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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. City of Valdez v. Polar Tankers, Inc. (04/25/2008) sp-6254
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
| CITY OF VALDEZ, | ) |
| ) Supreme Court Nos. S- 12218/12223 | |
| Appellant and | ) |
| Cross-Appellee, | ) Superior Court No. 3AN-00-09665 CI |
| ) | |
| v. | ) O P I N I O N |
| ) | |
| POLAR TANKERS, INC., | ) No. 6254 April 25, 2008 |
| ) | |
| Appellee and | ) |
| Cross-Appellant. | ) |
| ) | |
Appeal from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage, Peter A. Michalski, Judge.
Appearances: Debra J. Fitzgerald and William
M. Walker, Walker & Levesque, LLC, Anchorage,
for Appellant and Cross-Appellee. Leon T.
Vance, Faulkner Banfield, P.C., Juneau, and
Susan Orlansky and Eric T. Sanders, Feldman
Orlansky & Sanders, Anchorage, for Appellee
and Cross-Appellant.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, and Carpeneti, Justices. [Bryner,
Justice, not participating.]
EASTAUGH, Justice.
I. INTRODUCTION
The City of Valdez adopted an ad valorem property tax
on large vessels docking at private facilities in Valdez, and the
city council thereafter adopted an apportionment formula based on
days spent in port for taxing large vessels engaged in interstate
commerce. Several transporters of oil, including Polar Tankers,
Inc., challenged the tax in superior court, alleging that it
violated the Due Process, Commerce, and Tonnage Clauses of the
Federal Constitution. We hold that the apportionment formula
does not create a risk of duplicative taxation; it was therefore
error to declare the ordinance unconstitutional as applied.
II. FACTS AND PROCEEDINGS
A. Factual History
In 1999 the City of Valdez adopted Ordinance No. 99-17,
an ad valorem property tax (vessel tax) on certain large vessels
docking at private facilities in the city. Part A of the
ordinance describes the affected vessels:
Boats and vessels of at least 95 feet in
length for which certificates of
documentation have been issued under the laws
of the United States are subject to taxation
at their full and true value unless the
vessel is used primarily in some aspect of
commercial fishing or docks exclusively at
the Valdez Container Terminal where it is
subject to municipal dockage charges.[1]
The city subsequently interpreted the exception for
vessels docking exclusively at the Valdez Container Terminal to
also apply to vessels docking exclusively at other city-owned
docks. Part B of the ordinance provides for taxation on an
apportionment basis and for adoption of assessment formulas:
Vessels operated in intrastate, interstate or
foreign commerce that have acquired a taxable
situs elsewhere, shall be assessed on an
apportionment basis. The assessor shall
allocate to the City the portion of the total
market value of the property that fairly
reflects its use in the City. The assessor
shall establish formulas for calculating the
proportion of the total market value
allocated to the City. The assessment
formula shall be approved by the city
council.[2]
The vessel tax was proposed to address what was
described as a serious erosion of the citys tax base, much of
which is oil- and gas-related property. For several years before
passage of the ordinance, the portion of the citys tax base
consisting of oil and gas property had been declining rapidly,
and it would continue to decline under a depreciation formula
negotiated between the State of Alaska and the owners of the
Trans Alaska Pipeline System (TAPS).
In accordance with Part B of the 1999 vessel tax
ordinance, in 2000 the city council adopted a resolution
containing an apportionment formula. Section 1 of Resolution No.
00-15 adopted a tax apportioned on the days spent in port:
A vessel owner will pay the personal property
tax based on 100 percent of the assessed
value, times a ratio determined by the number
of days spent in Valdez divided by the total
number of days spent in all ports, including
Valdez, where the vessel has acquired a situs
for taxation.[3]
We refer to this as a port-day apportionment formula. The formula
also exempts periods when a vessel is tied up because of strikes
or withheld from the Alaska service for repairs.4 Section 2 of
the 2000 resolution contingently provides for adoption of another
apportionment formula that will more fairly represent how value
should be apportioned.5 It provides:
If a taxpayer claims that in a particular
case the apportionment formula approved in
this Resolution does not reasonably represent
the portion of the total value of the vessel
that should be apportioned to the taxing
situs of Valdez, the taxpayer may petition,
or the assessor may require, the use of
another apportionment formula that will more
fairly represent how the value should be
apportioned among Valdez and other taxing
jurisdictions.[6]
Polar Tankers, Inc. operates tanker vessels that
transport crude oil from the TAPS terminal in Valdez to ports in
Washington, California, and Hawaii. In Valdez, Polar loads crude
oil at the Alyeska Marine Terminal, a private dock owned by a
consortium of oil companies the TAPS owners. Polar is a wholly
owned subsidiary of ConocoPhillips Company. The city issued tax
statements for each of the assessed vessels in early July of
2000, 2001, 2002, 2003, and 2004. Polar paid the assessed taxes
under protest each year. The taxes it paid each year were:
$440,221.24 in 2000; $398,157.62 in 2001; $1,037,530.12 in 2002;
$1,433,072.20 in 2003; and $1,657,249.02 in 2004.
