Appeal from Order of the Commonwealth Court dated February 5, 1985 entered in No. 315 C.D. 1982. No. 11 M.D. Appeal Docket 1985 Appeal from Order of the Commonwealth Court dated February 5, 1985 entered in No. 267 C.D. 1983. No. 12 M.D. Appeal Docket 1985 Appeal from Order of the Commonwealth Court dated February 7, 1985 entered in No. 160 C.D. 1984 No. 19 M.D. Appeal Docket 1985
Maura A. Johnston, Andrew S. Gordon, Allen C. Warshaw, Office of Atty. Gen., Harrisburg, for appellants.
Arthur Littleton, Hoyle, Morris & Kerr, Philadelphia, Mark P. Pazuhanich, Hanna, Young & Upright, Stroudsburg, for appellees.
Nix, C.j., and Larsen,*fn* Flaherty, McDermott, Hutchinson, Zappala and Papadakos, JJ. Flaherty, J., did not participate in the consideration or decision of this case. Nix, C.j., files a concurring and dissenting opinion in which he "agrees with the results reached by the majority in American Trucking I, No. 11 M.D.Appeal Docket 1985, and American Trucking III, No. 19 M.D.Appeal Docket 1985", but dissents in American Trucking II, No. 12 M.D.Appeal Docket 1985; McDermott, J., joins this concurring and dissenting opinion.
On September 17, 1985, this Court heard oral argument in these three related appeals which arise from class action suits challenging the constitutionality of certain highway user fees and taxes imposed by the Commonwealth of Pennsylvania upon interstate motor carriers whose vehicles travel upon Pennsylvania roads, highways and bridges. To place these constitutional challenges in proper perspective, it is necessary and beneficial to first provide an overview of the salient provisions of our Vehicle Code, 75 Pa.C.S.A. §§ 101-9910 and taxing statutes.
PENNSYLVANIA HIGHWAY USER FEES
Our General Assembly has enacted a comprehensive and highly complex system of highway user fees, charges and taxes (hereinafter referred to as "highway user fees") designed to partially reimburse the Commonwealth of Pennsylvania for expenditures made for maintenance, construction and restoration of our extensive system of interstate highways, roads and bridges, and for expenditures made for the administration and enforcement of our Vehicle Code which governs all aspects of the use of our highways (e.g., safety, vehicle characteristics, registration and licensing, regulations concerning the operation of motor vehicles, etc.). Given that the Commonwealth of Pennsylvania is a major thruway for interstate commerce along the northeast corridor, and given its hilly terrain and frequently severe weather conditions which accelerate roadway and bridge deterioration in combination with heavy use by large tractors and trailers engaged in interstate commerce, these expenditures are, of course, enormous.
Pennsylvania's highway user fees include the following:
(a) truck and truck-tractor registration fees;
(b) trailer registration fees;
(c) truck and truck-tractor title fees;
(e) registration transfer fees;
(f) special handling permit fees;
(g) special trip permit fees;
(i) Motor Carriers Road Tax;
(j) Oil Company Franchise Tax;
(k) Gross Receipts Tax (on vehicles traveling interstate);
(m) farm truck registration fees.*fn1
As will be explained more fully, certain of these highway user fees (such as registration fees and titles) are "fixed" while others (such as the Liquid Fuels Tax, the Fuel Use Tax and the Motor Carriers Road Tax, see note 1, supra) are related to and dependent upon a motor carrier vehicle's actual use of Pennsylvania highways. All of the various highway user fees are "credited to the Motor License Fund and expended exclusively for road-related purposes." Joint Stipulation of Facts (hereinafter "JSF") at No. 315 C.D. 1982, No. 11 M.D.Appeal Docket 1985, para. 64.
Owners of motor vehicles that are based in Pennsylvania must register those vehicles with the Department of Transportation and must pay the registration fee applicable to the particular type of vehicle. 75 Pa.C.S.A. Chapter 13 (Registration) and Chapter 19 B (Registration Fees). These registration fees are paid by owners of Pennsylvania-registered vehicles in addition to the other various highway user fees outlined above.
