Court Opinion

ID: 9490344
Source: CourtListenerOpinion
Date Created: 2023-08-05 13:40:34.403213+00
Date Added: 2024-06-11T17:54:02.580984
License: Public Domain

MAYER, Circuit Judge,
dissenting.
Because in my view the Harbor Maintenance Tax (HMT) is a user fee, it does not violate the Export Clause of the Constitution.
Statutes are presumed constitutional. Fairbank v. United States, 181 U.S. 283, 285, 21 S.Ct. 648, 649, 45 L.Ed. 862 (1901). We must “not lightly assume that Congress intended to infringe constitutionally protected liberties or usurp power constitutionally forbidden it.” Edward J. DeBartolo Corp. v. Florida Gulf Coast Bldg. & Constr. Trades Council, 485 U.S. 568, 575, 108 S.Ct. 1392, 1397-98, 99 L.Ed.2d 645 (1988). Indeed, courts must strive to avoid constitutional questions. See NLRB v. Catholic Bishop of Chicago, 440 U.S. 490, 500-01, 99 S.Ct. 1313, 1318-19, 59 L.Ed.2d 533 (1979) (courts are required to choose any reasonable construction of a statute that would eliminate the need to confront a contested constitutional issue); Hooper v. California, 155 U.S. 648, 657, 15 S.Ct. 207, 211, 39 L.Ed. 297 (1895) (courts must resort to “every reasonable construction ... in order to save a statute from unconstitutionality”). Thus, “where an otherwise acceptable construction of a statute would raise serious constitutional problems, the Court will construe the statute, to avoid such problems unless such construction is plainly contrary to the intent of Congress.” DeBartolo, 485 U.S. at 575, 108 S.Ct. at 1397.
In light of these mandates, the question is whether the HMT is a tax or duty within the proscription of the Export Clause or whether it is a permissible user fee. Generally, a tax is enacted to raise revenue “to go to the general support of the government,” see Head Money Cases, 112 U.S. 580, 596, 5 S.Ct. 247, 252, 28 L.Ed. 798 (1884), while a user fee is designed as a specific charge for the use of government facilities and services, see Commonwealth Edison Co. v. Montana, 453 U.S. 609, 621, 101 S.Ct. 2946, 2955, 69 L.Ed.2d 884 (1981). If it is the latter, we avoid the sticky question whether the assessment violates the Export Clause. So, we must construe the HMT as a user fee, if reasonable to do so, unless it is “plainly contrary to the intent of Congress.” DeBartolo, 485 U.S. at 575, 108 S.Ct. at 1397.
*1578Congress thought it was enacting a user fee. It is true that the statute calls the HMT a tax and that it resides in the Internal Revenue Code. It is equally true, however, that the HMT is levied on “port use.” The label is not dispositive; we must dig deeper. See Head Money Cases, 112 U.S. at 595-96, 5 S.Ct. at 252-53 (“[T]he act is not void because, within a loose and more extended sense than was used in the Constitution, it is called a tax.”); Pace v. Burgess, 92 U.S. 372, 375, 23 L.Ed. 657 (1875); see also Fairbank, 181 U.S. at 304, 21 S.Ct. at 656-57 (courts analyze things, not names).
“In determining the meaning of the statute, we look not only to the particular statutory language, but to the design of the statute as a whole and to its object and policy.” See Crandon v. United States, 494 U.S. 152, 158, 110 S.Ct. 997, 1001, 108 L.Ed.2d 132 (1990). The object and policy of the HMT help to reveal its true identity. The Senate Report states: “The taxes and fees in this legislation are not for the purpose of raising revenue. Rather, they are to repay costs related directly to the servicing of commerce. These fees and taxes offset services rendered to vessels. The provision of a new, deeper channel is as much a service rendered to the shipper as pilotage, dockage, or wharfage.”1 S.Rep. No. 99-126, at 7 (1985), reprinted in 1986 U.S.C.C.A.N. 6639, 6644. The House Report similarly states that the HMT is “a charge on use by a commercial vessel of a harbor or channel (‘port’) in the United States for the loading or unloading of commercial cargo on or from the vessel.” H.R.Rep. No. 99-228, at 1 (1986), reprinted in 1986 U.S.C.C.A.N. 6705, 6706 (emphasis added). In fact, the legislative history refers repeatedly to the HMT as being based on use. See, e.g., id. at.l, reprinted in 1986 U.S.C.C.A.N. at 6706 (“Harbor (Port) User Charges”); H.R. Conf. Rep. No. 99-1013, at 228 (1986), reprinted in 1986 U.S.C.C.A.N. 6723, 6740 (“Port Use Tax”); S.Rep. No. 99-126, at 2, reprinted in 1986 U.S.C.C.A.N. at 6640 (“user taxes”); id. at 135, reprinted in 1986 U.S.C.C.A.N. at 6705 (additional views of Sen. Lautenberg) (“user fee”).
