Rockwater, Inc. v. United States

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[PUBLISH]

In the

United States Court of Appeals

For the Eleventh Circuit

____________________

No. 23-11893

____________________

ROCKWATER, INC.,

d.b.a. Peerless Manufacturing Company,

Plaintiff-Appellee,

versus

UNITED STATES OF AMERICA,

By and Through Its Agent, The Commissioner

of Internal Revenue,

Defendant-Appellant.

____________________

Appeal from the United States District Court

for the Middle District of Georgia

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D.C. Docket No. 4:21-cv-00125-CDL

____________________

Before WILLIAM PRYOR, Chief Judge, and LUCK and HULL, Circuit

Judges.

HULL, Circuit Judge:

This appeal requires us to decide whether specially designed

peanut trailers that dry and transport peanuts from farm fields to

off-site buying points on public roads are “off-highway

transportation vehicles” that are exempt from a 12 percent excise

tax that applies to the first retail sale of “[t]ruck trailer and

semitrailer chassis” and “[t]ruck trailer and semitrailer bodies.”

26 U.S.C. §§ 4051(a)(1)(C), (D), 7701(a)(48)(A)(i).

An Internal Revenue Service (“IRS”) audit determined that

Plaintiff-Appellee Rockwater, Inc., doing business as Peerless

Manufacturing Company, owed excise taxes on the sale of three

peanut-drying trailers. Rockwater paid the taxes, statutory

interest, and penalties but filed a claim for a refund from the IRS.

Rockwater then filed this lawsuit against the United States, the

Defendant-Appellant, for a full refund and attorney’s fees. The

district court granted summary judgment in favor of Rockwater as

to its refund request for the excise taxes, statutory interest, and

penalties, but denied Rockwater’s request for attorney’s fees. The

United States appealed.

After review, and with the benefit of oral argument, we

conclude that the district court erred in concluding that

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Rockwater’s peanut-drying trailers are “off-highway transportation

vehicles” that are exempt from the tax. Id. § 7701(a)(48)(A)(i). We

reverse in part the grant of summary judgment to Rockwater and

remand with instructions to enter final judgment for the United

States for taxes and statutory interest. Given the government did

not appeal the penalties, we affirm the district court’s ruling that

Rockwater is not required to pay penalties.

I. BACKGROUND

A. The Peanut Harvesting Process

Nearly half of the United States’ peanuts are produced in

Georgia, where farmers harvest the crop each fall. At the start of

the eight-to-ten-week harvest, farmers dig up the peanuts from the

ground and leave them in the fields for a few days to dry in the sun.

Drying is a critical stage in the process. Failing to dry the peanuts

within a few hours of harvesting can cause them to develop mold

and produce harmful aflatoxins.

Peanuts contain over 25 percent moisture at harvest and

must contain no more than 10.49 percent moisture to be safe and

salable. Thus, sun drying alone is insufficient. To finish drying the

peanuts, most commercial farmers use mechanical peanut-drying

trailers and wagons that transport the peanuts off-site to be dried

with fans.

B. Rockwater’s Peanut-Drying Trailers

The relevant facts about Rockwater’s trailers are not

disputed. In 1954, Peerless designed the first mechanical

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peanut-curing system, which consisted of a drying box affixed on

wheeled axles and connected to a drying fan. In 2016, after

Rockwater acquired Peerless, David Rogers and David Peeler

purchased Rockwater and reengineered the trailers. In 2017,

Rockwater began manufacturing and selling 45- and 48-foot

peanut-drying trailers under the Peerless name.

Rockwater’s trailers consist of a steel drying box welded to

a chassis. The chassis comprises an I-beam that runs the length of

the chassis. At one end of this I-beam are two oversized sand feet,

which provide additional stability while the trailers are in the fields.

At the other end are two axles with four wheels on each axle. The

steel drying box has eight-foot-tall side walls, an open top, a raised

40 percent perforated floor, and an 18-inch-tall gap, or “plenum,”

that runs the length of the trailer below the perforated floor, where

the drying fan connects and blows warm air that rises through the

peanuts and out the open top. Other features of the drying box are

its horizontally-hinged rear door, which allows peanuts to be

unloaded by hydraulically lifting the trailer at an angle for the

peanuts to empty out the back. The trailers can carry about 20 to

23 tons of peanuts. Here is a picture of Rockwater’s peanut trailer.