The complexity of a state's scheme for imposition and collection of highway user fees is greatly compounded by the very nature of the interstate highway system and its use by motor vehicles registered in all of the United States and foreign countries with each jurisdiction generally having its own registration fees and other taxes applicable to those vehicles. In light of this multiplicity of sovereign interests, the General Assembly has declared:
It is the policy of this Commonwealth to promote and encourage the fullest possible use of its highway system by authorizing the making and execution of reciprocal agreements, arrangements and declarations with other states, provinces, territories and countries with respect to drivers, licensed and vehicles registered in this and other states, provinces, territories and countries, thus contributing to the economic and social development and growth of this Commonwealth.
75 Pa.C.S.A. § 6141, Declaration of policy. See 75 Pa.C.S.A. §§ 6141-6153, Chapter 61, subchapter C, (Reciprocity). The Secretary of the Department of Transportation is authorized to execute agreements or arrangements with other jurisdictions granting to "drivers or vehicles or owners of vehicles properly licensed or registered in those jurisdictions . . . benefits, privileges and exemptions from the payment . . . of any taxes, fees or other charges" imposed upon Pennsylvania drivers, vehicles and owners provided that "drivers or vehicles properly licensed or registered in this Commonwealth . . . shall receive exemptions, benefits and privileges of a similar kind or to a similar degree as are extended to drivers or vehicles properly licensed or registered in . . ." the other jurisdiction. 75 Pa.C.S.A. § 6143. It is further provided in that section that:
Each agreement or arrangement shall, in the judgment of the secretary, be in the best interest of this Commonwealth and the citizens thereof and shall be fair and equitable to this Commonwealth and the citizens thereof, and shall be determined on the basis and recognition of
the benefits which accrue to the economy of this Commonwealth from the uninterrupted flow of commerce.
Prior to September, 1982, Pennsylvania had entered into bilateral Apportioned Registration Agreements with twenty-three states and provinces, which agreements were based upon the International Registration Plan (hereinafter the "IRP"). On September 15, 1982, Pennsylvania became a member jurisdiction of the IRP. Under both the former bilateral agreements and the IRP, registration fees for "apportionable vehicles" were/are determined: by dividing the in-jurisdiction miles by the total miles during the preceding year to produce a fraction; (2) by determining the total fee required under the laws of each jurisdiction for full registration of each vehicle; and (3) by multiplying the total fee for each state by the fraction of in-jurisdiction miles to total miles. JSF para. 102.*fn2 No state which is contiguous to Pennsylvania was an IRP member at times relevant to these appeals.
B. THE MARKER DECAL FEE AND ACT 68
The Act of June 18, 1980, P.L. 229, No. 68 (hereinafter Act 68) amended the Vehicle Code by adding chapter 21, Motor Carriers Road Tax Identification Markers, which operated in conjunction with the Motor Carriers Road Tax Act. 75 Pa.C.S.A. § 2101-2105, as amended. The latter Act, part of the Fiscal Code, taxes liquid fuels purchased outside the Commonwealth but consumed while traveling within it. 72 P.S. §§ 2617.1-2617.26. Act 68 requires every
motor carrier vehicle*fn3 operating in Pennsylvania to display an identification marker to be issued by the Department of Revenue upon payment of a fee. Purchase of the identification marker decal notifies the Commonwealth that the motor carrier vehicle is subject to the Road Tax Act and triggers that Act's reporting, record-keeping and tax-paying requirements. Pennsylvania-registered motor carrier vehicles are not required to bear these marker decals because the act of registration notifies the Commonwealth that the vehicle is subject to the Road Tax Act and the Pennsylvania license plate provides the identification marker necessary to facilitate enforcement. § 2102(d)(1).
2102(b) Fee. -- The fee for issuance of an identification marker shall be $25, except that for vehicles registered in this Commonwealth, the vehicle identification marker fee shall be deemed a part of and included in the vehicle registration fee.