B. Procedural History
After the city enacted the apportionment resolution in
2000, Polar sued the city in superior court, claiming the vessel
tax violated the Due Process, Commerce, and Tonnage Clauses of
the Federal Constitution. Polar was initially joined by several
other tankship companies. Over the next three years, the city
settled with all of the plaintiffs except Polar and SeaRiver
Maritime, Inc. In 2004 the superior court granted these
plaintiffs motion for summary judgment, holding that the vessel
tax was an unconstitutional duty on tonnage. The city moved for
reconsideration. The superior court granted the reconsideration
motion, vacated its earlier ruling, and directed the parties to
brief seven legal and factual questions. In January 2005 the
superior court issued a decision and order ruling that the
apportionment method violated the Due Process and Commerce
Clauses. It declined to rule on the Tonnage Clause issue. The
city moved for summary judgment on that issue, and the superior
court granted the citys motion in July and concluded that,
assuming the vessel tax was fairly apportioned, the tax would not
violate the Tonnage Clause.
In January 2006 the superior court issued its final
judgment holding that the tax did not violate the Tonnage Clause,
but that the port-day apportionment formula, as applied to the
plaintiffs, violated the Due Process and Commerce Clauses. The
judgment permitted the city to levy the vessel tax as soon as it
adopted a constitutional apportionment formula, and required the
city to repay all taxes overpaid by the plaintiffs, as calculated
using the new apportionment formula. The city moved for
clarification of the final judgment. The court denied the
clarification motion but stayed the judgment and ordered that the
city could not levy against Plaintiffs any amount of tax beyond
the amount that would be due using this apportionment formula:
Days in Valdez/365. The court ordered that the amount be paid
into a court-supervised account until the appeal was terminated
by agreement of the parties or decision of this court. Finally,
the superior court denied all parties motions for attorneys fees.
Three parties appealed. SeaRiver eventually dismissed
its appeal, and the citys and Polars appeals were consolidated.
On appeal, the city challenges the Due Process and Commerce
Clause rulings and Polar challenges the Tonnage Clause ruling.
III. DISCUSSION
A. Standard of Review
We review summary judgment rulings on constitutional
issues such as the Due Process, Commerce, and Tonnage Clauses de
novo.7
B. The Vessel Tax Apportionment Formula Does Not Violate
the Due Process Clause or the Commerce Clause.
Polar contends that the vessel tax violates the Due
Process and Commerce Clauses of the Federal Constitution.8 The
superior court held that the tax, Valdez Ordinance 99-17, was
constitutional, but that the port-day apportionment formula
contained in Valdez Resolution 00-15 violated the Due Process and
Commerce Clauses.9
Due process requires that: (1) the property taxed have
a physical presence and minimal connections with the taxing
sovereign (thus giving it a tax situs)10; and (2) the tax be
fairly apportioned to opportunities, benefits, or protection
conferred or afforded by the taxing [authority].11
In Complete Auto Transit, Inc. v. Brady the United
States Supreme Court laid out the test for determining whether a
tax on mobile property used in interstate commerce satisfies the
Commerce Clause.12 The Complete Auto test requires that: (1) the
property taxed have a substantial nexus with the taxing
jurisdiction; (2) the tax be fairly apportioned; (3) the tax not
discriminate against interstate commerce; and (4) the tax be
fairly related to the services provided by the jurisdiction.13
The Supreme Court has noted that the Complete Auto
test, while responsive to Commerce Clause dictates, encompasses
as well . . . due process requirement[s].14 We therefore consider
minimal connection/substantial nexus and fair apportionment under
both clauses simultaneously.
1. There is a substantial nexus between Valdez and
the vessels, such that Valdez has become a tax
situs.
