Appeals from the Superior Court of the District of Columbia; (Hon. John F. Doyle, Motions Judge)
Before Rogers, Chief Judge, and Ferren and Farrell, Associate Judges. Per Curiam Opinion for the court. Concurring opinion of Associate Judge Farrell
The opinion of the court was delivered by: Per Curiam
PER CURIAM: These seven consolidated appeals represent the continuation of litigation by long-distance telephone companies challenging the D.C. Gross Receipts Tax Amendment Act of 1987 (the 1987 Act). See Barry v. American Tel. & Tel. Co., 563 A.2d 1069 (D.C. 1989). Appellants here *fn1 contend that the motions Judge erred as a matter of law in granting summary judgment to the District of Columbia. Thus, we are confronted with appellants' contentions that the Council of the District of Columbia lacked the authority to enact the 1987 Act under the Origination Clause of the United States Constitution, and that the 1987 Act violates the Commerce Clause of the Constitution because the limited exemption of long-distance companies from the District's personal property tax, and certain sales and use taxes, discriminates against out-of-District of Columbia carriers. We hold that the Council had the authority to enact the 1987 Act. We further hold, consistent with recent decisions of the United States Supreme Court involving the internal consistency principle, that the limited exemptions in the 1987 Act violate the Commerce Clause. Accordingly, we reverse the grant of summary judgment. *fn2
The background of this tax litigation, which followed AT&T's divestiture of its local operating companies in connection with the antitrust suit in United States v. American Tel. & Tel. Co., 552 F. Supp. 131 (D.D.C. 1982), aff'd mem., 460 U.S. 1001, 103 S.Ct. 1240, 75 L.Ed 2d 472 (1983), is set forth in Barry v. American Tel. & Tel. Co., supra, 563 A.2d at 1070-1073. For our purposes it suffices to state that the Council of the District of Columbia enacted the D.C. Gross Receipts Tax Amendment Act of 1987 in an attempt to recapture revenues that it had to refund as a result of the divestiture of AT&T in January, 1984. *fn3 The 1987 Act required telecommunications companies previously exempt from the gross receipts tax to pay a 6.7 percent tax on gross receipts received from the sale of toll communications services that originated from or terminated on telecommunications equipment located in the District of Columbia and billed to a District telephone. *fn4 The 1987 Act also provided for exemptions from the District's personal property tax, and certain sales and use taxes, whenever a company had property in the District of Columbia that produced gross receipts subject to the gross receipts tax. *fn5 It also provided for a credit against the gross receipts tax for personal property taxes on such property paid to the District of Columbia during the period of retroactivity, July 1, 1986, through September 30, 1987. *fn6
Following argument, the motions Judge granted the District's motion for summary judgment, issuing a written decision on February 18, 1992. *fn7 See Cable & Wireless Communications, Inc. v. District of Columbia, Tax No. 4091-88 (D.C. Super. Ct. Feb. 18, 1992) (Opinion of Judge Doyle). Appellants now contend that the Gross Receipt Tax Amendment Act of 1987 is unconstitutional on three grounds: (1) it was enacted by the Council of the District of Columbia in violation of the Origination Clause of the United States Constitution; (2) it violates appellants' right under the Commerce Clause to be free of discriminatory burdens on out-of-state competitors; and (3) it violated Due Process as a result of its retroactivity provisions in light of the foreclosure to appellants under federal law of recovery of the tax from their customers. *fn8 We address only the first two contentions. *fn9 See Holland v. Hannan, 456 A.2d 807, 814 (D.C. 1983) (standard of review of grant of summary judgment).
Appellants contend that the 1987 Act was unconstitutional because it violated the Origination Clause in two respects: first, because the District of Columbia Self-Government and Governmental Reorganization Act of 1973, D.C. Code §§ 1-201 et seq. (Repl. 1992), originated in the Senate as S. 1435, 93d Cong., 1st Sess (1973), the delegation of taxing authority to the District government did not satisfy the requirement of House of Representatives origination; and second, because the Origination Clause has always been understood to apply to District of Columbia taxes, the 1987 Act is invalid.