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Farmers ordinarily use Rockwater’s trailers in the following

manner. The farmers load the harvested peanuts into the trailers’

open tops and drive the trailers to a drying shed that usually is

located at an off-site buying point (collectively, “buying point”).1

The “typical[]” distance from the field to the buying point is about

20 miles. Approximately two-thirds of those 20 miles are on public

roads. The trailers make an average of two to three trips each week

from the fields to the buying points.

It is necessary to move the trailers to the drying sheds

because the drying fans that attach to the trailers require gas and

1 The parties do not dispute that although some farms have their own drying

sheds, most drying sheds are located at centralized peanut-buying points.

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electricity, which are unavailable in the fields. The fans run

continuously for about a day on average, after which the peanuts

are emptied from the trailers and the trailers are returned to the

fields to begin the process again.

The trailers are not conducive to all-purpose transportation

needs. Their all-steel construction makes the trailers heavier than

most other trailer types, and the 18-inch plenum raises the trailers’

center of gravity, which increases the rollover risk. The perforated

flooring cannot support dense loads. Nor can the trailer be loaded

from the back because the rear door is hinged horizontally to allow

for gravitational unloading when the trailer is lifted at an angle.

Still, several design features facilitate the trailers’ trips from

the fields to the drying sheds by public road. The trailers “operate

by road speed limits.” Although the trailers can safely travel

55 miles per hour, Rockwater provides no maximum speed

recommendation. The trailers ordinarily are not designated

oversize or overweight, so they do not require special markings or

special permits to operate on the public roads. The trailers use

standard semitrailer tires because Rockwater “d[id] not want to

burden [its] customers with specialized tires.” The trailers also

come with standard brakes, lights, and reflective stripes that

comply with federal and state law for public roadway operation.

And before a sale, the trailers undergo a Department of

Transportation (“DOT”) inspection and receive vehicle

identification numbers.

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In addition, Rockwater’s online advertisement for the

trailers provides a bulleted list of the trailers’ features. The first

bullet point states that placing the stress of the load on the chassis

and not the body “allows the safest most reliable method for

handling your crop from the field to the buying point.”

C. Procedural History

The IRS audited Rockwater for failing to file a quarterly

federal excise tax return for its sale of three trailers in the second

quarter of 2017. After the IRS determined that the 12 percent tax

applied to the trailer sales, Rockwater paid $37,031.76 in excise

taxes, penalties, and interest.

Rockwater then filed a claim for a refund with the IRS.

Rockwater then filed this lawsuit challenging the application of the

excise tax to its trailer sales and requesting a refund and attorney’s

fees. In its complaint, Rockwater alleged that its trailers were

exempt from the excise tax on the first retail sale of highway

vehicles because the trailers are “off-highway transportation

vehicles.” See 26 U.S.C. §§ 4051(a)(1)(C), (D), 7701(a)(48)(A)(i).

The first retail sale means the first time a trailer is sold. See id.

§ 4051(a)(1). The excise tax does not apply to resales of the same

trailer thereafter. See id.

After discovery, Rockwater and the United States filed

cross-motions for summary judgment. The district court granted

summary judgment in favor of Rockwater as to the taxes. The

district court also ruled that “[e]ven if it were determined that

Rockwater owed the tax, it still had reasonable cause not to pay it

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initially” and so neither statutory interest nor penalties were

appropriate.

The United States appealed as to the taxes and statutory

interest but not as to the penalties. As the government argues, and

Rockwater now does not dispute, the Internal Revenue Code (the

“Code”) provides that penalties are subject to a “reasonable cause”

exception, see Code § 6651(a)(1), but statutory interest is not, see id.

§§ 6601(a), 6621. So the statutory interest depends on whether

Rockwater owed the excise taxes or whether its peanut-drying

trailers are exempt. That is the legal issue we examine.

II. STATUTORY AND REGULATORY OVERVIEW

A. Standards of Review

We review the statutory interpretation and application of

the Code de novo. C.I.R. v. Driscoll, 669 F.3d 1309, 1311 (11th Cir.

2012). We also review a grant of summary judgment de novo. Thai

Meditation Ass’n of Ala. v. City of Mobile, 83 F.4th 922, 926 (11th Cir.

2023).

In tax refund lawsuits, the IRS Commissioner’s assessment

has “the support of a presumption of correctness.” Welch v.