Moreover, the HMT was enacted as part of the Water Resources Development Act of 1986, Pub.L. No. 99-662, 100 Stat. 4082(Act), “comprehensive” legislation that addressed myriad problems in the federal water resources development program. See S.Rep. No. 99-126, at 3, reprinted in 1986 U.S.C:C.A.N. at 6641. “Historically, the Federal Government ha[d] financed the full cost of designing, constructing, rehabilitating, maintaining, and operating the ... coastal harbors of the United States.” Id. at 6, reprinted in 1986 U.S.C.C.AN. at 6643-44. Yet, the law did not “impose Federal user fees or charges on the beneficiaries of these expenditures.” H.R.Rep. No. 99-228, at 5, reprinted in 1986 U.S.C.C.A.N. at 6709. Congress found that traditional harbor maintenance policy would “not meet national needs” because it was “unlikely that the Federal Government [would] finance the construction of such port improvements.” S.Rep. No. 99-126, at 8, reprinted in 1986 U.S.C.C.A.N. at 6646. As the House Report explains: “[A]dditional Federal investment is needed for operations and maintenance of U.S. channels and harbors (ports) in order to improve and maintain such ports for waterborne commerce. Such additional investment in U.S. ports will facilitate economic development and make the Nation’s water transportation system more efficient.” H.R.Rep. No. 99-228, at 5, reprinted in 1986 U.S.C.C JLN. at 6709.
Importantly, Congress found that these needs were “clearly commercial.” S.Rep. No. 99-126, at 6, reprinted in 1986 U.S.C.C.A.N. at 6644 (emphasis added). It decided “that a portion of Federal expenditures needed for port operations and maintenance should be borne by the direct beneficiaries of such expenditures,” commercial users. H.R.Rep. No. 99-228, at 5, reprinted in 1986 U.S.C.C.A.N. at 6709 (emphasis added). Congress targeted commercial users to help shoulder the fiscal burden of operations and maintenance costs for harbors and inland waterways because they are the parties who enjoy their benefits. The government “has an obvious interest in making those who *1579specifically benefit from its services pay the cost.” Massachusetts v. United States, 435 U.S. 444, 462, 98 S.Ct. 1153, 1165, 55 L.Ed.2d 403 (1978).
One of Congress’ primary difficulties, however, was deciding how to craft a user fee to “help defray the costs of maintaining new harbors deeper than 45 feet.”2 S.Rep. No. 99-126, at 10, reprinted in 1986 U.S.C.C.A.N. at 6647. “In recent years, the Committee considered a variety of proposals involving harbor maintenance. These ranged from diverting a portion of customs revenues for harbor work to port-by-port maintenance fees to more studies. The debate in some cases is between high maintenance harbors and low maintenance harbors; in others it is between large ports and small ports; or between bulk cargo and containerized cargo ports.” Id. at 9, reprinted in 1986 U.S.C.C.A.N. at 6646. In fact, the Senate Subcommittee on Water Resources held twenty-six hearings over three Congresses and more than four years on the Act. Id. at 116, reprinted in 1986 U.S.C.C.A.N. at 6688. Ultimately, it opted to impose a nationally-uniform fee on the “value of the cargo passing through harbors.” Id. at 9, reprinted in 1986 U.S.C.C.A.N. at 6646; see also id. at 111-12, reprinted in 1986 U.S.C.C.A.N. at 6684. The House Report explains that “the ad valorem basis of the charges is the only acceptable basis on which to impose such charges. This national, uniform basis minimizes any possible competitive disadvantages among cargo types and U.S. ports which otherwise might result from user charges.” H.R.Rep. No. 99-228, at 5-6, reprinted in 1986 U.S.C.C.A.N. at 6710.
