Header, the Administration of the Honorable Lincoln C. Almond
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July 21, 1998


I am transmitting to the Secretary of State, without my signature, 98-H 7959, As Amended, "An Act Relating to the City of Newport Boarding and Landing Fees."

This Act would authorize the city of Newport to collect a landing fee "from every cruise vessel landing at a dock in the city of Newport" of $2.00 for each passenger boarding or landing in a cruise ship in Newport. The Act requires the Newport City Council "to promulgate rules and regulations to implement the provisions of this section." A floor amendment increased the fee in the original bill from $1.00 to $2.00. The bill does not define "cruise vessel." A floor amendment, however, made the Act inapplicable to "ferries and water carries of persons and/or property doing business as common carriers operating upon waters between termini within the state." The Act does not become effective until January 1, 1999.

I support providing the City of Newport with increased revenues from cruise ships to use to pay for public services provided to these ships and their passengers. Cruise ships presently pay a fee to many of the ports to which they travel. I write to make the City aware of constitutional limits on the use of these proceeds, to express some concern over the constitutionality of the Act in its present form and to suggest language changes which would assist in blunting that concern.

Two relevant areas of constitutional import exist: first. Article I, Section 10, Clause 3, the "tonnage tax" prohibition of the United States Constitution; second, the dormant Commerce Clause of the Constitution.

In Stale v. Turnbaugh, 1997 WL 805382 (R.I. 1997), the Rhode Island Supreme Court recently struck down the State's boat'registration fee under the "tonnage tax" provision of the Constitution because the money was not legislatively mandated to be spent for purposes benefitting those who pay the fee. Tonnage taxes include all taxes which "operate to impose a charge for the privilege of entering, trading in, or lying in a port." Id. Such a fee is constitutionally permissible only when the revenue derived therefrom is legally required to be used for the sole purpose of providing services to those who pay the tax, i.e, a user fee. The State responded to Turnbaugh by re-establishing a restricted receipt account dedicating the registration proceeds to boating-related purposes. The present Act imposes a tonnage tax because it contains no restriction on use of the tax by the City. The City Council must by ordinance dedicate all revenue derived from the landing fee to purposes declared legal by established case law. Both my Administration and the Office of Attorney General will provide assistance if requested.

The second issue may be more problematic. In a long line of cases the United States Supreme Court has held that the dormant Commerce Clause of the Constitution prevents states from discriminating between in-state and out-of-state interests, particularly interstate commerce. In 1849, in Smith v. Turner, 48 U.S. 283, the Supreme Court held unconstitutional a $ 1.00 per passenger landing fee collected in the port of New York from all vessels landing there. Similar challenges to a head tax on airline travel have been upheld, but in these cases the tax applied both to interstate and intrastate flights. See, e.g., Evansville-Vanderburgh Airport Auth. Disi. v. Delta Airlines, 405 U.S. 707(1972).

The potential problem stems from the floor amendment to the bill which excludes "ferries and water carries of persons and/or property doing business as common carriers operating upon waters between termini within the state." The amendment would protect in-state vessels, such as the Block Island Ferry and the Bay Queen from the fee. While it certainly is true that the Ferry carries many out-of state passengers, the express exclusion of local vessels is constitutionally suspect. Quite arguably, the amendment was not even necessary since these boats are not typically considered "cruise vessels." What was and is necessary is a factually-neutral definition of "cruise vessel." Defining a "cruise vessel" as "any vessel for hire providing overnight accommodations to an excess of 100 people" would clarify the entities to which the fee was intended to apply. This definition could be adopted by the Newport City Council before the Act takes effect on January 1 and the General Assembly could pass the same definition and repeal the floor amendment early in its next session.

These changes would certainly buttress the constitutionality of the Act. Again, the City Council must also ensure that the fees from the cruise ships are applied toward public service costs for the ships and their passengers. This should be made easier with the construction of a new marine terminal in Newport to serve these passengers.

It should be noted that a similar landing fee of 50 cents per passenger has been in effect in New Shoreham for several years. That fee, however, expressly applies to all passengers arriving on Block Island on any private or public boat from anywhere. The use of the proceeds is also limited by statute for the benefit of the tourists who pay the fee. Thus, the charge likely constitutes a permissible user fee applying to residents of Rhode Island and other states equally.

With the foregoing explanation. I allow this bill to become law without my signature.


Lincoln Almond