Helvering, 290 U.S. 111, 115 (1933). “[E]xemptions from taxation

are to be construed narrowly.” Mayo Found. for Med. Educ. & Rsch.

v. United States, 562 U.S. 44, 59-60 (2011) (citation and quotation

marks omitted).

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B. Federal Excise Tax on “Highway Vehicles”

The Code imposes a 12 percent tax on the first retail sale of

“[t]ruck trailer and semitrailer chassis” and “[t]ruck trailer and

semitrailer bodies.” 26 U.S.C. § 4051(a)(1)(C), (D). The Code does

not define those terms. But Congress authorized the Secretary of

the Treasury to pass rules and regulations to enforce the Code. Id.

§ 7805(a).

In turn, the relevant Treasury Regulations clarify that a

chassis and body are taxable under Code § 4051(a) “only if such

chassis or body is sold for use as a component part of a highway

vehicle.” Treas. Reg. § 145.4051-1(a)(1)(ii), (a)(2) (emphasis added).

The Treasury Regulations also define “highway vehicle” as “any

trailer or semitrailer, designed to perform a function of

transporting a load over public highways, whether or not also

designed to perform other [functions].” Id. § 48.4061(a)-1(d)(1). A

“public highway” includes “any road (whether a Federal highway,

State highway, city street, or otherwise)” which is not a private

roadway. Id.

The Treasury Regulations further provide that “in

determining whether a vehicle is a ‘highway vehicle,’ it is

immaterial that the vehicle is designed to perform a highway

transportation function for only a particular kind of load.” Id.

Examples of a “highway vehicle” are “passenger automobiles,

motorcycles, buses, and highway-type trucks, truck tractors,

trailers, and semi-trailers.” Id. A vehicle that is not a “highway

vehicle” is a “nonhighway vehicle.” Id.

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Here, Rockwater’s trailers are sold as a component part of a

highway vehicle, which standing alone would make them taxable.

The focus of Rockwater’s appeal is on another provision in the

Code that exempts “off-highway transportation vehicles” from the

12 percent excise tax. We turn to that provision.

C. Exemption for Off-Highway Transportation Vehicles

In the Code, Congress has defined types of “off-highway

transportation vehicles” to which the § 4051(a) tax does not apply.

26 U.S.C. § 7701(a)(48). Section 7701(a)(48)(A)(i) provides that “[a]

vehicle shall not be treated as a highway vehicle” under § 4051(a) if

these two special design requirements are met:

(1) the “vehicle is specially designed for the primary

function of transporting a particular type of load

other than over the public highway and”

(2) because “of this special design such vehicle’s

capability to transport a load over the public highway

is substantially limited or impaired.”

Id. § 7701(a)(48)(A)(i). 2 The next statutory subsection also provides

that “a vehicle’s design is determined solely on the basis of its

physical characteristics.” Id. § 7701(a)(48)(A)(ii).

2 Section 7701(a)(48)(B) adds another exception. It provides that

nontransportation trailers and semitrailers, which function only as enclosed

stationary shelters, also are exempt. 26 U.S.C. § 7701(a)(48)(B). This

exception is not involved in this case.

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Finally, Code § 7701(a)(48)(A) provides that we may

consider several factors in assessing whether the vehicle’s

capability to transport a load over a public highway is “substantially

limited or impaired”: (1) “the size of the vehicle”; (2) “whether

such vehicle is subject to the licensing, safety, and other

requirements applicable to highway vehicles”; and (3) “whether

such vehicle can transport a load at a sustained speed of at least

25 miles per hour.” Id. § 7701(a)(48)(A)(i), (iii).

With this background, we turn to the parties’ arguments.

III. DISCUSSION

The parties do not dispute that because Code

§ 7701(a)(48)(A)(i) uses “and” to connect the two requirements,

Rockwater’s trailers must satisfy both criteria to be exempt from

taxation as “off-highway transportation vehicles.” See Schlumberger

Tech. Corp. & Subsidiaries v. United States, 55 Fed. Cl. 203, 220 (2003)

(“The off-highway use exception is a two-part, conjunctive test.”).

In other words, we must reverse if Rockwater’s trailers fail to

satisfy either of Code § 7701(a)(48)(A)(i)’s criteria.

A. The Trailers Are Not Specially Designed to Transport

Peanuts Off-Highway

The initial issue is whether Rockwater’s trailers meet the

first requirement of being “specially designed for the primary

function of transporting” peanuts “other than over the public

highway.” 26 U.S.C. § 7701(a)(48)(i). This special design

requirement asks whether the vehicle is specially designed for the

primary function of transporting a load off public highways. See id.