Critically, Congress mandated that fees collected from the HMT be used only for commercial navigation projects.3 Monies in the Harbor Maintenance Trust Fund (HMTF) may be used only to pay (1) for the operations and maintenance costs of the United States portion of the St. Lawrence Seaway, and for the eligible operations and maintenance costs “assigned to commercial navigation of all harbors and inland harbors within the United States,” 33 U.S.C. § 2238(a) (1994) (emphasis added), referenced in 26 U.S.C. § 9505(c)(1) (1994); and (2) for all of the expenses of administering the HMT incurred by the Departments of Treasury and Commerce and the U.S. Army Corps of Engineers, up to $5,000,000 per fiscal year, 26 U.S.C. § 9505(c)(3).4 So, HMT charges, collected from commercial users, may only be expended for harbor operations and maintenance costs incurred on their behalf.
The government has been true to this constraint. In its initial report to Congress on the HMTF’s status, the government explained that operations and maintenance costs for commercial navigation were accounted for in the “Corps of Engineers Management Information System.” First Annual Report to Congress on the Status of the Harbor Maintenance Trust Fund for Fiscal Years 1987 — 1992 at 2, ¶ 6 [hereinafter First Report ]. In deciding which expenditures were reimbursable, the government recognized that some projects have both a “commercial navigation” purpose and some other purpose, such as recreation, hydropower, or flood control. Id. at 3, ¶ 7. All operations and maintenance expenditures made for single purpose commercial navigation projects were considered subject to reimbursement from the HMTF. Id. In contrast, on joint *1580purpose projects, the government allocated costs to the project’s different purposes in proportion to the benefits realized for each purpose, recovering only the commercial navigation costs. Id,.; see also Second Animal Report to Congress on the Status of the Harbor Maintenance Trust Fund for Fiscal Year 1993 at 1-2, ¶ 4 (indicating continued compliance) [hereinafter Second Report ]. This ensures that HMT funds collected from commercial users are spent for their benefit.
In sum, it surely does not violate Congress’ intent to construe the HMT as a user fee. The question is whether it is reasonable to interpret it that way. In analyzing whether a particular charge constitutes a user fee, the Court has asked whether it: (1) discriminates against the constitutionally-protected interest; (2) is based on some fair approximation of the use of some system; and (3) is structured to produce revenue fairly apportioned to the total cost to the government of the benefits conferred. Massachusetts, 435 U.S. at 464, 98 S.Ct. at 1165-66; EvansvilleVanderburgh Airport Auth. Dist. v. Delta Airlines, Inc., 405 U.S. 707, 716-17, 92 S.Ct. 1349, 1355-56, 31 L.Ed.2d 620 (1972).
First, the HMT does not discriminate against exporters. Indeed, the trial court did not hold to the contrary; it simply bypassed the issue and ruled the HMT a tax based on the second and third prongs of the Massachusetts test. The HMT is levied against commercial users of United States ports and harbors, including exporters, importers, domestic shippers, and passenger carriers (except ferries, as defined). Congress found these groups to be the principal beneficiaries of harbor operations and maintenance projects. It also required that HMT monies be expended only for their benefit. That the statute exempts some harbor users from payment does not render the HMT discriminatory against exporters. Some exempted users, like recreational users, do not and would not benefit from operations and maintenance projects funded by the HMT because those projects are commercial in nature. Requiring such users to pay the fee would be unfair. Congress made reasonable policy decisions to exempt other users, such as nonprofit organizations transporting humanitarian and development assistance cargo. 26 U.S.C. § 4462(h); see also id. § 4462(b) (exempting cargo transported within Alaska, Hawaii, or any United States possession, or between those locales and the United States mainland “because of the high dependence of these islands’ economies on waterborne commerce.” H.R.Rep. No. 99-228, at 6, reprinted in 1986 U.S.C.C.A.N. at 6710). These exemptions do not compromise the HMT’s non-discriminatory status.