The parties agree that Polars presence and activities
in Valdez are sufficient to permit the city to tax its vessels,
and that Valdez is therefore a tax situs for Polar. Ample
evidence supports this conclusion. There is a direct and
significant economic connection between the city and Polar. Most
of Polars business involves the oil it loads at the Alyeska
Marine Terminal in Valdez, and the parties seem to agree that
Polars tankers spend an average of about forty-two port days in
Valdez per year. Furthermore, the city provides many services to
Polar. The city assists the Coast Guard in regulating traffic on
dedicated tanker lanes. The significant presence of the Coast
Guard in the city is primarily due to the operations of Polar and
the other oil shippers. The city tells us the Alyeska Marine
Terminal, which is privately owned by the TAPS owners, was
financed by $1.3 billion in tax-exempt revenue bonds issued by
the City. Polar has at least one employee permanently located in
Valdez, and Polars employees, including the vessel crews, have
access to all the services provided by the city, such as police
protection, airport, roads, and hospitals. The city is involved
in oil spill contingency plans. As demonstrated by the Exxon
Valdez oil spill in 1989, the city is heavily affected by oil
spills; following the Exxon Valdez spill, cleanup efforts
continued to consume city resources for more than three years.
All of these factors create a substantial nexus between the city
and Polar such that Valdez has acquired the status of a tax situs
for purposes of the Due Process and Commerce Clauses.
Because we agree with the parties that a substantial
nexus exists, we also agree that Valdez is a tax situs for Polar.15
2. The vessel tax is fairly apportioned.
The superior court concluded that the citys port-day
apportionment formula by which the tax is calculated violates the
Due Process and Commerce Clauses because the formula creates a
risk of multiple taxation and is therefore not fairly
apportioned. We disagree.
The central purpose behind the apportionment
requirement is to ensure that each State taxes only its fair
share of an interstate transaction.16 There is no single correct
method of apportionment; rather, a tax is deemed fairly
apportioned if it is both internally and externally consistent.17
Because both parties agree that the vessel tax is internally
consistent (i.e., if all taxing jurisdictions used the same
formula, a vessel would be taxed for one hundred percent of its
value), we address only external consistency.
External consistency is the principle that looks to the
economic justification for the states claim upon the value taxed,
to discover whether a states tax reaches beyond that portion of
value that is fairly attributable to activity within the taxing
state.18 According to Hellerstein & Hellerstein, the external
consistency test in substance is nothing more than another label
for the fair apportionment requirement.19
The superior court concluded that the vessel tax was
not fairly apportioned because the apportionment formula created
a risk of duplicative taxation. A tax may be invalid even if it
creates only a risk of duplicative taxation. In Central Railroad
of Pennsylvania v. Commonwealth of Pennsylvania, the Supreme
Court stated that a domiciliary State is precluded from imposing
an ad valorem tax on any property to the extent that it could be
taxed by another State, not merely on such property as is
subjected to tax elsewhere.20 We have similarly stated that the
Commerce Clause is triggered only upon an affirmative showing
that property taxed by one jurisdiction has another taxable situs
and could be taxed elsewhere.21
Polar admits that Valdez is a proper taxing situs. But
Polar nonetheless argues that Valdezs taxing authority is
subordinate to the taxing authority of Polars domicile and that
Valdezs apportionment scheme is unfair because it impinges on the
domiciles taxing authority, creating the risk of multiple
taxation. Polar asserts that California is its commercial
domicile.
Under the home port doctrine, a vessel was subject to
property taxation in full at the domicile of the owner and not
elsewhere.22 But the Supreme Court in Japan Line, Ltd. v. County
of Los Angeles recognized that the home port doctrine has yielded
to a rule of fair apportionment among situs states.23 The Court
there noted that if the containers at issue in Japan Line were
instrumentalities of purely interstate commerce, a rule of fair
apportionment would have been applied.24
Therefore, a rule of fair apportionment must be applied
to the taxation of Polars ships. As we discuss below, an
apportionment formula is fair if it apportions the full value of
a ship between the taxing jurisdictions in which it is regularly
present in proportion to the number of days during the tax year
that the ship is present in each jurisdiction. Our determination
that Valdez has adopted one of the many potential fair
apportionment schemes it could choose from renders Polars
assertion of home port superiority irrelevant.25
Valdezs apportionment formula apportions the full value
of a ship between the taxing jurisdictions in which it is
regularly present in proportion to the number of days during the
tax year that the ship is present in each jurisdiction. Thus if
we assume that a tanker is in port in Valdez for fifty days a
year and in port in all jurisdictions including Valdez for 150
days per year, the Valdez apportionment ratio would be 50/150.
