B-144550, DEC. 16, 1960

B-144550, DEC. 16, 1960

TO WARREN OLNEY III, DIRECTOR, ADMINISTRATIVE OFFICE OF THE UNITED STATES COURTS:

WE REFER TO YOUR LETTER OF NOVEMBER 29, 1960, INQUIRING WHETHER THE 2 PERCENT MUNICIPAL CHARGE ON TELEPHONE SERVICE AT NEW ORLEANS, LOUISIANA, IS PAYABLE BY THE FEDERAL GOVERNMENT. THE QUESTION ARISES INCIDENT TO A REQUEST OF THE CLERK OF THE UNITED STATES DISTRICT COURT AT NEW ORLEANS FOR AUTHORITY TO CERTIFY FOR PAYMENT THE AMOUNT OF SUCH CHARGE IN THE MONTHLY BILL OF THE SOUTHERN BELL TELEPHONE AND TELEGRAPH COMPANY.

AN ORDINANCE OF THE CITY OF NEW ORLEANS, NO. 1972, APPROVED AUGUST 11, 1960, AUTHORIZED THE MAYOR OF THE CITY TO EXECUTE A SETTLEMENT ON BEHALF OF THE CITY WITH THE SOUTHERN BELL TELEPHONE AND TELEGRAPH COMPANY RELATIVE TO CERTAIN STREET USE CHARGES. THE AGREEMENT, THE TERMS OF WHICH WERE PRESCRIBED BY THE ORDINANCE, PROVIDES:

"2. THE COMPANY WILL * * *

"/C) BEGINNING WITH EACH CUSTOMER'S FIRST BILLING DATE ON AND AFTER THE 22ND DAY OF AUGUST, 1960, PAY TO THE CITY 2 PERCENT OF THE COMPANY'S GROSS RECEIPT FROM BASIC RENTALS PAID BY TELEPHONE SUBSCRIBERS FOR RENTAL OF TELEPHONES IN THE CITY OF NEW ORLEANS, AND 2 PERCENT OF ITS GROSS BASIC CHARGES FOR TELETYPEWRITER LOCAL SERVICE ORIGINATING AND TERMINATING IN THE CITY OF NEW ORLEANS, AND 2 PERCENT OF ITS GROSS BASIC CHARGES FOR LOCAL PRIVATE LINE SERVICES ORIGINATING AND TERMINATING IN THE CITY OF NEW ORLEANS; SAID PAYMENTS TO BE MADE IN QUARTERLY INSTALLMENTS AND PAID NOT LATER THAN 30 DAYS AFTER THE END OF EACH QUARTER, THE FIRST OF SAID PAYMENTS FOR THE PERIOD ENDING SEPTEMBER 30, 1960, TO BE MADE ON OR BEFORE OCTOBER 30, 1960; SAID PAYMENTS TO BE MADE ONLY SO LONG AS ACT NO. 247 OF THE REGULAR SESSION OF THE LOUISIANA LEGISLATURE OF THE YEAR 1960 SHALL BE IN FULL FORCE AND EFFECT. * * *"

SECTION 1 OF THE LOUISIANA LEGISLATIVE ACT OF 1960, NO. 247, REFERRED TO IN THE AGREEMENT STATES:

"WHENEVER ANY MUNICIPALITY OF THE STATE OF LOUISIANA SHALL COLLECT OR RECEIVE ANY PAYMENT FROM ANY PUBLIC UTILITY OPERATING WITHIN SUCH MUNICIPALITY, INCLUDING THOSE UTILITIES WHOSE RATES AND CHARGES ARE REGULATED BY THE LOUISIANA PUBLIC SERVICE COMMISSION, FOR OR BY REASON OF THE USE OF ITS STREETS, ALLEYS OR PUBLIC WAYS OR PLACES, OR FOR OR BY REASON OF THE OPERATION OF THE UTILITY'S BUSINESS OR BY REASON OF ANY AGREEMENT BETWEEN SUCH MUNICIPALITY AND THE UTILITY, WHETHER SUCH PAYMENT BE CALLED A LICENSE, OCCUPATIONAL, PRIVILEGE, FRANCHISE OR INSPECTION TAX, CHARGE OR FEE, OR OTHERWISE, THE AMOUNT OF SUCH TAX OR PAYMENT MAY, TO THE EXTENT THAT SUCH TAX OR PAYMENT WAS NOT INCLUDED AS A PART OF THE COST OF FURNISHING SERVICES IN THE FIXING OF THE RATES AND CHARGES FOR SUCH SERVICES BY THE LOUISIANA PUBLIC SERVICE COMMISSION, BE ADDED TO THE SALES PRICE OF SUCH PUBLIC UTILITY'S SERVICE AND BILLED PRO-RATA TO THE UTILITY'S CUSTOMERS RECEIVING LOCAL SERVICE WITHIN THE MUNICIPALITY COLLECTING SUCH TAXES OR RECEIVING SUCH PAYMENTS.'

THE DOUBT CONCERNING THE PROPRIETY OF THE PAYMENT OF THE 2 PERCENT CHARGE IS APPARENTLY AS TO THE APPLICABILITY OF THE CONSTITUTIONAL DOCTRINE OF INTERGOVERNMENTAL IMMUNITY FROM TAXATION. ASSUMING THE CHARGE TO BE A TAX, ALTHOUGH THAT IS NOT THE POSITION OF THE TELEPHONE COMPANY, THE LEGAL INCIDENCE THEREOF IS BY THE TERMS OF THE CITY ORDINANCE ON THE COMPANY, THE PUBLIC UTILITY, NOT THE UNITED STATES, THE CONSUMER; AND THUS THE IMMUNITY DOCTRINE WOULD NOT BE APPLICABLE. "THE CONSTITUTION DOES NOT EXTEND SOVEREIGN EXEMPTION FROM STATE TAXATION TO CORPORATIONS OR INDIVIDUALS, CONTRACTING WITH THE UNITED STATES, MERELY BECAUSE THEIR ACTIVITIES ARE USEFUL TO THE GOVERNMENT.' ESSO STANDARD OIL CO. V. EVANS, 345 U.S. 495, 500. NOR DOES THE CONSTITUTIONAL DOCTRINE PRECLUDE THE PASSING OF THE ECONOMIC BURDEN OF THE TAX TO THE UNITED STATES AS THE CUSTOMER OF THE TAXED UTILITY. JAMES V. DRAVO CONTRACTING CO., 302 U.S. 134; ALABAMA V. KING AND BOOZER, 314 U.S. 1.

THE LEGISLATIVE ACT OF LOUISIANA HAVING AUTHORIZED THE ADDITION OF THE MUNICIPAL CHARGE TO THE SALES PRICE OF THE UTILITY'S SERVICE, WE SEE NO BASIS, ASSUMING THE ESTABLISHED RATES DO NOT OTHERWISE REFLECT SUCH A MUNICIPAL CHARGE, FOR DENIAL OF PAYMENT OF THE CHARGE. THE CLERK OF THE DISTRICT COURT MAY BE AUTHORIZED TO CERTIFY FOR PAYMENT THE AMOUNT OF THE CHARGE IN THE MONTHLY BILLING. SEE B-142864, AUGUST 2, 1960.