Next, the City observed that, in the context of state taxation, Congress's intent to preempt a local tax had to be "unmistakably clear" and balanced against the presumption that Congress did not intend to supplant state law, a burden that Wendella was required to overcome. The City argued that the MTSA, an amendment to the RHA, was intended to only prohibit fees and tolls on vessels and passengers that were "passing through" on federally navigable waters and was not clear as to whether local commercial sales transactions were preempted, citing the MTSA's legislative history and a case from Hawaii, Reel Hooker Sportfishing, Inc. v. Department of Taxation, 236 P.3d 1230 (Haw. Ct. App. 2010), in support. The City characterized the tour boat operator tax as one imposed for the privilege of offering an amusement within the city and reasoned that just because the amusement occurred on a boat did not mean that the tour boats were now "vessels" as contemplated by section 5(b), citing an unpublished federal slip opinion, Lil' Man in the Boat, Inc. v. City & County of San Francisco, No. 17-cv-00904-JST, 2019 WL 8263440 (N.D. Cal. Nov. 26, 2019), in support.
Rep.).See State, Dep't of Nat. Res. v. Alaska Riverways, Inc ., 232 P.3d 1203, 1222 (Alaska 2010) (explaining that § 5(b), "like the Commerce and Tonnage Clauses, prohibits levying fees on the use of navigable waters unless those fees do not impose a significant burden on interstate commerce"); Reel Hooker Sportfishing, Inc. v. State, Dep't of Taxation , 123 Hawai'i 494, 236 P.3d 1230, 1235-36 (Haw. App. 2010) ; Lil’ Man In The Boat, Inc. v. City & Cty. of San Francisco , No. 17-cv-00904-JST, 2019 WL 8263440, at *8-9 (N.D. Cal. Nov. 26, 2019).Reel Hooker Sportfishing, Inc. , 236 P.3d at 1234-36.
Properly construed, the Act forbids taxes imposed on the vessel itself, or on its crew members themselves, or on the passengers themselves—not taxes imposed on property purchased for use on or by a vessel, or by its crew, or by its passengers. See, e.g., Commercial Barge Line Co. v. Dir. of Revenue, 431 S.W.3d 479, 484 (Mo. 2014) (holding that there was no violation of the Act where the state "assess[ed] sales and use tax on the goods and supplies delivered to the Taxpayers' towboats while they [were] in Missouri"); Reel Hooker Sportfishing, Inc. v. Dep't of Taxation, 123 Hawai'i 494, 236 P.3d 1230, 1232 (Haw. Ct. App. 2010) (" 33 U.S.C. § 5(b) does not preempt the assessment of [Hawaii's general excise tax] because [it] is a tax assessed on gross business receipts for the privilege of doing business in Hawai'i, and is not a tax on their vessels or passengers."). If exempting water carriers from the sales and use tax that rail carriers pay is to be justified, it must be on some basis other than the Commerce Clause or the Maritime Transportation Security Act.
Properly construed, the Act forbids taxes imposed on the vessel itself, or on its crew members themselves, or on the passengers themselves—not taxes imposed on property purchased for use on or by a vessel, or by its crew, or by its passengers. See, e.g., Commercial Barge Line Co. v. Dir. of Revenue, 431 S.W.3d 479, 484 (Mo. 2014) (holding that there was no violation of the Act where the state "assess[ed] sales and use tax on the goods and supplies delivered to the Taxpayers’ towboats while they [were] in Missouri"); Reel Hooker Sportfishing, Inc. v. Dep’t of Taxation, 236 P.3d 1230, 1232 (Haw. Ct. App. 2010) (" 33 U.S.C. § 5(b) does not preempt the assessment of [Hawaii’s general excise tax] because [it] is a tax assessed on gross business receipts for the privilege of doing business in Hawai’i, and is not a tax on their vessels or passengers."). If exempting water carriers from the sales and use tax that rail carriers pay is to be justified, it must be on some basis other than the Commerce Clause or the Maritime Transportation Security Act.
"The U.S. House Conference Report state[d] that the purpose of 33 U.S.C. § 5(b) was ‘to clarify existing law with respect to Constitutionally permitted fees and taxes on a vessel,’ and ‘to prohibit fees and taxes on a vessel simply because that vessel sails through a given jurisdiction.’ " Reel Hooker Sportfishing, Inc. v. State, Dep't of Taxation, 236 P.3d 1230, 1235 (Haw. Ct. App. 2010) (quoting H.R. Rep. No. 108–334, at 180 (2002) (Conf. Rep.) ).
In contrast, and relevant here, other courts have found that the MTSA's "prohibition does not apply to taxes imposed on things other than the vessel, its passengers, or crew, such as taxes on the fuel used, or the privilege of doing business or using goods or services in the state." Id. (citing Commercial Barge Line Co. v. Director of Revenue , 431 S.W.3d 479, 484 (Mo. 2014) (no violation of MTSA where state was "assessing sales and use tax on the goods and supplies delivered to the Taxpayers' towboats while they [were] in Missouri" and not "taxing the barges, towboats, or their crews"), and Reel Hooker Sportfishing, Inc. v. Department of Taxation , 236 P.3d 1230, 1232 (Haw. Ct. App. 2010) (" 33 U.S.C. § 5(b) does not preempt the assessment of [the Hawaii general excise tax] on the charter fishing revenue of these Hawaii businesses because [the general excise tax] is a tax assessed on gross business receipts for the privilege of doing business in Hawaii, and is not a tax on their vessels or passengers")). The court agrees with this plain reading of the MTSA, and finds that it does not preempt the imposition of a sales tax on the diesel fuel used by water carriers.
. See also Reel Hooker Sportfishing, Inc. v. State Dep't of Taxation, 236 P.3d 1230, 1234 (Haw. Ct. App. 2010) (holding that the express language Section 5(b) refers only to vessels and their passengers and crews) (emphasis in original).
Rather, it is assessing sales and use tax on the goods and supplies delivered to the Taxpayers' towboats while they are in Missouri. In this way, the instant case is similar to Reel Hooker Sportfishing, Inc. v. State Dep't of Taxation, 123 Hawai'i 494, 236 P.3d 1230 (Haw.Ct.App.2010), in which the state assessed a general excise tax against a charter fishing company that navigated the waters surrounding various Hawaiian islands. Although the taxpayers argued that this violated the Maritime Transportation Security Act, the court found that the general excise tax was assessed on the “privilege of doing business in Hawaii” and not on the boats themselves.