Second, the HMT is based on a fair, if imperfect, approximation of exporters’ use of, or privilege to use, United States harbors and ports. When the government “applies user charges to a large number of parties, it probably will charge a user more or less than it would under a perfect user-fee system.” United States v. Sperry Corp., 493 U.S. 52, 61, 110 S.Ct. 387, 394, 107 L.Ed.2d 290 (1989). “Perfect uniformity and perfect equality of taxation, in all the respects in which the human mind can view it, is a baseless dream.” Head Money Cases, 112 U.S. at 595, 5 S.Ct. at 252. Consequently, the amount of a user fee need not be “precisely calibrated to the use that a party makes of Government services.” Sperry, 493 U.S. at 60, 110 S.Ct. at 394.
The government concedes that the HMT, like most user fees, is imperfect, but contends that it is a fair approximation of use. U.S. Shoe argues, and the court held, that this is wrong for four primary reasons: (1) all harbor users do not pay the fee, (2) there is no correlation between the charges collected at a particular port and expenditures for that port’s maintenance and operations, (3) low-value, bulk cargo importers and exporters use the port facilities to a greater extent than high-value, non-bulk cargo importers and exporters yet pay lower fees, and (4) the ad valorem nature of the fee does not accurately measure use. The first three, of course, are the precise concerns with which the legislature wrestled over three Congresses and more than four years. The fourth challenge is to what Congress found to be “the only acceptable basis on which to impose such charges” because it was “uniform” and “minimizes any possible competitive disadvantages among cargo types and U.S. ports *1581which otherwise might result from user charges.” H.R.Rep. No. 99-228, at 5-6, reprinted, in 1986 U.S.C.C.A.N. at 6710. “This was obviously the judgment of Congress and we [should] abide by it.” Sperry, 493 U.S. at 62, 110 S.Ct. at 395. Notwithstanding, I address each issue in turn.
For the same reasons that the HMT is not discriminatory, the fact that all users of our harbors and ports do not pay the fee does not mean it is an unfair approximation of use by those against whom the assessment is levied. See Evansville, 405 U.S. at 717-18, 92 S.Ct. at 1355-56 (upholding a user fee as a fair approximation of the use of the facilities for whose benefit they are imposed even though “a majority of the actual number of persons who use facilities of the airports involved” were exempt, because the exemptions were not “wholly unreasonable”). Nor is there merit to U.S. Shoe’s second argument that because fees collected at a particular port are not necessarily expended for operations and maintenance at that port, the fee is not a fair measure of use. This is an overly narrow view. Users do not benefit only from access to the particular ports they use. Every exporter has all ports and harbors available to it. Those that never use certain ports benefit from them “in the sense that [they] are available for their use if needed and in that” the provision of better harbor maintenance services “makes the [ports] safer for all users.” Massachusetts, 435 U.S. at 468, 98 S.Ct. at 1167-68; see also Sperry, 493 U.S. at 63, 110 S.Ct. at 395-96.
Finally, U.S. Shoe’s related third and fourth arguments do not establish that the HMT is not a fair approximation of use. Initially, there is great irony in the argument that the charge is unfair because high-value, non-bulk cargo carriers are assessed higher fees than low-value, bulk cargo shippers, yet allegedly “use” harbors to a lesser extent. Exporters generally ship low-value cargo, such as grain and coal, which is transported in bulk. See First Report at 3, ¶ 9. Importers, on the other hand, tend to ship high-value cargo, like electronics and automobiles, which is not shipped in bulk. Id. Consequently, exporters are generally assessed lower fees than importers, yet they purportedly “use” the harbors to a greater extent because of the bulk nature of their shipments. Thus, it is the exporters themselves who allegedly are not bearing their fair share.
In addition to the irony, U.S. Shoe’s argument is unpersuasive. First, not all bulk cargo is of low value, nor, undoubtedly, is all non-bulk cargo of high value. For example, some “high value” commodities, such as “petroleum,” are transported in bulk. Id. Thus, to say that the HMT is unfair because low-value cargo carriers use ports to a greater extent than high-value cargo carriers is not wholly accurate. Second, even if a high-value cargo shipper never requires the use of harbors deeper than forty-five feet, there is nothing in the record to support the notion that the only operations and maintenance projects undertaken with HMTF monies are deep-harbor dredging. Indeed, U.S. Shoe does not argue that projects financed with HMTF monies are so limited. While projects are limited to those that inure to the benefit of commercial users, the government has discretion to decide which projects those are. That some users, like exporters, transport some bulk products of lower value than some non-bulk products transported by other users, does not make the HMT a tax. Nor does its ad valorem structure.
