-16 (1986), and 
-18- 

Continental Air Lines v. Dep’t of Rev., 12 Or. Tax. 349, 351 (Or. Tax. Ct. 1992)). 

Similarly here, the Freight Fee is not any of the taxes listed in Subsection (e)(1). 

 The State’s reliance on Burbank-Glendale-Pasadena Airport, supra (Comments, 

at 21-22) is misplaced. That case involved imposition of a ten-percent tax on cars that 

temporarily parked in parking lots in the city, including parking lots proximate to the 

airport. The court ruled that the tax was “not a tax on air commerce. It was a tax on the 

fee paid for short-term parking. The AHTA does not apply to taxes on airport ground 

transportation services, such as parking facilities.” 64 Cal. App. 4th at 1223. BurbankGlendale does not apply here because the Freight Fee Law is not a fee, tax or charge on 

“ground transportation services,” or on the use of “parking facilities.” 

In asserting that the AHTA does not preempt the Freight Fee Law, the State 

asserts that the “AHTA was not intended to universally shelter air carriers from any and 

all state fees and charges . . . .”32 This is not an accurate characterization of the ATA’s 

position. The ATA does not contend that airlines are never subject to taxes, fees or 

charges imposed by a state. To the contrary, the AHTA does not prohibit the tax, fee or 

charge provided that it: (1) does not violate 49 U.S.C. § 40116(b) and (d); and (2) is the 

usual and customary type of universally applied fee, tax or charge, such as “property 

taxes, net income taxes, franchise taxes, and sales or use taxes on the sale of goods or 

services,” 49 U.S.C. § 40116(e). However, because the Freight Fee is imposed on the 

“sale of air transportation,” it is prohibited by the express language of 49 U.S.C. § 

40116(b). 

 

32State Comments, at 15. 
-19- 

 For all of the reasons set forth above, and in the ATA’s Opening Comments, the 

Department should conclude that the Anti-Head Tax Act preempts and prohibits the 

Hawaii Freight Fee Law as applied to air carriers. 

II. BECAUSE APPLICATION OF THE FREIGHT FEE LAW TO AIR 

 CARRIERS RELATES TO THE PRICES, SERVICES AND ROUTES OF 

 AIR CARRIERS, IT IS PREEMPTED BY THE AIRLINE 

 DEREGULATION ACT. 

As set forth in the ATA Opening Comments, the Freight Fee Law is also 

preempted and prohibited by the Airline Deregulation Act. Nothing in the State of 

Hawaii’s Comments refutes this fact. 

 A. The Term “Related to” in the Airline Deregulation Act is to be 

 Broadly Construed. 

In asserting that the ADA does not preempt the Freight Fee Law, the State seeks a 

ruling from the Department that would adopt an unprecedentedly narrow interpretation of 

the phrase “related to” in the ADA. The State’s request for such a restricted construction 

of “related to” is contrary to the ordinary meaning of the phrase “related to” (or “relating 

to,” as the statute was formerly worded), which “is a broad one,” meaning “to ‘stand in 

some relation; to have bearing or concern, to pertain; refer; to bring into association with 

or connection with.’” Morales v. Trans World Airlines, Inc., 504 U.S. 374, 383 (1992) 

(citing BLACK’S LAW DICTIONARY, at 1158). Accordingly, the words “related to” 

“express a broad pre-emptive purpose.” Id. The broad scope of “related to” was 

reinforced by the Supreme Court in Rowe v. New Hampshire Motor Transp. Ass’n, 552 

U.S. 364 (2008), where the Court held that a federal law applicable to the motor carrier 

industry but modeled on the language of the ADA preempted a Maine law which required 

carriers to verify the age of recipients of tobacco shipments. 
-20- 

 The State nevertheless asserts that this case presents a situation in which the 

relationship between the state law at issue (i.e., the Freight Fee Law) and airline prices, 

services and routes is insignificant and “too tenuous, remote or peripheral” to justify 

preemption.33 However, the case law precedent under the ADA does not support the 

State’s argument. The classic examples of state laws that are too tenuous, remote or 

peripheral to be preempted by the ADA are those that prohibit gambling or prostitution. 