There is no reason why the days at sea outside the jurisdiction
of any taxing authority should be included in the denominator of
the fraction. This result is different, however, from Polars
contention that any jurisdiction is taxing for days spent at sea.26
The port-day formula resembles the formula that was
involved in Braniff Airways v. Nebraska State Board of
Equalization & Assessment, and whose reasonableness was not
challenged.27 The Braniff formula involved the ratio of aircraft
landings in the taxing jurisdiction as compared to all landings
in all potential taxing jurisdictions.28 There is not too much
difference between landings and dockings, nor between dockings
and days in port. Each of these measures assesses the extent of
activity in the taxing jurisdiction relative to the activity in
all taxing jurisdictions. This satisfies the goal of
apportionment, which is to ensure that each State taxes only its
fair share of an interstate transaction.29 Most importantly the
Braniff formula taxed the whole aircraft in accordance with the
ratio indicated by the formula without carving out some separate
quantum of value for the aircrafts home port. The home port
received no special consideration even though the planes likely
spent time flying over non-situs states.30
The formula in Ott v. Mississippi Valley Barge Line Co.31
also supplies an analogy. In that case the apportionment ratio
compared the number of barge miles in Louisiana to the total
number of barge miles in all state waters concerning the routes
in question.32 No special status, or even mention, was given to
the vessels home ports. In Ott the vessels routes were from port
to port on navigable rivers.33 But if instead a vessels regular
route was from St. Louis, Missouri through New Orleans, Louisiana
to Tampa Bay, Florida, it is hard to imagine that the denominator
would have to include miles traveled on the high seas outside the
taxing authority of any state.
There are of course many conceivable apportionment
formula‚ that might be fair.34 The port-days formula is but one
such example. Because the formula is fair, and accordingly a
valid formula for Valdez to use, and because Valdezs permissible
tax necessarily limits the taxing authority of Polars domicile,
there is no concern about the risk of duplicative taxation.35
Because the tax is fairly apportioned, the tax is also externally
consistent.
3. Polar waived claims of discrimination against
interstate commerce and fair relation between the
tax and services provided.
On appeal, Polar only devotes a single sentence to the
third element of the Complete Auto test whether the tax
discriminates against interstate commerce stating in its brief,
unfair apportionment itself is a form of discrimination against
interstate commerce. Given the cursory nature of Polars failure
to argue this issue separately, we consider it waived.36
Even if we were to consider the issue on its merits, it
does not appear that the vessel tax discriminates against
interstate commerce. In Moorman Manufacturing Co. v. Bair, the
United States Supreme Court held that a tax did not violate the
Commerce Clause even if it resulted in an out-of-state company
paying a greater portion of its income in taxes because the tax
apportionment method treat[ed] both local and foreign concerns
with an even hand.37 According to the Court, any alleged
disparity was the consequence of the combined effect of multiple
state statutes, and a single state was not responsible for that
combined effect.38 Like the tax in Moorman, the citys vessel tax
applies equally to in-state and out-of-state vessels. Any effect
on interstate commerce is incidental.
Polar also waived any argument regarding the fourth
element of Complete Auto whether the tax is fairly related to
the services provided. Polar asserts that the tax is not fairly
related to the services provided because the citys apportionment
method effectively treats a portion of [out-of-Valdez] time as if
the tankers were present in Valdez. But because Polar has not
briefed the issue we decline to address it.
Because Polar has attained a taxable situs in Valdez,
and because the vessel tax is fairly apportioned, we hold that
neither the tax nor the apportionment formula violates the Due
Process Clause or the Commerce Clause.
C. The Vessel Tax Does Not Violate the Tonnage Clause.
In its cross-appeal Polar asserts that the tax violates
the United States Constitutions Tonnage Clause,39 which prohibits
taxes that operate to impose a charge for the privilege of
entering, trading in, or lying in a port.40 The superior court
initially found that the tax violates the Tonnage Clause, but
after vacating that judgment the superior court concluded that
the tax does not violate the Tonnage Clause. In so ruling, the
superior court noted that it had originally misunderstood the
taxpayers argument on this matter. Because the parties agreed
that no trial concerning the Tonnage Clause claim was necessary,
and because (as the superior court noted) counsel for the
taxpayers . . . clarified taxpayers agreement that had the tax
been properly apportioned, the City has jurisdiction to tax the
tankers, the superior court dismissed Polars Tonnage Clause
challenge.
