Craig D. Shannon v. State

Opinion

Opinion issued February 27, 2003

In The

Court of Appeals

For The

First District of Texas

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NOS. 01-02-00400-CR

           01-02-00401-CR

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CRAIG D. SHANNON, Appellant

V.

THE STATE OF TEXAS, Appellee

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On Appeal from County Criminal Court at Law No. 3

Harris County, Texas

Trial Court Cause Nos. 5315 and 5316

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O P I N I O N

          The issue in these appeals is whether the dormant commerce clause prohibits the City of Houston from passing an ordinance requiring transporters of non-hazardous waste to pay a flat fee to obtain the necessary licenses and permits required to pick up waste originating within the city limits. Appellant, Craig D. Shannon, was convicted in municipal court of failing to obtain a transporter permit and operating a vehicle transporting waste that was not properly designated, and the municipal court assessed the minimum $250 fine on each charge. Appellant appealed to the county criminal court at law, which affirmed the municipal court convictions. These appeals followed. We, too, affirm.

BACKGROUND

          The City of Houston, in an effort “to protect the public sanitary sewer system from unauthorized waste releases and to deter the discharge of waste into storm sewers, street rights-of-way and other unauthorized places[,]” passed a series of ordinances to regulate the transportation and treatment of certain, non-hazardous wastes. See Houston, Tex., Ordinances, art. XI, §§ 47-411–47-566 (1968). The Houston Code provides:

It shall be unlawful for any person to utilize a motor vehicle or motor vehicle trailer for the transportation of waste originating within the city unless the driver of the vehicle has been designated on a current and valid transporter permit and the vehicle or trailer has been designated on the permit.

Houston, Tex., Ordinances, art. XI, §§ 47-451.

It shall be unlawful for any person to act as a transporter unless the person holds a current and valid transporter permit or is acting as the agent or employee of a person who holds a current valid transporter permit.

Houston, Tex., Ordinances, art. XI, §§ 47-431.

Transporter (primary or secondary) means a person who accepts waste that originates from a location within the city and who uses public rights-of-way for transportation of the waste. A generator or disposer who transfers its own waste over city streets for off-site disposal is also a transporter.

Houston, Tex., Ordinances, art. XI, §§ 47-411.

          To obtain the permits referenced in the ordinances above, the transporter must pay a $50 permit fee, plus $400 for each class C vehicle requiring a registration decal.

The Commerce Clause

          In his sole point of error, appellant contends the City’s permit and registration fees are unconstitutional under the Commerce Clause of the United States. See U.S. Const. art. I, § 8, cl. 3. Specifically, appellant, relying on American Trucking Assns. v. Scheiner, 483 U.S. 266, 107 S. Ct. 2829 (1987), asserts that the permit/licensing fees created by the municipal ordinances are prohibited “flat taxes” that unduly burden interstate commerce.

          A state tax will withstand scrutiny under the commerce clause if the tax is (1) applied to an activity with a substantial nexus with the taxing State, (2) is fairly apportioned, (3) does not discriminate against interstate commerce, and (4) is fairly related to the services provided by the State. Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 279, 97 S. Ct. 1076, 1079 (1977). In this case, appellant challenges the second and fourth elements of the Complete Auto test.

          A. Fair Apportionment/Internal Consistency

          To determine whether a tax is fairly apportioned, we must determine whether it is internally and externally consistent. See Goldberg v. Sweet, 488 U.S. 252, 261, 109 S. Ct. 582, 589 (1989). Appellant argues only that the permit fee is “internally inconsistent”; thus, we apply the test for internal consistency.

          To be internally consistent, a tax must be structured so that if every State were to impose an identical tax, no multiple taxation would result. Id. Thus, the internal consistency test focuses on the text of the challenged statute and hypothesizes a situation where other States have passed an identical statute. Id.