See, e.g., Rowe, 552 U.S. at 371; Morales, 504 U.S. at 390). In other words, the fact that 

airlines are deregulated does not mean that they can offer illicit activities. 

 In practice, the cases where courts have determined that a state law is “too 

tenuous, remote, or peripheral” have largely involved the application of general state laws 

against discrimination and the like that are being applied to industries throughout the 

jurisdiction. See, e.g., ATA v. City and County of San Francisco, 266 F.3d 1064, 1072-73 

(9th Cir. 2001) (no preemption of municipal ordinance that prohibited discrimination in 

the provision of benefits to employees of city contractors; “no indication that when 

Congress passed the ADA, it intended to preempt states and local governments from 

passing laws that forbid employers from discriminating in their provision of employment 

benefits”); and Abdu-Brisson v. Delta Air Lines, Inc., 128 F.3d 77 (2d Cir. 1997) (New 

York’s law against age discrimination was not preempted by the ADA and therefore 

could be applied to airline decisions regarding pilot compensation following the hiring by 

Delta of former Pan Am pilots); Wellons v. Northwest Airlines, Inc., 165 F.3d 493 (6th 

Cir. 1999) (race discrimination claim not preempted). 

 

33State Comments, at 7. 
-21- 

 The situation here is not similar at all because the air carriers subject to the 

Freight Fee Law are not objecting to being the subject of a state civil rights or labor law 

that is applied to all industries throughout the state. Rather, the airline industry (with the 

maritime industry) was singled out to perform a state-function – namely to bill, collect 

and remit an inspection fee. See Rowe, 552 U.S. at 375-76 (Maine state law imposing 

recipient-age verification obligations on shipments of tobacco to Maine had a “significant 

impact” on motor carrier rates, routes and services [and therefore was not too tenuous, 

remote, or peripheral] because the state law was “not general, it [did] not affect truckers 

solely in their capacity as members of the general public”). 

B. The Freight Fee Law “Relates to” Air Carrier Prices, 

 Services and Routes. 

 1. The Freight Fee Law Relates to Air Carrier Prices. 

The State asserts that the Freight Fee Law “does not relate to or significantly 

affect prices.”34 However, this argument ignores the fact that either the air carrier will be 

forced to absorb the price of the Fee, or pass it on to the shipper customer as part of the 

total amount paid by the shipper. Because of the Freight Fee Law air carriers must 

expend internal resources to bill, collect and remit the Freight Fee, all of which goes to 

the financial bottom line of the carrier and will ultimately be passed on to customers (if 

not initially when the Fee is imposed). 

 The State contends that Buck v. American Airlines, Inc., 476 F.3d 29 (1st Cir. 

2007), has no application here because there the underlying fees and taxes were not 

 

34State Comments, at 7. 
-22- 

preempted by the ADA.35 This assertion ignores the fact that Buck did not involve stateimposed fees or taxes. Rather, the subject fees and taxes were authorized under federal 

law (passenger facility charges, customs fees, and APHIS) or a foreign government. 

Furthermore, the State fails to acknowledge the critical aspect of Buck as it relates to this 

case: namely, the court’s recognition that when an air carrier is required to collect 

government-imposed fees, such fees are “related” to the price charged by that carrier for 

air transportation. Specifically, the First Circuit emphasized that “[a]lthough the fees are 

in one sense separate from the base fare, the two are inextricably intertwined” because 

“an air traveler’s concern is with the overall cost of his or her ticket.” Id. at 35. Similarly 

here, a shipper of freight to Hawaii is concerned with the “overall cost” to transport the 

freight to Hawaii. How much of the charge is for the air transportation – and how much 

for the State-imposed inspection fees – is of no moment. As in Buck, when air carriers 

serving Hawaii establish their prices, they “must take cognizance of any surcharges that 

will be imposed by operation of law.” Id. An “airline must account for the fees when 

setting its own rates.” Id. at 36. 

 In trying to defend its Freight Fee Law the State attempts to conjure up a “parade 

of horribles” by contending that under “the ATA’s reasoning any fee imposed by an 

airport would violate the [ADA] by potentially impacting the ‘overall cost’ of a ticket.”36

 

The fallacy of this argument is patent. It does not acknowledge the fact that a subsection 

of the ADA – 49 U.S.C. § 41713(b)(3) – authorizes airports to impose reasonable fees on 

airlines for use of the airport (i.e., terminal rents and landing fees). Subsection 

 

35State Comments, at 9. 