The United States Constitution forbids the states from,
without the Consent of Congress, lay[ing] any Duty of Tonnage.41
A duty of tonnage is any tax or duty that operate[s] to impose a
charge for the privilege of entering, trading in, or lying in a
port, regardless of whether it is measured by the tonnage of the
vessel.42 A fairly apportioned property tax is not a tonnage
duty.43
Having concluded above that the disputed vessel tax is
a fairly apportioned ad valorem tax on personal property, we
necessarily also hold that it does not violate the Tonnage
Clause. The vessels are taxed based on their value, and only
those vessels that have acquired a taxable situs in Valdez are
taxed.44 Polar concedes that it has acquired a taxable situs in
Valdez.
In Japan Line, Ltd. v. County of Los Angeles, the
California Supreme Court sustained an ad valorem property tax on
cargo containers against a Tonnage Clause challenge.45 The
California Supreme Court reasoned that the cargo containers were
not being taxed while in transit [but r]ather they [were] being
taxed on an apportioned basis for their continuous presence in
the state.46 Like the containers in Japan Line, no single vessel
is in the taxing situs of Valdez year-round, but as a group the
tankers form a continuous presence in the city. As the
California Supreme Court noted, the presence of these vessels
involves the constant use of many services provided by the (state
and, here, the county); e.g., harbor facilities, roads, bridges,
water supply, as well as fire and police protection.47 Similarly,
the Vermont Supreme Court upheld a personal property tax on
vessels in Vermont, noting that [t]he tax relates to police,
fire, and environmental protection afforded to those who use
vessels in this state.48 Polar does not deny that municipal
services are available to it in Valdez, including police,
airport, civic center, and medical services. The vessel tax is
therefore a legitimate property tax levied to support the
services available to all taxpayers in the city, including Polar.
Polar argues that the vessel tax is invalid because it
is a general revenue tax imposed only on specific vessels. But
the legitimacy of the vessel tax does not depend on whether the
city chooses to tax other personal property. Alaska Statute
29.45.050(b)(2) provides that [a] municipality may by
ordinance . . . classify as to type and exempt or partially
exempt some or all types of personal property from ad valorem
taxes.
Citing Transportation Co. v. Wheeling,49 Polar argues
that in order to be valid, the tax must be applied to the vessels
in the same manner as it is applied to other property. It
reasons that because the vessel tax is the only personal property
tax in effect in Valdez, the vessels are not being taxed in the
same manner as other property. We disagree. Wheeling stands for
the proposition that a charge based on the value of property is
not a duty of tonnage.50 Valdez taxes the vessels value using the
same mill rate it uses for all other property, including real
property.51 It thus taxes the vessels in the same manner as other
property, because the tax is based on value.
Polar contends that the vessel tax is no more than a
charge for entering the Valdez port to access private facilities.
Polar argues that the tax applies only to vessels that call at
the three private docking facilities in Valdez, and that it is
therefore . . . a charge for being in port and not using the
Citys docking facilities. (Emphasis in original.) It compares
the tax to one struck down by the California Supreme Court in
City of Oakland v. E.K. Wood Lumber Co.52 But E.K. Wood Lumber is
inapt. The fee there was a flat fee, not a tax based on the
value of the property.53 The fee was imposed on all vessels
landing at Oakland, regardless of whether they had obtained a
taxable situs there.54 E.K. Wood Lumber therefore does not
persuade us that the citys ad valorem property tax is an
unconstitutional duty of tonnage.
D. Other Issues
The city asserts that the final judgment is defective
because it violates separation of powers and fails to sustain
Valdezs vessel tax in accordance with the law. The city also
contends that the ruling should have been modified to clarify
that it applies only to Polar. Because we are reversing the
judgment below and remanding for entry of judgment for the City
of Valdez, we do not need to address these arguments.
Reversal also makes it unnecessary to consider Polars
argument concerning attorneys fees. On remand the city will be
the prevailing party for purposes of Alaska Civil Rule 82.
IV. CONCLUSION
We therefore REVERSE the judgment below and REMAND for
entry of judgment for the City of Valdez.
