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DONOVAN v. WASHINGTON METRO. AREA TRANSIT AUTH.

July 19, 1985

RAYMOND J. DONOVAN, Secretary of Labor, Plaintiff,
v.
WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY, Defendant



The opinion of the court was delivered by: PARKER

 Barrington D. Parker, District Judge:

 Before the Court are cross-motions for summary judgment filed by the parties in the above-captioned matter. The resolution of this case turns upon whether the Washington Metropolitan Area Transit Authority (WMATA), which is tax-exempt, is required to contribute to a special fund under section 44(c)(2) of the Longshore and Harbor Workers' Compensation Act ("LHWCA"), 33 U.S.C. § 944(c)(2) (Supp. 1985). Because the Court is convinced that the required contribution does not constitute taxation and that, in any event, WMATA's exemption would not be applicable to workmen's compensation contributions, the Court grants summary judgment for plaintiff.

 I.

 BACKGROUND

 WMATA operates public transit facilities and services in the metropolitan Washington, D.C. area. It is a creature of an interstate compact ratified by the Congress. See D.C. Code 1-2431 (Supp. 1984). In addition to declaring the purposes, functions, organization and operation of WMATA, the Compact also provides that WMATA "shall not be required to pay taxes or assessments upon any of the property acquired by it or under its jurisdiction, control, possession or supervision or upon its activities in the operation and maintenance of any transit facilities or upon any revenues therefrom and the property and income derived therefrom shall be exempt from all federal, State, District of Columbia, municipal and local taxation. . . ."

 WMATA, as an employer in the District of Columbia, is subject to the LHWCA, as extended by the District of Columbia Workmen's Compensation Act, 45 Stat. 600, formerly codified at 36 D.C. Code §§ 501-502 (1973) ("DCWCA"). *fn1" The LHWCA is designed to insure that eligible employees are compensated fairly for claims arising out of their employment and is to be liberally construed. Director, Office of Workers' Compensation Programs, United States Department of Labor v. Perini North River Associates, 459 U.S. 297, 74 L. Ed. 2d 465, 103 S. Ct. 634 (1983). As part of the scheme for funding of claims, section 44(c)(2) of the LHWCA requires that every insurer of an employer under the Act contribute to a "special fund," the purpose of which is to provide supplemental compensation to claimants in specific instances. *fn2"

 From 1973 until the time this action was commenced, WMATA operated as a self-insurer under the LHWCA. See 33 U.S.C. § 932(a)(1) and (2). As required of all self-insurers, WMATA contributed to the special fund without protest from 1973 until the middle of 1983, when it refused to make any further payments. *fn3" WMATA asserted in the middle of 1983 that its tax exemption under § 78 of the Compact excused it from liability under § 44(c)(2) of the LHWCA. The Court is called upon to determine whether this assertion is accurate and tenable.

 II.

 ANALYSIS

 A. Contributions Under Section 44(c)(2) Do Not Constitute Taxation

 WMATA argues in support of its contention that it has a tax-exempt status, that the contributions required by the LHWCA constitute a tax and not some other form of payment from which it would not be exempt. In support of this argument, it relies upon Massachusetts v. United States, 435 U.S. 444, 55 L. Ed. 2d 403, 98 S. Ct. 1153 (1978). *fn4" However, the Court concludes that defendant's reliance on this case is misplaced. Massachusetts v. United States involved a determination whether a charge was a tax or a user fee under the Airport and Airway Revenue Act of 1970. The test enunciated *fn5" in that case was specifically tailored to address the question of whether a "registration tax" imposed by the federal government constituted an abuse of the federal taxing powers so as to interfere with a state's ability to perform essential services. The Court did not undertake to define a tax for general purposes and the specific factual and legal context in which that case arose makes it an undesirable precedent to govern the instant litigation. By contrast, several other cases indicate that an involuntary payment is a tax when it is assessed upon persons or property in order to raise general revenue to defray the public expense. Pace v. Hannibal, 680 S.W. 2d 944 (Mo. 1984); Nebraska Public Power District v. Hershey School District, 207 Neb. 412, 299 N.W. 2d 514 (1980); Bob Pearsall Motors, Inc. v. Regal Chrysler-Plymouth, Inc., 521 S.W. 2d 578 (Tenn. 1975). This general rule suggests that contributions used to supply a specific fund with a specific purpose -- in this case providing supplemental benefits in second injury cases -- are not "taxes" within the meaning of the WMATA Compact. *fn6" The funds contributed under § 44(c)(2) of the LHWCA do not in a general sense finance the public expense. To the contrary, these funds are utilized only to provide supplemental benefits in second injury or upgraded compensation cases. As such, they hardly can be viewed as a tax, as generally defined.

 B. Even if Contributions Under Section 44(c)(2) Constitute Taxation, Tax Exemption Does Not Apply

 If the contribution into the special fund is not a tax, then there is no statutory exemption shielding WMATA from liability. However, even if the contribution were to be viewed as a tax, the statutory exemption would not apply in this case, based on the controlling statutory construction, ...


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