36Id. 
-23- 

41713(b)(3) states that the prohibition against a State “enact[ing] or enforc[ing] a law . . . 

related to a price, route, or service of an air carrier . . . does not limit a State, or political 

authority of at least 2 States that owns or operates an airport served by an air carrier . . . 

from carrying out its proprietary powers and rights.” This section permits States which 

own airports to impose reasonable airport-related fees on air carriers for the use of that 

airport. ATA v. DOT, 613 F. 3d 206, 216 (D.C. Cir. 2010) (the ADA “contains an 

exception allowing an airport authority, notwithstanding other provisions of the Act, to 

‘carry[] out its proprietary powers and rights,” which includes the ability “to charge” 

airlines “reasonable fees”). However, the “proprietary powers and rights” exception in 

the ADA is expressly limited to airports: it does not apply to non-airport-related fees – 

such as the Hawaiian Freight Fee. 

 2. The Freight Fee Law Relates to Air Carrier Services. 

 The State’s argument that its Freight Fee Law is not “related to” any service 

provided by airlines is especially meritless. Common sense alone demonstrates that the 

State had decided to mandate that the airlines introduce and offer a new service: namely, 

the service of billing, collecting and remitting the Freight Fee on behalf of Hawaii. The 

airlines that are subject to the Freight Fee Law are being required to perform a service by 

having to bill, collect and remit the Freight Fee from each shipper customer, or else face a 

per-transaction fine of at least $50. 

 The State contends that the term “service” in the ADA should be confined to 

“origins and destinations of the point-to-point transportation of passengers, cargo, or 

mail.”37 For this narrow reading of “service” the State relies on the Ninth Circuit 

 

37State Comments, at 12. 
-24- 

decisions in Charas v. Trans World Airlines, Inc., 160 F.3d 1259 (1998), and Duncan v. 

Northwest Airlines, Inc., 208 F.3d 1112 (2000). Notably, both cases preceded the 

Supreme Court’s decision in Rowe, 552 U.S. 364. 

Following Rowe, the Second Circuit Court of Appeals in 2008 rejected a similar 

argument as that made by the State here as to the definition of “services” under the ADA. 

In ATA v. Cuomo, 520 F.3d 218, 223 (2d Cir. 2008), the court stated that a “majority of 

the circuits, to have construed ‘service’ have held that the term refers to the provision or 

anticipation provision of labor from the airline to its passengers and encompasses matters 

such as boarding procedures, baggage handling, and food and drink – matters incidental 

to and distinct from the actual transportation of passengers.” The Second Circuit noted 

that the Third and Ninth Circuits had defined “service” more narrowly, but labeled that 

approach as “inconsistent with the Supreme Court’s recent decision in Rowe,” where the 

Court “necessarily defined ‘service’ to extend beyond prices, schedules, origins, and 

destinations.” Id.; see also Hanni v. American Airlines, Inc., No. C 08-00732 CW, 2008 

WL 1885794, *6 (N.D. Cal. April 25, 2008) (“As the Second Circuit recently noted, the 

Ninth Circuit’s definition of ‘service’ in Charas does conflict with the Supreme Court’s 

subsequent opinion in Rowe, which ‘necessarily defined “service” to extend beyond 

prices, schedules, origins, and destinations’”).38

 

38The tort law context of Charas – in contrast to the economic regulation context here – also 

should be considered because it even further demonstrates that the Charas case should have no 

application here. The key aspect of that decision was the Ninth Circuit’s ruling that the ADA 

does not “immunize the airlines from liability for personal injuries caused by their tortious 

conduct.” 160 F.3d at 1266. “It was in this context that the Charas court held that ‘service’ does 

not refer to the pushing of beverage carts, keeping the aisles clear of stumbling blocks, the safe 

handling and storage of luggage, assistance to passengers in need, or like functions.” Hanni, 

supra, at * 6. The issues presented by the Hawaiian Freight Fee have no relationship to the 

ability of an injured passenger to recover under tort laws. 
-25- 

 In Rowe, the Maine law regarding delivery of tobacco products was prohibited by 

the equivalent of the ADA for the trucking industry because the state law would “require 

carriers to offer a system of services that the market does not now provide (and which 

carriers would prefer not to offer).” 552 U.S. at 372. Similarly here, the Freight Fee 