_______________________________
1 Valdez Ordinance 99-17 (codified as Valdez Municipal
Code (VMC) 03.12.020(A) (1999)).
2 Id.
3 Valdez, Alaska, Resolution No. 00-15 (May 1, 2001).
4 Id.
5 Id.
6 Id.
7 Lewis v. State, Dept of Corr., 139 P.3d 1266, 1268-69
(Alaska 2006).
8 U.S. Const. amend. XIV 1; U.S. Const. art. I, 8, cl.
3.
9 In its final judgment, the superior court stated that
the port-day apportionment formula is contained in Valdez
Resolution 00-19. This appears to be a typographical error as
the port-day apportionment formula is contained in Valdez
Resolution 00-15. We therefore refer to Valdez Resolution 00-15
here.
10 Atlantic Richfield Co. v. State, 705 P.2d 418, 430
(Alaska 1985).
11 Ott v. Mississippi Valley Barge Line Co., 336 U.S. 169,
174 (1949) (holding that ad valorem property tax apportioned
using miles traveled in state divided by total miles traveled did
not violate Commerce or Due Process Clauses).
12 Complete Auto Transit, Inc. v. Brady, 430 U.S. 274
(1977) (upholding sales tax challenged by motor carrier
transporting cars into Mississippi from out of state).
13 Id. at 279.
14 Quill Corp. v. North Dakota, 504 U.S. 298, 313 n.7
(1992).
15 See Goldberg v. Sweet, 488 U.S. 252, 260 (1989)
(upholding excise tax under Complete Auto test and stating that
because all parties agree that Illinois has a substantial nexus
with the interstate telecommunications reached by the Tax Act, we
begin our inquiry with apportionment, the second prong of the
Complete Auto test).
16 Id. at 260-61.
17 Id. at 261.
18 I Jerome R. Hellerstein & Walter Hellerstein, State
Taxation 4.15[2], at 4-142 (3d ed. 1998) (citing Oklahoma Tax
Commn v. Jefferson Lines, Inc., 514 U.S. 175, 185 (1995)).
19 Id.
20 Cent. R.R. of Pa. v. Pennsylvania, 370 U.S. 607, 614
(1962) (emphasis added).
21 Kenai Peninsula Borough v. Arndt, 958 P.2d 1101, 1103
(Alaska 1998) (emphasis added) (holding that Commerce Clause was
not violated because vessels tax status became fixed for full tax
year on date of its assessment and it therefore could not be
taxed elsewhere, even after being sold).
22 S. Pac. Co. v. Kentucky, 222 U.S. 63, 68-69 (1911); see
also Hellerstein & Hellerstein, supra note 18, at 4.12[2][c].
23 Japan Line, Ltd. v. County of Los Angeles, 441 U.S.
434, 442 (1979).
24 Id. at 445-46. Although it appears that some of Polars
vessels, for some of the years at issue, might have acquired a
taxing situs in a foreign nation, Polar does not argue that the
international aspect of its commerce affects the Valdez tax. We
recognize that Japan Line imposes an additional test for taxation
of the instrumentalities of foreign commerce, id. at 446-49, but
we do not reach that test because the parties did not raise this
issue on appeal.
25 Polars claim of home port superiority is not compelled
by the cases that Polar cites. For example, the holding in
Central Railroad, 370 U.S. at 611-12, 614, that a domiciliary
situs cannot tax property to the extent that it could be taxed by
another situs, does not define the limits of a non-domiciliarys
right to tax.
26 Polars apportionment argument rests on this
characterization of the Valdez tax. There is no risk of multiple
taxation if Valdez uses a port-day formula and other
jurisdictions use a port-day formula, voyage-day formula (number
of days in jurisdiction divided by total days in a year), or
voyage-distance formula (distance traveled in a jurisdiction
divided by total distance). A risk of multiple taxation only
exists if we accept Polars assertion that its domicile can
extraterritorially tax its vessels for all time spent on the open
seas.
Polar provides no compelling reason for us to accept
this assertion. Modern precedent and the repudiation of the home
port doctrine in Japan Line, 441 U.S. at 443, suggest that a
domicile possesses no such expansive powers. The Japan Line
Court announced that the special status traditionally accorded a
domicile can claim no unequivocal constitutional source. Id.
Polars view of a domiciles ability to assert an extraterritorial
tax conflicts with the tenor of Japan Line.