This fee is a "tax for the privilege of using Pennsylvania roads." JSF para. 1. The administrative costs associated with the issuance of the marker decal are approximately $5.00; the balance of the marker fee is credited to the Motor License Fund and expended for road-related purposes such as highway maintenance, construction, state police operations and construction bond debt service. JSF paras. 4, 5 and 46.
Section 2 of Act 68 also simultaneously amended section 1916(a) of the Vehicle Code and increased registration fees for all Pennsylvania-registered motor carrier vehicles. The smallest registration fee increase was $45.00 (for Class 7 vehicles, or motor carrier vehicles with "gross or combination weight" of 17,000-21,000 pounds), graduating upward to $228.00 (for Class 20 vehicles, or motor carrier vehicles with "gross or combination weight" of 68,001-73,280
pounds). In every case, therefore, the registration fee increase exceeded the amount of the marker fee ($25.00).
Act 68 further provided that operation of a motor carrier vehicle in Pennsylvania without an identification marker was unlawful unless exempted by regulation or unless a five-day permit had been obtained for a $5.00 fee where enforcement of the identification marker decal provisions "would cause undue delay and hardship in the operation of such motor carrier vehicle or vehicles." 75 Pa.C.S.A. § 2102(d).
C. THE AXLE TAX AND ACT 234
The Act of December 8, 1982, P.L. 842, No. 234 (hereinafter "Act 234") added Chapter 99, Axle Tax for Highway Bridge Improvement, to the Vehicle Code. 75 Pa.C.S.A. § 9901-9910, as amended. Act 234 also amended section 2102(b) by reducing the marker fee to $5.00 as of March 31, 1983.*fn4 75 Pa.C.S.A. § 2102(b).
Act 234 imposed an axle tax upon all motor carriers*fn5 as follows:
In addition to any other tax imposed by law, all motor carriers shall pay an annual tax in the amount of $36 per axle on every truck, truck tractor or combination having a gross weight or registered gross weight in excess of 26,000 pounds operated on the highways of this Commonwealth.
75 Pa.C.S.A. § 9902. This tax must be paid "at the time a motor carrier applies for vehicle registration or for the issuance of an identification marker or permit pursuant to section 2102 . . . ." 75 Pa.C.S.A. § 9903. The full axle tax applies to all motor carrier vehicles, regardless of state or province of registration, which travel at least 2,000 miles annually in this Commonwealth; vehicles traveling less than 2,000 miles annually are entitled to a rebate prorated
in accordance with the actual mileage.*fn6 75 Pa.C.S.A. § 9905. Additionally, payment of the axle tax is excused if the motor carrier has obtained a 5 day trip permit for $25. 75 Pa.C.S.A. § 2102(d).
The Legislature has declared the purpose of the axle tax as follows:
It is the declared policy of the Commonwealth that the money raised by the tax imposed by this chapter be used, to the greatest extent possible, to provide for the creation of jobs and the rehiring of the unemployed in this Commonwealth. In order to reach this goal, firms with Pennsylvania-based facilities shall be actively solicited to make bids on contracts to furnish products and materials, including, but not limited to, steel and steel products, to be used in the projects funded through the Highway Bridge Improvement Restricted Account.
75 Pa.C.S.A. § 9907(b). To that end, all proceeds from the axle tax and trip permits are to be "deposited in the Highway Bridge Improvement Restricted Account within the Motor License Fund" and appropriated for expenditure on bridge rehabilitation, replacement and removal projects. 75 Pa.C.S.A. § 9907(a) and 9908.