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The statutory requirement does not ask about the type of load

being carried or non-transportation features of the vehicle. See id.

Instead, this first requirement focuses on the primary, special

transportation design of the vehicle, instead of the

non-transportation purposes it might also serve. See id.

The physical characteristics that Rockwater cites do not

establish that the primary transportation purpose of its trailers is

off-highway use. Rockwater points to features like (1) the I-beam

and oversized sand feet providing greater stability in the field,

(2) the perforated floor and plenum allowing for drying fans to

blow warm air up through the peanuts, and (3) the open top and

the hinged rear gate facilitating the loading and unloading of the

peanuts.

Although the oversized sand feet lend the trailers stability

when stationary, the sand feet serve no purpose during transport.

And in considering the transportation function of these trailers, it

is immaterial whether the top is open or the floors are perforated

or the rear door is hinged. What matters is that these design

features serve the purpose of drying peanuts primarily in stationary

locations like buying points. They do not establish a primary

purpose of transporting peanuts.

As the government points out, the trailers are outfitted with

standard highway equipment that allows the trailers to operate at

55 miles per hour. Although the trailers are specially designed to

facilitate the drying of peanuts, their special peanut-drying design

has nothing to do with off-highway transportation.

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Let’s consider a similar challenge brought in the Sixth

Circuit involving the application of the same highway vehicle tax,

id. § 4051(a), to a coal-hauler dump truck. See Worldwide Equip.,

Inc. v. United States, 605 F.3d 319, 321 (6th Cir. 2010). In Worldwide,

a heavy truck dealer challenged the application of the tax to its

coal-hauler dump trucks. Id. To haul coal in the muddy, gravelly

Appalachian coal fields, the coal-hauler dump trucks were outfitted

with (1) a special engine, transmission, and rear axle combination;

(2) an oversized steel dump body; and (3) special off-road tires. Id.

at 327-28. Evidence reflected that the rear axles and special tires

would overheat if the truck was operated at or above 35 to 40 miles

per hour for any length of time. Id. at 328. Holding that sufficient

evidence precluded summary judgment for the government on the

special design prong, the Sixth Circuit explained that the evidence

suggested that the coal-hauler dump trucks were specially designed

to haul coal off-road in the coal fields. Id. at 326-27, 331. The Sixth

Circuit noted that this special design for off-highway transportation

was apparent from the coal-hauler dump trucks’ special frames,

engines, transmissions, and off-road tires and the need for special

permits to operate the trucks on the highway due to their size and

weight. Id. at 326-28.

Unlike in Worldwide, the special features that Rockwater

calls our attention to are specific to peanut drying, not transporting

the peanuts. See id. Indeed, the physical characteristics relevant to

assessing the trailers’ transportation design are its standard tires, its

ability to operate by road speed limits, and its DOT-compliant

brakes, lights, and reflective stripes, all of which support

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Rockwater’s advertisement that the trailers are the “safest most

reliable method for handling your crop from the field to the buying

point.” (Emphasis added). In fact, Rockwater’s advertisement

reveals that the trailers’ ability to transport peanuts from fields to

buying points, which almost always requires travel over public

roads, is the primary goal of its transportation design. The

presence of these highway transportation features coupled with the

absence of specific features for off-highway transportation establish

that the trailers were not specially designed for the primary

purpose of moving peanuts off-highway. And without specific

off-highway transportation design features, the fact that the trailers

are capable of being towed in the fields does not, without more,

establish that off-highway transportation is a special design, much

less the primary function. See Fla. Power & Light Co. v. United States,

56 Fed. Cl. 328, 333 (2003) (holding that vehicles designed for

extreme weather conditions for use by a utility company were not

off-highway vehicles because their design for frequent off-road use

was not the same as being primarily designed for off-road use).

The First Circuit rejected an argument like Rockwater’s

when it held that hydraulic boat trailers were not off-highway

vehicles. See Hostar Marine Transp. Sys., Inc. v. United States,

592 F.3d 202, 212-13 (1st Cir. 2010). The First Circuit explained that

although the hydraulic boat trailers exhibited some special design

features, those features either were irrelevant to their “on-versus

off-highway function” or supported their “on-highway function.”

