Lasser, P.J.T.C. (temporarily assigned).
This is an action in which plaintiffs challenge the constitutionality of the Counterpart Fee Act, N.J.S.A. 39:3-6. This act imposes a retaliatory fee or tax on trucks operating in New Jersey that are registered in one of the 18 states that impose a fee or tax on New Jersey registered trucks which New Jersey does not impose. Plaintiffs allege that the act violates the Commerce Clause, Art. I, § 8, cl. 3, and the Privileges and Immunities Clause, Art. IV, § 2, of the United States Constitution. There are two complaints involved, one brought by Private Truck Council of America, Inc. (hereinafter Private Truck) and the second brought by West Motor Freight, Inc. (hereinafter West). Private Truck and West are jointly referred to as plaintiffs. These two cases are now before the court on motions and cross-motions for summary judgment and have been consolidated for purposes of these motions.
Previous motions to certify a class were granted in the Private Truck case and denied in the West case. The Private Truck class is comprised of motor carriers engaged in interstate commerce in New Jersey whose trucks are registered in states against which New Jersey "retaliates" by levying a counterpart
fee. Motions for a preliminary injunction and an escrow fund for deposit of all taxes or fees paid by plaintiffs under the statute until the case is decided were denied in both cases. Private Truck has filed a tax refund claim pursuant to N.J.S.A. 54:39A-19 on behalf of the class. Plaintiffs seek attorneys' fees under 42 U.S.C. §§ 1983 and 1988.
At the oral argument of the motions for summary judgment plaintiffs moved the court to assume jurisdiction over an escrow fund established by New Jersey at the time the Pennsylvania axle tax was declared unconstitutional.*fn1 This motion was denied with the proviso that the fund would continue to be maintained by the State and plaintiffs and the court would be advised of any proposed change, at which time plaintiffs would have an opportunity to renew their motion.
These cases were instituted in the Superior Court and then transferred to the Tax Court. However, at the request of the parties, the cases were returned to the Superior Court because of concern expressed with respect to the jurisdiction of the Tax Court should the imposition in issue be held to be a fee and not a tax.
Generally, the 50 states impose two types of fees or taxes on interstate trucks operating within their borders -- motor fuel taxes and registration fees. Many states impose what are referred to as "third structure" taxes in addition to the "first structure" motor fuel taxes and "second structure" registration fees. The Pennsylvania axle tax of $36 per axle is an example of a third structure tax. Third structure taxes or fees are imposed for the purpose of raising revenue for the maintenance and improvement of roads.
The Counterpart Fee Act imposes a retaliatory tax or fee (similar to the insurance company retaliatory tax) on trucks that use New Jersey highways and are registered in one of the
18 states that impose third structure taxes on trucks registered in New Jersey. It is the intent of the statute to encourage reciprocal agreements*fn2 among the 50 states in an effort to achieve uniform impositions on interstate motor carriers or to secure the elimination of third structure taxes and lessen the burden of taxation on interstate commerce. Out-of-state registered trucks do not pay registration fees to New Jersey. The counterpart fee is less than the New Jersey registration fee. The amount that out-of-state registered trucks pay to operate in New Jersey is thus less than New Jersey registered trucks pay to operate in New Jersey, unless registration fees paid by out-of-state truckers to their state of registry are also included.
New Jersey is one of seven states with similar statutes, but the Maine statute has been declared unconstitutional*fn3 and the New Hampshire statute has been repealed, reducing the number of states to five. Challenges to the constitutionality of third structure retaliatory acts are pending in all five states.
The Counterpart Fee Act reads as follows:
When nonresident owner required to pay registration fee Except as otherwise provided by reciprocity agreement or arrangement entered into by the director or by a declaration issued by him, no motor vehicle or motor-drawn vehicle registered in another jurisdiction which requires the payment of a registration fee or fees or taxes of any other nature from an owner of a similar vehicle properly registered in this State for the operation of such vehicle on the highways of such other State, shall be operated on the highways of this State unless a fee is paid to the director, equal in amount to the fee or tax collected by the authorized official or body of such other jurisdiction for the operation on its highways of the motor vehicle or motor-drawn vehicle properly registered in this State. In the event that the fee or tax collected by such other jurisdiction is imposed for the registration of the vehicle therein, then in no case shall the fee paid to the director be less than the amount now or hereafter provided for by the laws of this State for the registration of a similar vehicle.
The Director shall from time to time promulgate such regulations as may be necessary for the effective enforcement of this section. [ N.J.S.A. 39:3-6.]
"Director" in the statute refers to the Director of the Division of Motor Vehicles.
Plaintiffs contend that the Counterpart Fee Act discriminates on its face against interstate commerce on three levels. First, the act discriminates in favor of New Jersey registered trucks because trucks engaged in interstate commerce that are not registered in New Jersey must pay a tax or fee that New Jersey registered trucks are not required to pay. Second, the act discriminates among classes of interstate commerce because the counterpart fee must be paid only by trucks registered in 18 of the 50 states. Third, the act discriminates among trucks registered in the 18 states that impose third structure taxes because the counterpart fee varies depending on the amount of third structure tax imposed by the state of registry.
Defendant contends that the act has a legitimate purpose: to ease the burden on interstate commerce by encouraging the elimination of third structure taxes and to promote reciprocity. It argues that retaliatory taxation for this purpose has been approved in the case of the insurance premiums retaliatory tax and that since the purpose has been held to be acceptable for Equal Protection purposes, some discrimination is permissible under the Commerce Clause. It urges that the Commerce Clause test is thus substantial discrimination, not facial discrimination. It argues that the counterpart fee is a highway tax and should be grouped with registration and motor fuel taxes in considering whether it constitutes an unconstitutional burden on interstate commerce because other highway user taxes are complementary to the counterpart fees. Defendant contends that plaintiffs have not established that when all highway fees and taxes are taken into account, they pay more per vehicle mile traveled in New Jersey than do New Jersey registered vehicles.
Defendant also maintains that the constitutionality of the Counterpart Fee Act was upheld in B & ...