It is beyond dispute that an ad valorem charge can be a user fee. See Sperry, 493 U.S. at 59-64, 110 S.Ct. at 393-96; Alamo Rent-A-Car, Inc. v. Sarasota-Manatee Airport Auth., 906 F.2d 516 (11th Cir.1990); see also Alamo Rent-A-Car, Inc. v. City of Palm Springs, 955 F.2d 30 (9th Cir.1992). Notwithstanding, U.S. Shoe attempts to distinguish Sperry and Alamo on the ground that the parties assessed the user fees in those cases were direct beneficiaries of the provided services. Here, it argues, the direct beneficiaries are the vessel owners, not the importers and exporters who pay the fee. There are two problems with this argument. First, it flies in the face of Congress’ finding that exporters are the direct beneficiaries. Congress decided that a portion of federal expenditures needed for port operations and maintenance should be borne by the direct beneficiaries of such expenditures, among *1582whom it obviously included exporters and importers. Second, the Court rejected a similar argument in Evansville. There, it held that it is not “particularly important whether the charge is imposed on the passenger himself, to be collected by the airline, or on the airline, to be passed on to the passenger if it chooses.” 405 U.S. at 714, 92 S.Ct. at 1354. Similarly, here it is unimportant whether the fee be assessed against exporters and importers, the ultimate beneficiaries of the harbor maintenance and operations projects, or against the actual vessel owner, to be passed on to the importers or exporters if it chooses.
Finally, the HMT is structured to produce revenue fairly apportioned to the total cost to the government of the benefits conferred. The relevant inquiry is whether Congress structured the HMT so that the monies collected under it are “fairly apportioned” to the government’s cost of providing commercial harbor maintenance services. U.S. Shoe argues, and the trial court held, that the HMT fails this prong for two primary reasons: (1) it funds projects yet to be commenced rather than reimbursing the government for completed projects, and (2) the HMTF has accumulated a large surplus. The first objection is misplaced; the second, while troubling, is unavailing.
Regardless of the factual accuracy of U.S. Shoe’s first concern,5 when viewed in light of the purposes for which the HMT was enacted, it is of little relevance that HMT monies might fund port operations and maintenance projects not completed, or even initiated, at the time of collection. The HMT is not a short-term fix to the myriad problems that plague our nation’s waterborne commerce. It is a long-term vehicle to improve and to maintain the harbors for the continuing benefit of United States commerce. Indeed, Congress expressly found that the fee will facilitate economic development. “[A] surplus of revenue over outlays in any one year can be offset against actual deficits of past years and perhaps against projected deficits of future years.” Massachusetts, 435 U.S. at 470 n. 25, 98 S.Ct. at 1168 n. 25 (emphasis added). The Eleventh Circuit has also recognized that user fees may be expended on future projects. In Alamo, it held that “given the long term nature of maintaining and developing an airport, it was appropriate ... to factor in future development plans when setting user fees.” 906 F.2d at 522. Thus, it is of little moment that HMT monies are purportedly expended to fund projects not yet started rather than to repay the government for services that have already been rendered.
Similarly, the fact that the HMTF enjoys, or perhaps suffers, a large surplus does not resolve whether Congress structured the HMT as a tax or a user fee. To be sure, the substantial surplus weighs against finding the HMT a user fee. But this does not, of itself, render it a tax. A closer look reveals that the HMT’s structure was not ill-conceived. From 1987 through 1990, during which the HMT was only 0.04% ad valorem and paid just 40% of eligible Corps costs, revenues and expenditures were closely aligned. See First Report at 6, ¶ 13. For example, in FY 1988, HMTF expenditures actually exceeded revenues by approximately $6 million, and the ending balance was just $9 million. Id.