The motions Judge correctly rejected these arguments. The Origination Clause of the Constitution, art. I, § 7, cl. 1, provides that "all bills for raising revenue shall originate in the House of Representatives." As Judge Doyle observed in his opinion, the provision derived from the British tradition that money bills must originate in the House of Commons, not the House of Lords. *fn10 Further, the provision has never prevented delegations of taxing authority to the District of Columbia or to the territorial governments. *fn11 Indeed, as the District of Columbia points out in its brief, the delegation of legislative authority under the D.C. Self-Government act, see D.C. Code § 1-204, quoted (infra), is virtually identical to that in the District's Organic Act of 1871, ch. 62, 16 Stat. 419, 423, and substantially like the legislative powers of the territorial governments. See supra note 11 and District of Columbia v. John R. Thompson Co., 346 U.S. 100, 105, 97 L. Ed. 1480, 73 S. Ct. 1007 (1953) (analogizing the delegation of legislative power under the Act of 1871 to similar grants to territorial governments).
The significance of these delegations, as the District points out, arises from the fact that such delegations to subordinate governments of taxing power predated the Constitution, and their continuance by the First Congress clearly demonstrates that the Origination Clause applies only to tax measures to finance the general government. *fn12 Thus, the purpose of the Origination Clause, relating to the distribution of power within Congress, was to give to the immediate representatives of the people "the primary role in raising revenue" to finance the general, federal government. *fn13 See United States v. Munoz-Flores, 495 U.S. 385, 394-95, 109 L. Ed. 2d 384, 110 S. Ct. 1964 (1990) (citing THE FEDERALIST No. 58). Consequently, we agree with the District that the grant to citizens of the District of Columbia, who have no voting representative in Congress, of the power to enact local taxes is fully consistent with the Founding Fathers' intention that there would be self-government for citizens of the seat of government. See THE FEDERALIST No. 43, at 282 (James Madison) (Paul L. Ford ed., 1898).
The D.C. Self-Government Act provides that:
Except as provided in §§ 1-206, 1-233, 47-313, the legislative power of the District shall extend to all rightful subjects of legislation within the District consistent with the Constitution of the United States and the provisions of this Act subject to all the restrictions and limitations imposed upon the states by the 10th section of the 1st article of the Constitution of the United States.
D.C. Code § 1-204 (Repl. 1992). The chairman of the Senate District Committee, who was also the manager of the bill in the Senate, explained that by this legislation it was intended, with exceptions for taxation of federal property and enactment of an income tax on nonresidents, that the elected Mayor and Council of the District of Columbia "can decide in what way and how much to tax their citizens, can enact local ordinances into law, and can begin to shape their own destiny as should be the right of all American citizens." 119 Cong. Rec. 22947 (1973) (Senator Eagleton). *fn14
We reject appellants' argument that because the D.C. Self-Government Act provides the source of the local government's taxing authority, that law had to originate in the House of Representatives. The term "revenue bill," for Origination Clause purposes, refers only to bills that "levy taxes in the strict sense of the word, and are not bills for other purposes which may incidentally create revenue.'" United States v. Munoz-Flores, supra, 495 U.S. at 397 (quoting Twin City Bank v. Nebeker, 167 U.S. 196, 202, 42 L. Ed. 134, 17 S. Ct. 766 (1897)) (citing 1 J. STORY, COMMENTARIES ON THE CONSTITUTION § 880, pp. 610-11 (3d ed. 1858)). Consequently, "a statute that creates a particular government program and that raises revenues to support that program, as opposed to a statute that raises revenue to support Government generally, is not a 'Bill for raising Revenue' within the meaning of the Origination Clause." Id. at 398. In Twin City Bank v. Nebeker, supra, 167 U.S. at 202-03, the Supreme Court determined that the test for whether a particular bill is a revenue bill rests upon the bill's "main purpose." See United States v. Wilson, 901 F.2d 1000, 1004 (11th Cir. 1990) ("where the purpose of an act is 'to raise revenue to be applied in ...