27 Braniff Airways v. Nebraska State Bd. of Equalization &
Assessment, 347 U.S. 590, 593 & n.4, 597-98 (1954). While Polar
argues that the Braniff Courts reasoning should not be extended
to ocean-going vessels, the Courts later decision in Japan Line
largely eliminated the distinction between ocean-going vessels
and other instrumentalities of interstate commerce. Japan Line,
441 U.S. at 442. It is notable that the Japan Line Court
specifically cited Braniff in its discussion of prior opinions
whose language distinguishing ocean-going vessels based on the
home port doctrine the Court rejected. Id. (citing Braniff, 347
U.S. at 600).
28 Braniff, 347 U.S. at 593 n.4.
29 Goldberg, 488 U.S. at 260-61.
30 A variation on Braniff more dramatically illustrates
the point: if an airline domiciled in New York only has flights
between New York City and Los Angeles, the airline would not be
subject to taxation by any jurisdiction other than New York and
California. The Braniff apportionment formula of number of
landings would accord California and New York even powers of
taxation. Under the home port superiority method urged by Polar,
New York, the state of domicile, would have the ability to tax a
plane for all times the plane was not in California.
31 Ott v. Mississippi Valley Barge Line Co., 336 U.S. 169
(1949).
32 Id. at 171.
33 Id. at 170.
34 See Goldberg, 488 U.S. at 261 ( [W]e have long held
that the Constitution imposes no single [apportionment] formula
on the States, and therefore have declined to undertake the
essentially legislative task of establishing a single
constitutionally mandated method of taxation. (quoting Container
Corp. of Am. v. Franchise Tax Bd., 463 U.S. 159, 164, 171
(1983))).
35 See Cent. R.R., 370 U.S. at 614.
36 Petersen v. Mut. Life Ins. Co., 803 P.2d 406, 410
(Alaska 1990) (Where a point is not given more than a cursory
statement in the argument portion of a brief, the point will not
be considered on appeal.); Lewis v. State, 469 P.2d 689, 691-92
(Alaska 1970).
37 Moorman Mfg. Co. v. Bair, 437 U.S. 267, 274, 278 n.12
(1978) (upholding Iowa apportionment formula for income tax on
interstate business against Due Process and Commerce Clause
challenges).
38 Id.
39 U.S. Const. art. I, 10, cl. 3.
40 Clyde Mallory Lines v. Alabama ex rel. State Docks
Commn, 296 U.S. 261, 265-66 (1935) (holding fee exacted to fund
regulation of harbor not unconstitutional duty of tonnage).
41 U.S. Const. art. I, 10, cl. 3.
42 Clyde Mallory Lines, 296 U.S. at 265-66.
43 In re State Tonnage Tax Cases, 79 U.S. 204, 212-14
(1870) (stating that vessels owned by individuals and used for
commercial purposes are considered property and are allowed to be
taxed by states and do not fall under Tonnage Clause); Bigelow v.
Dept of Taxes, 652 A.2d 985, 987-88 (Vt. 1994) (holding that
Vermonts tax was not tonnage tax because it taxed property used,
not privilege of using Vermonts ports).
44 VMC 03.12.020(A).
45 Japan Line, Ltd. v. County of Los Angeles, 571 P.2d 254
(Cal. 1977), revd on other grounds, 441 U.S. 434 (1979). The
United States Supreme Court held that the tax, as applied to
Japanese shipping companies cargo containers that were based,
registered, and subjected to property tax in Japan, and were used
exclusively in foreign commerce, violated the Commerce Clause.
Japan Line, 441 U.S. at 453-54. The Court therefore did not
reach the Tonnage Clause question. Id. at 439 n.3.
46 Japan Line, 571 P.2d at 258.
47 Id.
48 Bigelow, 652 A.2d at 988.
49 Transp. Co. v. Wheeling, 99 U.S. 273, 283-84 (1878)
(noting that tax is only impermissible duty of tonnage when it is
taxed as instrument of commerce without reference to value of
property).
50 Id.
51 VMC 03.12.022(A), .010, .060, .170.
52 City of Oakland v. E.K. Wood Lumber Co., 292 P. 1076,
1080 (Cal. 1930) (holding that ordinance requiring every vessel
to land at the citys wharves, or, upon paying the same charge, be
entitled to a permit to land at some other wharf in the city, is
not a charge, as to vessels so landing elsewhere, for facilities
or services furnished by the city and thus was unconstitutional
duty of tonnage).
53 Id. at 1077-78.
54 Id.
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