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SALEM TRANSP. CO. OF NEW JERSEY v. PORT AUTH. OF N

June 21, 1985

SALEM TRANSPORTATION COMPANY OF NEW JERSEY, INC., METROPOLITAN LIMOUSINE SERVICE, INC. and SALEM TRANSPORTATION COMPANY, INC., Plaintiffs, against PORT AUTHORITY OF NEW YORK AND NEW JERSEY, Defendant.


The opinion of the court was delivered by: MACMAHON

MacMAHON, District Judge.

Plaintiffs, Salem Transportation Company of New Jersey, Inc., Metropolitan Limousine Service, Inc. and Salem Transportation Company, Inc. ("Salem"), move, pursuant to Rule 56, Fed.R.Civ.P., for partial summary judgment on the issue whether permit fees imposed by defendant Port Authority of New York and New Jersey ("Port Authority") violate 49 U.S.C. § 1513(a) and the Commerce Clause of the United States Constitution, Article 1, Section 3, Clause 8. Defendant Port Authority moves, also pursuant to Rule 56, for summary judgment dismissing the complaint.

 FACTS

 Plaintiffs are engaged in the business of transporting air passengers to and from and between the New York area metropolitan airports by means of ground transportation. Some passengers are transported from one airport to another according to agreements between plaintiffs and certain airlines.

 Port Authority, an agency of New York and New Jersey, created by an interstate compact, maintains various public terminals transportation and other facilities of commerce, including John F. Kennedy International Airport, LaGuardia Airport and Newark International Airport. It is within Port Authority's sole discretion to control the financing, construction, leasing charges, rates, tolls, contracts and operation of the air terminals.

 Although ground access to the terminals is free, anyone desiring to solicit business at the airports must pay a fee. A permit is normally granted upon agreement to pay a gross receipts fee, which in sometimes in addition to a fixed minimum charge. In return for gross receipts fees, the permittee receives (1) the right to manned counters and/or courtesy phones and to have its services sold through consolidated counters in all Port Authority operated terminals and in all airline operated terminals; (2) the right to use roadways in front of, and adjacent to, terminals and waiting/parking areas; (3) a number of airport promotion and advertising benefits and (4) identification as a Port Authority permittee.

 Starting in or about 1971, plaintiffs received certain permits from Port Authority which allowed plaintiffs to conduct their ground transportation operations at the airports in return for a fee based on a percentage of their gross receipts. The amount of permit fees depends on the number of passengers transported by plaintiffs and the price charged per passenger.

 DISCUSSION

 Plaintiffs first contend that the imposition of the gross receipts fee for transportation of air travel passengers violates 49 U.S.C. § 1513(a), which prohibits the imposition of a head tax by local or state governments either on passengers or on the carriage of such passengers in air commerce. Specifically, § 1513(a) provides:

 
(a) No State (or political subdivision thereof, including the Commonwealth of Puerto Rico, the Virgin Islands, Guam, the District of Columbia, the territories or possessions of the United States or political agencies of two or more States) shall levy or collect a tax, fee, head charge, or other charge, directly or indirectly, on persons traveling in air commerce or on the carriage of persons traveling in air commerce or on the sale of air transportation or on the gross receipts derived therefrom; except that any State (or political subdivision thereof, including the Commonwealth of Puerto Rico, the Virgin Islands, Guam, the District of Columbia, the territories or possessions of the United States of political agencies of two or more States) which levied a tax, fee, head charge, or other charge, directly or indirectly, on persons traveling in air commerce or on the carriage of persons traveling in air commerce or on the sale of air transportation or on the gross receipts derived therefrom prior to May 21, 1970, shall be exempt from the provisions of this subsection until December 31, 1973.

 The statute was enacted in response to the United States Supreme Court's decision in Evansville-Vanderbush Airport Authority v. Delta Airlines, 405 U.S. 707, 92 S. Ct. 1349, 31 L. Ed. 2d 60 (1972).

 In Evansville, the Supreme Court upheld passenger head taxes for aviation purposes enacted by New Hampshire and Evansville, Indiana. "The Court, in essence, ruled that states and cities could constitutionally impose a reasonable charge on interstate and interstate air passengers in order to underwrite airport operational and developmental costs. Yet, the decision did not sufficiently define the ruling as, for example, what constitutes a reasonable charge, or just how far a state or municipality could go in levying head taxes." 1973 U.S. Code Cong. & Ad. News 1446.

 In 1970, congress passed the Airport and Airway Development Act, which established a national Aviation Trust Fund for improvements in the national air transportation system. An 8% charge was levied on domestic passenger airline tickets, while $3.00 per person was charged for international trips. However, the congressional committee "never intended that air travelers would be subject to state and local head taxes as well as to national user charges." Id., at 1450.

 The legislative history, as well as the few decisions which address § 1513(a) indicate that congress was concerned with the imposition of a double tax on air passengers traveling in air transportation or air commerce. Id., at 1434-1463; 119 Cong. Rec. 3349-3350 (1973); Aloha Airlines v. Director of Taxation of Hawaii, 464 U.S. 7, , 104 S. Ct. 291, 293, 78 L. Ed. 2d 10 (1983); Island Aviation, Inc. v. Guam Port Authority, 562 F. Supp. 951, 957 (D. Guam 1982); Arizona v. Cochise Airlines, 128 Ariz. ...


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