Court: District Court, D. Maryland; December 27, 2015; Federal District Court
Clear Channel Outdoor, Inc. filed a Motion for Summary Judgment against the Mayor and City Council of Baltimore regarding the Billboard Ordinance (Ordinance 13-139), which imposes fees on outdoor advertising displays. Clear Channel claims the ordinance, which it argues violates the First and Fourteenth Amendments, will cost it $1.5 million annually. The City contends the ordinance is a tax under the Tax Injunction Act (TIA), asserting that the court lacks jurisdiction. The court previously denied the City's motion to dismiss, classifying the ordinance as a fee rather than a tax at that stage. In the current decision, the court denies Clear Channel's Motion for Summary Judgment and grants the City's Cross-Motion for Summary Judgment, determining that the Billboard Ordinance constitutes a tax under the TIA. The court also outlines the standard for granting summary judgment, emphasizing that the moving party must demonstrate the absence of genuine issues of material fact and that the non-moving party bears the burden of proving such disputes exist.
The nonmoving party cannot establish a genuine issue of material fact through speculation or inferences alone. A mere factual dispute will not prevent a properly supported summary judgment motion; a genuine issue must exist regarding material facts that could influence the case's outcome. Materiality is assessed based on substantive law, and only relevant disputes that could affect the result under governing law can preclude summary judgment. A genuine issue arises when evidence allows a reasonable jury to rule in favor of the nonmoving party. When cross-motions for summary judgment are filed, the court must evaluate each motion independently, resolving factual disputes and rational inferences in favor of the opposing party. However, the court must also prevent unsupported claims from proceeding to trial. If the nonmoving party presents evidence that is merely colorable or not significantly probative, summary judgment is warranted.
In this case, Clear Channel's Motion for Summary Judgment will be denied, and the City's Cross-Motion will be granted because the Billboard Ordinance qualifies as a "tax" under the Tax Injunction Act (TIA), which limits federal jurisdiction over state tax matters when an adequate state remedy exists. The court must determine if a speedy and efficient state remedy is available and whether the charge in question is a tax or fee. Clear Channel does not dispute the existence of a state remedy, making the classification of the Billboard Ordinance as the sole question. The distinction between a tax and a fee is based on whether the charge is intended for revenue generation (tax) or for regulatory/punitive purposes (fee), with charges existing on a spectrum between these two categories.
The legal analysis distinguishes between a "classic tax" and a "classic fee." A classic tax is levied by the legislature on a broad segment of society to benefit the community, while a classic fee is imposed by an administrative agency on specific regulated entities to cover regulatory costs. The Fourth Circuit's three-prong inquiry helps determine the classification of a charge: 1) the entity imposing the charge, 2) the population subject to the charge, and 3) the purposes for which the collected funds are used. Ambiguity often arises when a legislative body imposes a charge that affects a narrow segment of the population.
In examining the Billboard Ordinance, the first prong indicates it is a tax since it is enacted by the Baltimore City Council and collected by the city's tax assessor. Conversely, the second prong suggests it is a fee because it primarily impacts a limited number of entities, with Clear Channel responsible for the majority of the financial burden. Although the City argues that a charge can be classified as a tax even if it affects a narrow population, the analysis cites cases demonstrating that charges can indeed be categorized as taxes under similar circumstances.
The Court finds the Fourth Circuit case GenOn to be relevant in determining the nature of a charge imposed by a county bill on large carbon dioxide emitters. In GenOn, the court concluded that a charge was a fee rather than a tax because it uniquely burdened GenOn, despite the bill’s broad language. In the current situation, while multiple entities operate under the Billboard Ordinance, Clear Channel bears the majority of the financial responsibility, with its $1.5 million obligation significantly overshadowing the other entities’ minimal $100,000 total. The Baltimore City Council recognized this disproportionate burden.
Additionally, the court evaluated arguments regarding the classification of the Billboard Ordinance. The ordinance's exclusion of "onsite" displays and those smaller than ten square feet limits its applicability, contradicting claims of it being a broad tax. The focus on the actual impact of the charge supports the conclusion that it acts as a punitive fee.
The court also assessed the revenue allocation under the third prong, which considers whether revenue benefits the general public or a specific group. Revenue from the Billboard Ordinance is credited to the City’s General Fund, yet a portion is allocated specifically for the Art and Culture Ordinance, which benefits a narrowly defined group, indicating that the charge functions as a fee rather than a tax.
The Fund is designed to provide small grants to non-profit organizations for cultural community-based programming. Clear Channel argues that the Art and Culture Ordinance indicates the Billboard Ordinance functions as a fee, as the city intended to allocate its revenue specifically for arts and culture support. Clear Channel cites a 2013 hearing where a city official noted that $1.0 million from the Billboard Ordinance was budgeted for arts and culture. However, the evidence shows that the revenue benefits the general public, funding programs in public schools, theaters, and museums, rather than exclusively aiding billboard owners or covering outdoor advertising regulation costs.
Clear Channel also claims the Billboard Ordinance has regulatory purposes that imply it is a fee, referencing two categories: generating income to cover regulatory costs or discouraging certain behaviors by increasing expenses. Citing case law, the distinction is made that if revenue from a charge is used to advance a regulatory agenda, it is a fee; if it benefits the general public, it is classified as a tax. The excerpt illustrates contrasting examples: a carbon charge in Montgomery County, used to fund greenhouse gas reduction, is deemed a fee; while licensing fees from a West Virginia gambling act, used for public benefit programs, are classified as a tax.
The Billboard Ordinance states that outdoor advertising diminishes the City’s revenue potential and seeks to allocate the economic burdens associated with it. While these recitals imply that the City intended to generate revenue for regulating outdoor advertising, Clear Channel has not provided evidence that such revenue is designated for regulation costs. Instead, the City has allocated Billboard Ordinance revenue to arts and culture, unrelated to billboard regulation. The Ordinance also claims that outdoor advertising poses public safety risks by distracting drivers, suggesting an intent to discourage such advertising through increased costs. However, there is no evidence that the revenue from the Ordinance is used to enhance driver safety or discourage distractions. The Court concludes that the Ordinance functions as a tax rather than a regulatory fee, as it does not serve the regulatory agenda or provide specific benefits to those regulated. This conclusion leads to a lack of subject-matter jurisdiction to address the constitutional challenge. Consequently, Clear Channel’s Motion for Summary Judgment is denied, while the City’s Cross-Motion for Summary Judgment is granted. The analysis distinguishes this case from prior rulings, as the Billboard Ordinance affects multiple entities rather than solely Clear Channel.