Section 1 of Act 234 simultaneously amended section 1916(a) of the Vehicle Code and, beginning with the weight class upon which the axle tax is first imposed (26,001-30,000 pounds), reduced the annual Pennsylvania truck or truck tractor registration fees in multiples of $36.00. The practical operation of this simultaneous reduction in registration fees was explained by the Commonwealth Court:
The incremental $36.00 registration fee reductions roughly correspond to the number of axles legally required for vehicles of various weights. Permissible maximum gross weights for two-axle, three-axle and four-axle trucks are 38,000 pounds, 58,400 pounds and 73,280 pounds, respectively. See 75 Pa.C.S. § 4941(c). Vehicles
registered with maximum gross or combination weights of 26,001-40,000 pounds, 40,001-60,000 pounds, 60,001-73,280 pounds and 73,281-80,000 pounds, sustained registration fee reductions in amounts of $72.00, $108.00, $144.00 and $180.00, respectively. Registration fee reductions generally offset the tax owed based on the number of axles ordinarily required of vehicles within each affected weight class.*fn3
American Trucking Associations, Inc. v. Bloom, 87 Pa. Commw. 345, 487 A.2d 465, 467 & n. 3 (1985).
No. 11 M.D.Appeal Docket 1985 (Appeal from Order of the Commonwealth Court entered at No. 315 C.D.1982)
Appellees are American Trucking Associations, Inc. (ATA), a non-profit corporation/federation of 51 state trucking associations and 13 national conferences, and two non-Pennsylvania corporations engaged in the interstate motor carrier business. As plaintiffs below, appellees filed an original class action complaint with the Commonwealth Court seeking to have section 2102(b) of the Vehicle Code, the marker fee, declared unconstitutional. Appellees were certified to represent a class of plaintiffs consisting of all interstate motor carriers whose vehicles are registered outside of Pennsylvania and who are or will be subject to the identification marker and marker fee requirement imposed by Act 68. Appellants are James I. Scheiner, Secretary of the Department of Revenue, Leroy S. Zimmerman, Attorney General of the Commonwealth, and Jay Cochran, Commissioner of the Pennsylvania State Police.*fn7
The complaint set forth the following challenges to the constitutionality of the marker fee: that it was discriminatory and unduly burdensome under the Commerce Clause, U.S. Const. Art. I, § 8, cl. 3; that it violated the Privileges and Immunities Clause, Art. IV, § 2; that it violated the Equal Protection Clause, amend. XIV and the Uniformity Clause of the Pennsylvania Constitution, Art. VIII, § 1; and that it violated the Supremacy Clause, Art. VI, cl. 2.*fn8 The gravamen of most of these allegations is discrimination perceived against interstate commerce in favor of local commerce in that, by "deeming" the marker fee to be part of and included in the Pennsylvania registration fee, Act 68 actually imposed the $25.00 marker fee "exclusively upon motor carrier vehicles registered outside of Pennsylvania for the privilege of using the highways of the Commonwealth." Complaint paras. 42, 50, 52, 61. The second principal contention was that Act 68 imposed an "unlawful burden" under the Commerce Clause upon interstate motor carriers because the market fee is a flat tax that is "wholly unrelated to the volume, value or nature of the services provided by the Commonwealth" and is "wholly unrelated to the magnitude or nature of any benefit received by or conferred upon" interstate motor carriers. Complaint para. 46.
Appellees' prayer for relief sought a declaration that section 2102(b) of the Vehicle Code (as originally enacted by Act 68) was unconstitutional and sought an injunction against its enforcement. Additionally, appellees sought immediate refund of "any $25.00 payments received from
interstate motor carriers on account of marker fees for the year commencing April 1, 1982."*fn9
The parties filed an elaborate Joint Stipulation of Facts. Additionally, trial was held before the Honorable Robert W. Williams, Jr., under the original jurisdiction of the Commonwealth Court concerning the validity of appellees' survey which purported to establish the discriminatory impact of the marker fee upon foreign registered vehicles. The trial court held that the marker fee discriminated against such vehicles and in favor of Pennsylvania registered vehicles, declared section 2102(b) of the Vehicle Code unconstitutional under the Commerce Clause, and ordered refund of marker fee payments made after April 1, 1982 pursuant to stipulation of the parties regarding refunds. 77 Pa. Commw. 575, 466 A.2d ...