Id. at 213. For example, the First Circuit considered the boat

trailers’ open-center frames, hydraulic components, and stub axles,

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but concluded that no evidence supported the inference that the

features were related to the roads on which the trailers traveled

instead of the boats that they hauled. Id. The First Circuit also

pointed to several features that “emphatically point[ed] towards

their special design for on-highway transportation,” such as

DOT-compliant brakes, lighting, tires, and wheel coverings and the

ability to travel at normal highway speeds. Id.

Likewise, the transportation features of Rockwater’s

peanut-drying trailers, including its DOT compliance and ability to

travel by normal road speed limits on public highways without

special permits or markings, evince that their primary

transportation design was for use on public roads. Without this

design, no matter the peanut-drying features on the trailers, the

peanuts would be marooned in the fields, unable to reach the

critical drying fans at the buying points.

Based on the first requirement in § 7701(a)(48)(A)(i), the

peanut-drying trailers do not meet the statutory definition of

“off-highway transportation vehicles,” and the district court’s grant

of summary judgment to Rockwater must be reversed.

Nevertheless, we also consider the trailers’ ability to meet the

second requirement below.

B. The Trailers’ On-Highway Capability is Not

Substantially Limited or Impaired

The next issue is whether the trailers’ capability to carry

cargo over the public highways is substantially limited or impaired.

Code § 7701(a)(48)(A)(iii) provides several factors to consider in

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assessing whether a vehicle’s capability is substantially limited or

impaired, including the size of the vehicle, its safety and licensing

features, and its ability to travel over 25 miles per hour. See

26 U.S.C. § 7701(a)(48)(A)(iii). All these factors weigh in the

government’s favor.

First, the trailers are not designated as oversize or

overweight. This means that the trailers do not require special

permits to operate. Second, the trailers go through DOT

inspection before sale and have DOT-compliant brakes, lights, and

reflective stripes. The trailers also are marketed as safe to handle

loads of peanuts from the fields to the buying points, which

Rockwater acknowledges almost always requires travel on public

roads. The trailers can travel by “road speed limits” of 55 miles per

hour, too, well above the 25-mile-per-hour threshold.

Notably, all the statutory factors concern physical

characteristics of the vehicle. See id. § 7701(a)(48)(A)(ii), (iii). This

is why Rockwater’s arguments about the trailers’ economic

feasibility and the short duration of the harvest season are

unpersuasive. As the Court of Federal Claims explained, the

“words ‘substantially limited or substantially impaired’ are [not]

synonymous with impaired efficiency of vehicle operation.” Fla.

Power & Light Co., 56 Fed. Cl. at 333-34 (rejecting the argument that

the utility vehicles’ designs, which made them heavier, slower, and

less fuel-efficient, did not substantially limit or impair their use on

public highways). Moreover, Rockwater relies on evidence about

the type of cargo that its trailers are designed to carry, instead of

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evidence that the trailers are substantially less capable of traveling

on public roads. It argues that its trailers’ raised center of gravity

increases the rollover risk, but this is not dispositive. Despite the

increased rollover risk, which is not unique to these trailers, the

trailers remain capable of safely operating by road speed limits and

do not need special markings or permits for highway travel.

Because Rockwater failed to establish that its trailers were

off-highway transportation vehicles, 26 U.S.C. § 7701(a)(48)(A)(i),

that are exempt from taxation, id. § 4051(a)(1), the government

was entitled to summary judgment on the taxes and statutory

interest.

IV. THE DISSENT

A. Excise Taxes

The dissent agrees Rockwater owes the excise taxes. While

the Court identifies two independent reasons why, the dissent joins

only the reason in Part III.A. As to the second reason in Part III.B,

our dissenting colleague argues there is a jury issue. But this

ignores that the parties’ cross-motions for summary judgment

agreed that no material facts were in dispute and, on appeal, the

parties did not argue that a jury question exists on any issue. We

properly decide the legal issues that the parties identified and

litigated.

B. Statutory Interest

The Code provides for mandatory statutory interest on the

taxes owed here. See 26 U.S.C. § 6601. Because Rockwater owes

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taxes, it automatically owes interest. Yet our dissenting colleague

would have us rule that Rockwater does not owe interest. This is

a nonsensical result that no one asks for. As set forth below,

Rockwater has never argued that it did not have to pay interest on

taxes owed by Rockwater.

Starting in the district court, the parties litigated over

whether Rockwater owed the excise taxes and penalties. Even if it

owed the taxes, Rockwater argued that penalties are subject to a

reasonable cause defense. 3 However, Rockwater never argued

that reasonable cause would supply a defense to the mandatory

statutory interest.