          In Scheiner, the state of Pennsylvania passed a permit fee and axel tax, which applied to all motor carriers, whether registered in Pennsylvania or elsewhere. 483 U.S. at 274, 107 S. Ct. 2829, 2835. The Supreme Court held that the so called “flat” or unapportioned taxes were internally inconsistent by stating:

If each State imposed flat taxes for the privilege of making commercial entrances into its territory, there is no conceivable doubt that commerce among the States would be deterred.

483 U.S. at 284, 197 S. Ct. at 2840.

          While the fee structure invalidated in Scheiner is very similar to the present case, we find it distinguishable in one important respect. In Scheiner, all motor carriers on Pennsylvania roads were subject to the tax, regardless of whether they were just passing through the State, or were, in fact, conducting significant intrastate travel. Accordingly, the Supreme Court concluded that by taxing both the infrequent user of Pennsylvania roads and the carriers operating exclusively in Pennsylvania at the same rate, the infrequent user was having to pay a much higher cost per mile for the upkeep of Pennsylvania roads. See 483 U.S. at 286, 107 S. Ct. 2840. Thus, the fee structure in Scheiner was internally inconsistent because a trucker traveling cross-country would be subject to paying multiple, unapportioned fees for the privilege of using each separate State’s highways.

          In this case, only transporters originating in Houston are subject to the permit and license fee imposed by the city ordinance. Therefore, no other city or state in the United States can impose an identical tax—only Houston qualifies as the city in which the transport originates. See Goldberg, 488 U.S. at 261, 109 S. Ct. at 589 (holding tax on phone calls originating in taxing state is internally consistent); see also Oklahoma Tax Comm’n v. Jefferson Lines, Inc., 514 U.S. 175, 185, 115 S. Ct. 1331, 1338 (1994) (tax on sale of interstate travel originating in taxing state is internally consistent).

          Because no other state has the right to tax the transport of waste originating in the City of Houston, we conclude that the fee/permit fees of the municipal code are not internally inconsistent.

          B. Fairly Related

          Appellant also argues that the fees charged by the City of Houston do not meet the Complete Auto test because they are not fairly related to the services provided by the City. However, since Scheiner, the Supreme Court has further expanded on what is necessary to meet the “fair relation” requirement of the Complete Auto test. In Jefferson Lines, the Court stated,

The fair relation prong of Complete Auto requires no detailed accounting of the services provided to the taxpayer on account of the activity being taxed, nor, indeed, is a State limited to offsetting the public costs created by the taxed activity. If the event is taxable, the proceeds from the tax may ordinarily be used for purposes unrelated to the taxable event. Interstate commerce may thus be made to pay its fair share of state expenses and “contribute to the cost of providing all governmental services, including those services from which it arguably receives no direct ‘benefit.’” The bus terminal may not catch fire during the sale [of the taxed bus ticket], and no robbery there may be foiled while the buyer is getting his ticket, but police and fire protection, along with the usual and usually forgotten advantages conferred by the State’s maintenance of a civilized society, are justification enough for the imposition of a tax. Complete Auto’s fourth criterion asks only that the measure of the tax be reasonably related to the taxpayers presence or activities in the State.

514 U.S. at 199-200; 115 S. Ct. at 1345-46 (citations omitted).

          In this case, the $50 permit fee and $400 vehicle registration fee is sufficiently related to appellant’s presence in the City. Appellant, like all people traveling in Houston, will benefit by a clean, nonhazardous sewage and road system. Also in connection with this fourth prong of Complete Auto, we note that the ordinances do not require that each vehicle in a transporter’s fleet be registered—only those vehicles actually picking up waste products from within the city limits need to be registered.

CONCLUSION

          We conclude that the fees imposed by the City of Houston relating to the transportation of non-hazardous waste are not internally inconsistent and bear a fair relation to the services provided by the City. Because appellant’s brief does not address the other elements of the Complete Auto test, we similarly decline to do so.

          We affirm the judgments of the county criminal court at law.

                                                                        Sherry Radack

                                                                        Chief Justice

Panel consists of Chief Justice Radack and Justices Nuchia and Hanks.

Publish. Tex. R. App. P. 47.