Facts
- Congress enacted the Airport and Airway Revenue Act of 1970 to recover costs of federal aviation programs from users of the national airspace system.
- The Act imposed an annual flat-fee registration tax on all civil aircraft operating in U.S. navigable airspace, including aircraft owned by States and the federal government.
- The Act also imposed taxes on aviation fuel and on aircraft tires and tubes, but States were exempt from the fuel, tire, and tube taxes.
- The federal government collected the aircraft registration tax from Massachusetts for a state-owned helicopter used exclusively for police functions.
- Massachusetts paid under protest and filed a federal refund action, asserting implied constitutional immunity from federal taxation of an essential state function.
- The district court dismissed the complaint, treating the charge as a user-based revenue measure; the First Circuit affirmed.
Issues
- Whether a federal annual civil-aircraft registration tax, applied to a state-owned police helicopter, violates implied state immunity from federal taxation.
- Whether the tax is permissible as a nondiscriminatory, cost-recovery measure reasonably tied to the benefits and use of the federal aviation system.
Decision
- The Supreme Court affirmed (6–2) and held the registration tax constitutional as applied to Massachusetts’ police helicopter.
- The Court rejected categorical immunity for state “essential and traditional” governmental functions when the federal measure is a nondiscriminatory revenue device tied to program costs.
- The Court upheld Congress’s use of a flat-fee component within a broader scheme aimed at allocating program costs among classes of beneficiaries.
- Justice Stewart, joined by Justice Rehnquist, dissented; Justice Stevens did not participate.
Legal Principles
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A State has no constitutional immunity from a nondiscriminatory federal revenue measure that requires beneficiaries of a federal program to pay a reasonable approximation of their fair share of its cost.
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A federal charge directed to program cost recovery is valid when it:
- does not discriminate against state functions,
- is based on a fair approximation of the State’s use of, and benefits from, federal facilities or services, and
- is structured so total revenues do not exceed the federal government’s costs of the benefits supplied.
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The Constitution does not require Congress to use the most precise usage-based metric; a flat fee may be used if the overall scheme reasonably allocates costs and is not designed to control or substantially interfere with state functions.
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A tax is nondiscriminatory where it applies across the relevant class of civil aircraft users, including civil aircraft operated by the United States.
Conclusion
The Court sustained a federal aircraft registration tax applied to a state police helicopter because it operated as a nondiscriminatory cost-recovery measure that reasonably approximated beneficiaries’ fair share of federal aviation program costs, rather than as a device to regulate or disable core state operations.