The district court’s summary judgment order held that

Rockwater did not owe the excise taxes. As a brief alternative

ruling, the district court concluded that even if Rockwater owed

the taxes, it had reasonable cause not to pay them initially and did

not owe the penalties.

That section of the order, entitled “Penalties,” cited only the

penalty statute and cases about reasonable cause in the context of

owing penalties. The order did not cite the mandatory interest

statute, or any interest cases, or discuss interest at all. Yet in that

Penalties section the district court sua sponte and mistakenly

lumped interest in its reasonable cause ruling, even though that

exception applies solely to penalties.

3 Failing to file a tax return at all incurs a penalty “unless it is shown that such

failure is due to reasonable cause and not willful neglect.” 26 U.S.C. § 6651(a).

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Given the district court’s sua sponte and elementary mistake,

the United States argued on appeal that the district court’s order

“should not be interpreted to hold that its ‘reasonable cause’

finding exempts Rockwater from statutory interest” because the

Code provides that penalties are subject to a “reasonable cause”

exception, see Code § 6651(a)(1), but statutory interest is not, see id.

§§ 6601(a), 6621. Indeed, the government succinctly cited the

relevant law: “Compare I.R.C. § 6651(a) (penalty is subject to a

reasonable cause exception) with I.R.C. § 6621 (interest is not).” As

the government said at oral argument, “There’s not much more to

say than that.” Given the instant context of mandatory, statutory

interest, the government’s argument did everything necessary to

explain the elementary legal error by the district court. Notably,

too, Rockwater does not claim the government abandoned or

failed to preserve the interest error on appeal; only our dissenting

colleague does.

And importantly, Rockwater also has never claimed that

even if it owed the taxes, it did not owe interest.

At oral argument, the United States clarified that it did not

challenge the reasonable cause penalty ruling, but it maintained

that no reasonable cause defense applies as to the mandatory

statutory interest. Rockwater did not dispute this either during

oral argument or in its response brief. The record before us is clear

that both parties have always understood that Rockwater’s liability

for interest is automatic if it is required to pay the excise taxes.

That’s the way the tax law works.

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What this means is that everyone but our dissenting

colleague recognizes that the mandatory, statutory interest has and

continues to rise and fall solely on the issue of the excise taxes. And

because we do not represent one party or the other, we decline to

litigate an “issue” and affirm an alternative ruling that yields an

illogical result that no party has requested either in the district court

or on appeal.

V. CONCLUSION

We REVERSE the grant of summary judgment to

Rockwater, REMAND for entry of final judgment in favor of the

United States on Rockwater’s complaint as to the excise taxes and

statutory interest, and AFFIRM the finding that Rockwater is not

required to pay penalties.

REVERSED IN PART AND AFFIRMED IN PART.

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23-11893 LUCK, J., concurring and dissenting in part 1

LUCK, Circuit Judge, concurring in part and dissenting in part:

The district court granted summary judgment for Rockwa-

ter, Inc. and ordered that the company be refunded three separate

pots of money: (1) excise taxes that Rockwater paid to the govern-

ment; (2) interest that the government imposed for the delay in

paying the excise taxes; and (3) penalties the government imposed

for delaying payment on the taxes. On appeal, the government

raised only “one issue” related to the first pot of money—the excise

taxes refund.

But the government did not argue that the district court

erred in ordering the refund for the second pot of money—interest.

The word interest did not appear in the issue section of the govern-

ment’s initial brief. It did not appear in the summary of the argu-

ment. And it did not appear in the argument section. Not “plainly

and prominently,” as we require to preserve an issue for appeal. See

Sapuppo v. Allstate Floridian Ins. Co., 739 F.3d 678, 681 (11th Cir. 2014)

(quotation omitted). Not at all in those sections of the initial brief.

That means the interest refund issue has been abandoned. See

United States v. Willis, 649 F.3d 1248, 1254 (11th Cir. 2011) (“A party

seeking to raise a claim or issue on appeal must plainly and promi-

nently so indicate. . . . Where a party fails to abide by this simple

requirement, he has waived his right to have the court consider that

argument.” (quotation, citation, and brackets omitted)); Access

Now, Inc. v. Sw. Airlines Co., 385 F.3d 1324, 1330 (11th Cir. 2004) (“Any

issue that an appellant wants [us] to address should be specifically

and clearly identified in the brief. . . . