Court Opinion

ID: 9480198
Source: CourtListenerOpinion
Date Created: 2023-08-05 07:41:04.613401+00
Date Added: 2024-06-11T17:47:32.573684
License: Public Domain

E. GRADY JOLLY, Circuit Judge,
dissenting:
With respect for the majority’s view, I dissent, because, first, the contract in this case does not call into question the constitutionality of Alabama’s jet fuel tax. Second, even if we must consider the constitutionality of this tax, a non-discriminatory property tax that applies equally to sales, consumption and storage of all jet fuel is plainly not prohibited by the constitution’s Import-Export Clause simply because some of the taxed fuel is exported.
The majority opinion summarily concludes that the language of the contract at issue “necessarily calls into question the constitutionality of the Alabama tax.” The majority reads the provision “legally required to be paid” to mean duly or properly imposed in accordance with law. It reaches this interpretation although admitting that “it was probably never in the contemplation of these parties that they were facing or were even close to a constitutional problem.” Maj. op. at 819. The phrase “legally required to be paid” should be read as simply an awkward expression for *822“payable by law.” This reading would effect the parties’ stated intent to shift “product taxes, fees or charges imposed [by government entities] on the Delivering Party [LL & E]” to the receiving party, Pilot, without also passing on extra-legal charges arbitrarily imposed by port authorities. . Because the jet fuel tax was required by a duly enacted law of the state of Alabama, the contract clearly placed the cost on Pilot. In short, the majority gives the contract an artificial reading to reach the constitutional question, which is contrary to the general proposition that we should avoid constitutional issues when there are non-constitutional grounds upon which the case can be decided. Matter of Hipp, Inc., 895 F.2d 1503, 1509 (5th Cir.1990) (cases cited therein).
Even if the contract requires that we consider the constitutionality of the tax, the majority erred in concluding that “the Import-Export Clause was specifically intended to prevent the type of taxation involved in this case.” Maj. op. at 820. In reaching its conclusion, the majority reviews the past and recent history of the Clause and observes that the Supreme Court has not explicitly addressed the Clause’s application to direct taxes on goods “in transit.” The Court’s recent decisions, however, make clear that even a tax operating directly on goods “in transit” is not prohibited if it is non-discriminatory and does not frustrate the policies underlying the Clause. Alabama’s tax is unquestionably non-discriminatory; it applies equally to all fuel sold or handled for use by anyone, domestically or for export. “Failure to assess the tax would shift the tax burden from [the exporter] and the ultimate consumers of its ... products to the local taxpayers of [Alabama] — a result completely at odds with Michelin." R.J. Reynolds Tobacco Co. v. Durham County, N.C., 479 U.S. 130, 107 S.Ct. 499, 514, 93 L.Ed.2d 449 (1986) (nondiscriminatory ad valorem tax that applied to imported tobacco not prohibited by Clause because it “is nothing more than a means ‘by which a State apportions the cost of such services as police and fire protection among the beneficiaries according to their respective wealth.’ ”) Id., citing Michelin, 423 U.S. 276, 287, 96 S.Ct. 535, 541, 46 L.Ed.2d 495 (1976).
Contrary to the majority’s conclusion, Alabama’s tax does not frustrate the three policies underlying the Import-Export Clause: federal revenue collection, unitary federal foreign economic policy and interstate commercial harmony. There can be no interference with federal revenue collection because the federal government may not tax exports. U.S. Const., Art. I, § 9. Although all property or excise taxes that fall on imports and exports in some sense affect foreign economic policy,
it is obvious that such nondiscriminatory property taxation can have no impact whatsoever on the Federal Government’s exclusive regulation of foreign commerce, probably the most important purpose of the Clause’s prohibition. By definition, such a tax does not fall on [exports] as such because of their place of [destination]. It cannot be used to create special protective tariffs or particular preferences for certain domestic goods, and it cannot be applied selectively to encourage or discourage any [exportation] in a manner inconsistent with federal regulation.
Michelin Tire Corp. v. Wages, 423 U.S. 276, 286, 96 S.Ct. 535, 541, 46 L.Ed.2d 495 (1976).
Finally, although “allowance of nondiscriminatory ad valorem property taxation may increase the cost of goods purchased by ‘inland consumers’ ... such taxation is the quid pro quo for benefits actually conferred by the taxing state.” Michelin, 423 U.S. at 288-89, 96 S.Ct. at 542. The majority is surely correct that most oil exports are by tanker and that only coastal states can tax this form of commerce; by the same token it is only coastal states that bear the regulatory, administrative and, increasingly, environmental, costs of this commerce. The Framers did not intend such states to bear all these costs, and this nondiscriminatory tax imposed at the Mobile, Alabama port on fuel, which happened *823to be exported, is not unconstitutional, therefore respectfully dissent. I