Law, as applied to air carriers, requires air carriers to offer a service – namely the billing, 

collection and remittance of the Freight Fees – which the market did not provide and 

which the carriers would prefer not to offer. Just as the Maine law substituted the state’s 

“own governmental commands for ‘competitive market forces’ in determining (to a 

significant degree) the services that motor carriers will provide” (id.), the Hawaii Freight 

Fee Law substitutes Hawaii’s governmental commands for competitive market forces in 

determining that air carriers must provide the service of billing, collecting and remitting 

the Freight Fee from their customers. Thus, the improper result in Rowe was that 

“carriers will have to offer tobacco delivery services that differ significantly from those 

that, in the absence of regulation, the market might dictate.” Id. And similarly here, air 

carriers serving Hawaii must offer billing, collection and remittance services that differ 

significantly from that that which, in the absence of regulation, the market might dictate. 

See also Tanen v. Southwest Airlines Co., 187 Cal. App. 4th 1156, 1170, 114 Cal. Rptr. 

3d 743, 753 (2010) (ADA preempted suit by airline customer challenging expiration date 

of travel gift certificates because otherwise the airline would be required by state law “to 

offer services that it did not provide, i.e., travel certificates that could be used at any 

time”). 

 The State also argues that ADA preemption should not apply here because, 

according to the State, the Freight Fee Law does not impose a “broad and intrusive 
-26- 

regulatory scheme” on the air carriers flying to Hawaii.39 This argument should be 

rejected because it is contrary to the un-refuted record evidence in the ATA Opening 

Comments (pp. 8-17) that the Freight Fee Law imposes an onerous financial and 

administrative burden on the carriers subject to the Law. See also Suppl. Cohen Decl., 

Exhibit A hereto. 

 Even assuming, arguendo, that the burden imposed on air carriers by the Freight 

Fee Law was deemed to be de minimis that would not be determinative. The amount of 

the privilege fee in Tinicum was not particularly large ($.03 per 1,000 pounds or part 

thereof of approved maximum landing weight).40 But once the precedent was established 

for the township to impose that fee, there was no way to preclude an increase in the fee. 

Similarly here, if Hawaii is allowed to proceed with its requirement that airlines bill, 

collect and remit the Fee, there is nothing to stop the State from increasing the amount of 

the Fee or the penalty to be imposed on air carriers that fail to bill, collect and remit the 

Fee. In addition, looking solely at the burden imposed by the Hawaiian Freight Fee fails 

to consider the fact that the Department’s ruling upholding the Freight Fee Law as 

applied to air carriers would give all 50 states (and municipal and county governments) 

carte blanche to mandate that airlines perform one of their governmental functions. A 

Department ruling upholding the Hawaiian Freight Fee Law would establish a dangerous 

precedent for states and local governments to obligate airlines to perform state and localgovernment functions for free. 

 

39State Comments, at 7. 

40582 F.3d at 484. 
-27- 

 Indeed, the argument by the State regarding the level of burden that the Freight 

Fee Law imposes on air carriers misses the point for the same reason that a similar 

argument was rejected by the Supreme Court in Rowe. In an important passage, the 

Court in Rowe stated: 

Maine replies that the regulation will impose no significant additional 

costs upon carriers. But even were that so (and the carriers deny it), 

Maine’s reply is off the mark. As with the recipient-verification 

provision, the “deemed to know” provision would freeze in place and 

immunize from competition a service-related system that carriers do not 

(or in the future might not) wish to provide . . . . To allow Maine to insist 

that the carriers provide a special checking system would allow other 

States to do the same. And to interpret the federal law to permit these, 

and similar, state requirements could easily lead to a patchwork of state 

service-determining laws, rules, and regulations. That state regulatory 

patchwork is inconsistent with Congress’ major legislative effort to leave 

such decisions, where federally unregulated, to the competitive 

marketplace. 