Trouble began in 1991, when Congress increased the ad valorem rate to 0.125% in order to fund 100% of eligible Corps expenses and to reimburse the National Oceanic and Atmospheric Administration (NOAA) $45.5 million for its annual commercial navigation costs. While the revenue generated under the higher rate was only slightly less than projected, expenditures were considerably less, resulting in a growing HMTF surplus. Withdrawals from the HMTF were less than anticipated due primarily to (1) the absence of legislation authorizing NOAA to receive its commercial navigation costs, (2) *1583the fact that the Corps’ operations and maintenance budget was lower than had been projected in 1990 when the new ad valorem rate was established, and (3) withdrawals from the HMTF for improved administration and enforcement, while authorized, remained unappropriated. See, e.g., Second Report at 5, ¶ 10.
The surplus has certainly burgeoned in recent years as a result of these unforeseen decreases in projected expenditures, but that does not mean that the HMT’s structure shows it to be a tax. Congress is not prescient. In fact, the government recognizes that this is a problem about which something must be done. See Third Annual Report to Congress on the Status of the Harbor Maintenance Trust Fund for Fiscal Year 19% at 7, ¶ 16 (“The growing surplus in the HMTF remains. This can only be corrected by widening the authorized uses for HMTF monies, or by reducing the HMF [sic] to a level consistent with its annual expenditures.”). Congress has already amended the HMT statute once. There is no reason to believe that it will not correct the growing surplus. Until then, commercial users know that all HMT monies plus interest may only be expended for harbor operations and maintenance projects with commercial purposes. They may not be used for the general support of the government. See Northwest Airlines, Inc. v. County of Kent, 510 U.S. 355, 371-72, 114 S.Ct. 855, 865-66, 127 L.Ed.2d 183 (1994) (declining to decide whether an airport user fee, which had accumulated “huge surpluses,” was excessive under Evansville, in part because all fees collected had to be expended for the airport’s capital or operating costs, and the airlines challenging the fee had not suggested that the surplus was being used for any purpose other than airport-related expenses); Head Money Cases, 112 U.S. at 596, 5 S.Ct. at 253 (charges imposed on shipowners for each immigrant they brought into the United States, which were deposited into an “immigrant fund” appropriated in advance for the temporary care of passengers whom shipowners transported, was not a tax).
I would reverse the judgment of the Court of International Trade.

. Charges for harbor services like pilotage, wharfage, and dockage tire permissible. See generally Clyde Mallory Lines v. Alabama, 296 U.S. 261, 56 S.Ct. 194, 80 L.Ed. 215 (1935).

.Very few bays and estuaries have natural depths greater than 20 feet. S.Rep. No. 99-126, at 7, reprinted in 1986 U.S.C.C.A.N. at 6645. Yet the size of vessels has so increased that harbors forty-five feet deep are now "inadequate for many fully loaded tankers.” Id. at 8, reprinted in 1986 U.S.C.C.A.N. at 6645. Congress found that the constraints of these shallow harbors “add to the costs of importing crude oil and petroleum products," and that "[d]eeper draft harbors would facilitate the export of U.S. coal and, eventually, other bulk commodities, such as grain and ores.” Id.

. Interest earned on monies in the Harbor Maintenance Trust Fund (HMTF) also remains in the fund.

. 26 U.S.C. § 9505(c)(2) permits monies in the fund to be used to pay rebates of tolls or charges levied for use of the St. Lawrence Seaway, as required by 33 U.S.C. § 988a. Section 988a was amended in 1994, however, to waive the collection of tolls or charges on commercial vessels, instead of requiring commercial users to pay the toll or charge and then obtain a rebate. Pub.L. No. 103-331, § 339(a), 108 Stat. 2496.

. The First Report states that “the actual transfer of funds from the [HMTF] is for expenditures made in the previous fiscal year. In other words, FY 1990 expenditures are shown as transfers from the [HMTF] in FY 1991, and so forth. Corps expenditures are never made directly from the [HMTF], nor are transfers made on the basis of estimates or projections.” First Report at 3, ¶ 7. This indicates that FY 19xx projects are reimbursed from the HMTF with FY 19xx, or perhaps surplus, funds in FY 19xx+1.