Whether a ferry company transporting many out-of-state visitors between points within Massachusetts is “engaged in” interstate commerce.

Global Companies, a fuel company, sold fuel to Hy-Line and collected sales tax. Hy-Line provides about one quarter of the transportation between Cape Cod, Martha’s Vineyard and Nantucket. Its trips often pass through Federal or international waters in order to avoid shallow water, but begin and end within Massachusetts.

Global requested an abatement of sales tax on the basis that Hy-Line’s fuel was used by “vessels engaged in foreign and interstate commerce,” and thus exempt under G.L. c. 64H, § 6(o). The Appellate Tax Board upheld the Commissioner of Revenue’s refusal to abate. Global appealed, and the SJC transferred the case sua sponte from the Appeals Court. 

Global argues that Hy-Line’s vessels are “engaged in” interstate commerce because Hy-Line serves an essential government function in providing transportation, and provides a necessary leg in the journeys of interstate and foreign travelers, citing Opinion of the Justices to the House of Representatives, 428 Mass. 1201 (1998) (holding that a higher car rental tax for non-Boston residents would violate the Commerce Clause). In the alternative, Global argues that Hy-Line’s forays into Federal or international waters engage it in interstate commerce.

The Commissioner of Revenue responds that the plain terms of the statute apply only to vessels that travel between interstate or foreign ports—not those that transport goods or people within the state who may have originated outside. The Commissioner argues that the definition of interstate commerce used in Commerce Clause cases is overbroad for interpreting the statute, and that even under those cases, transportation between two points in a state is not “interstate” even if it passes out of the state without stopping.

Global’s argument, while clever, is unlikely to succeed. The concept of “interstate commerce” in the constitutional sense has been battered beyond recognition by rival factions on the Supreme Court—expanded, on the one hand, by those seeking to give Congress the tools it needs to govern an increasingly unified and interconnected Union, and cabined, on the other hand, by those seeking to protect the laboratory of the states. The SJC should avoid that jurisprudence in resolving what is a fairly straightforward statute, unless there is some compelling reason to refer to it. (An additional problem with using Commerce Clause jurisprudence, as the Appellate Tax Board notes, is that it would be difficult to limit to this case, as most vessels are involved to some degree in the stream of interstate commerce.)

Taking the statute at its face, the most plausible reading is that a vessel is only “engaged in” interstate commerce if it is travelling between in-state and out-of-state ports. While there could be interesting wrinkles for vessels that conducted commerce while on the high seas—gambling boats? ships offloading seafood catches?—Hy-Line is not doing so.