Id. at 373 (emphasis added). 

 Similarly, Hawaii’s argument that the Freight Fee Law will impose no significant 

additional costs upon carriers, besides being factually incorrect, “is off the mark.” 

Retention of the Freight Fee Law will freeze in place and immunize from competition a 

service-related system that carriers do not wish to provide. To allow Hawaii to insist that 

carriers provide a service in billing, collecting and remitting the fee would allow other 

states to do the same. And, to interpret federal law to permit such requirements could 

easily lead to a patchwork of state service-determining laws, rules and regulations which 

is inconsistent with Congress’ major legislative purpose to leave such decisions to the 

competitive marketplace. 
-28- 

 The State asserts that the Freight Fee Law helps to protect Hawaii “from the 

unchecked spread of non-native invasive species.”41 However, that is no different than 

the State of Maine’s assertion in Rowe that the delivery-service requirements were critical 

for protecting the health of state residents against the ills of tobacco. In neither case is 

the state motivation relevant. See Rowe, at 374 (“Despite the importance of the public 

health objective, we cannot agree with Maine that the federal law creates an exception on 

that basis”). It is merely an argument that the end justifies the means. 

 The Court in Rowe pointed to the fact that the “state statutes require motor carrier 

operators to perform certain services, thereby limiting their ability to provide 

incompatible alternative services; and they do so simply because the State seeks to enlist 

the motor carrier operators as allies in its enforcement efforts.” 552 U.S. at 376 

(emphasis added). “Given these circumstances, from the perspective of preemption, this 

case is no more ‘borderline’ than was Morales.” Id. Similarly here, Hawaii is requiring 

that air carriers provide billing, collection and remittance services “thereby limiting their 

ability to provide incompatible alternative services; and they do so simply because 

[Hawaii] seeks to enlist [the air carriers] as allies in its enforcement efforts.” Id. at 376. 

 The Second Circuit in Cuomo recognized that if New York State were allowed to 

impose its own state bill of passenger rights law, it would threaten to create “the same 

patchwork of state service-determining laws, rules, and regulations that concerned the 

Court in Rowe.” 520 F.3d at 223-24. Similarly here, if Hawaii is allowed to require air 

carriers to bill, collect and remit freight inspection fees (under threat of significant 

monetary sanctions) it will threaten to create “the same patchwork of state-service 

 

41State Comments, at 1. 
-29- 

determining laws, rules, and regulations” in the area of inspections that each of the 50 

states believes is important for the health and well being of its respective citizens.42

 3. The Freight Fee Law Relates to Air Carrier Routes.

 As set forth in the ATA’s Opening Comments, the Freight Fee and the associated 

fines also relate to the “route” of the air carrier because the Freight Fee only applies to 

flights to Hawaii and the financial and administrative burden imposed by the new law 

will impact whether and how the carrier chooses to serve the Hawaiian market.43

 

 In its Comments, the State contends that ATA’s “assertion that the Freight 

Inspection Fee Inspection Law will significantly impact air carrier routes ignores the fact 

that airport fees already vary from airport to airport.”44 Once again, this argument ignores 

the exception in the ADA for airports to charge reasonable fees as part of their 

proprietary powers. Obviously, what is reasonable for one airport to charge may not be 

reasonable for another airport. 

CONCLUSION

 For the reasons set forth above and in ATA’s Opening Comments, the ATA’s 

Petition for Declaratory Order should be granted and the Department should and rule that 

the Hawaiian Freight Fee Law, as applied to air carriers, is preempted and prohibited by 

the Anti-Head Tax Act and the Airline Deregulation Act. 

 

42In United Parcel Services, Inc. v. Flores-Galarza, 318 F.3d 323 (1st Cir. 2003) , the court held 

that the ADA preempted a Puerto Rico law which required air carriers to withhold delivery of 

packages unless the recipient produced a certificate of compliance with obligation to pay state 

excise taxes. Just as Puerto Rico could not require that air carriers provide the service of 

verifying that their consignees had complied with state excise tax laws, Hawaii cannot mandate 

that air carriers provide the service of ensuring that shippers pay the inspection fees required by 

the State. 

43ATA Opening Comments, at 39-40.