Opinion ID: 1867810
Heading Depth: 1
Heading Rank: 2

Heading: the hub exemption and procedural history

Text: ถ 3 In 2001 the legislature enacted an absolute exemption from ad valorem taxation for any air carrier that operates a hub facility in Wisconsin. Wis. Stat. งง 70.11(42) and 76.02(1) (2003-04). [2] The legislature defined a hub facility in two ways: a. A facility at an airport from which an air carrier company operated at least 45 common carrier departing flights each weekday in the prior year and from which it transported passengers to at least 15 nonstop destinations, as defined by rule by the department of revenue, or transported cargo to nonstop destinations, as defined by rule by the department of revenue. b. An airport or any combination of airports in this state from which an air carrier company cumulatively operated at least 20 common carrier departing flights each weekday in the prior year, if the air carrier company's headquarters, as defined by rule by the department of revenue, is in this state. Wis. Stat. ง 70.11(42)(a)2. [3] ถ 4 The legislature then provided in Wis. Stat. ง 76.02(1) that `[a]ir carrier company' means any person engaged in the business of transportation in aircraft of persons or property for hire on regularly scheduled flights, except an air carrier company whose property is exempt from taxation under s. 70.11(42)(b).  (Emphasis added.) ถ 5 As this provision implies, the hub exemption is not limited to property physically located at an air carrier's hub facility. Instead, the exemption extends to all [p]roperty owned by an air carrier company that operates a hub facility in this state, if the property is used in the operation of the air carrier company. Wis. Stat. ง 70.11(42)(b). ถ 6 Midwest Airlines, Inc. (Midwest) and Air Wisconsin Airlines Corp. (Air Wisconsin) qualified for the exemption in 2002. Midwest operated a hub facility as defined by the first test, the Single Airport hub exemption; Air Wisconsin operated a hub facility as defined by the second test, the Headquarters hub exemption. The Legislative Fiscal Bureau estimated that in 2002 the hub exemption relieved Midwest of nearly $2 million in ad valorem taxes, and relieved Air Wisconsin of nearly $600,000 in ad valorem taxes. Legislative Fiscal Bureau, Tax Exemption for Air Carriers with Hub Terminal Facilities (DOTโ Transportation Finance), Paper # 899 to Joint Committee on Finance, at 2-3 (May 29, 2001) (hereinafter Legislative Fiscal Bureau Paper # 899). ถ 7 Northwest received its 2002 ad valorem tax assessment on October 10, 2002, and filed a summons and complaint for re-determination of its assessment in the Dane County Circuit Court on November 11, 2002. Northwest claimed the hub exemption violated (1) the Interstate Commerce Clause, Article I, Section 8 of the United States Constitution; (2) the Equal Protection Clause, Amendment XIV, Section 1 of the United States Constitution; and (3) the Uniformity Clause, Article VIII, Section 1 of the Wisconsin Constitution. ถ 8 The named defendant, the Wisconsin Department of Revenue (DOR), filed a motion to dismiss because, inter alia, Northwest had failed to serve DOR within 30 days of receiving the assessment notice. On the same day, June 13, 2003, Northwest filed a motion for summary judgment, requesting that the circuit court declare the hub exemption unconstitutional. ถ 9 The circuit court granted in part the DOR's motion to dismiss. The court held that Wis. Stat. ง 76.08(1) required Northwest to serve DOR with a copy of the summons and complaint within 30 days of receiving an assessment notice and that Northwest failed to do so. Northwest did not serve DOR until January 13, 2003. Accordingly, the circuit court held that Northwest was not entitled to a re-determination of its 2002 ad valorem tax assessment and that this denial of re-determination did not deprive Northwest of its due process right to meaningful retrospective relief. ถ 10 In addition, the circuit court ruled on Northwest's summary judgment motion. The court held that the hub exemption was a facial violation of the dormant Commerce Clause because it benefited in-state air carriers while imposing an extra burden on out-of-state air carriers. The court also concluded that the hub exemption could be severed from the ad valorem tax scheme, allowing the ad valorem tax to be imposed upon all air carriers. ถ 11 Both Northwest and DOR appealed. Northwest appealed the circuit court's holdings that (1) the hub exemption was severable; (2) Wis. Stat. ง 76.08(1) required it to serve DOR with a copy of the summons and complaint within 30 days; and (3) the denial of the re-determination claim did not violate Northwest's due process right to meaningful retrospective relief. DOR cross-appealed the circuit court's holding that the hub exemption violates the dormant Commerce Clause. ถ 12 Faced with the prospect of having to pay the ad valorem tax, Midwest filed a motion to intervene. The circuit court granted Midwest leave to intervene but would not reconsider its constitutional ruling. On appeal, Midwest challenges the circuit court's holdings that (1) the hub exemption is severable; and (2) the hub exemption violates the dormant Commerce Clause. Midwest contends that a federal statute, 49 U.S.C.A. ง 40116 (2000 & West Supp.2005), forecloses review of the constitutionality of the hub exemption under the dormant Commerce Clause. DOR joins Midwest in this argument. ถ 13 The parties also ask us to determine whether the hub exemption violates either the Equal Protection Clause or the Uniformity Clause even though the circuit court reached neither issue. ถ 14 We conclude: (1) 49 U.S.C.A. ง 40116 precludes dormant Commerce Clause review of the hub exemption; (2) the hub exemption does not violate the Equal Protection Clause of the United States Constitution; and (3) the hub exemption does not violate the Uniformity Clause of the Wisconsin Constitution. Because we have determined that the hub exemption is valid, we need not reach the questions associated with whether Northwest complied with the procedural requirements for re-determination of its assessment. Accordingly, we reverse the circuit court's decision that the hub exemption violates the dormant Commerce Clause.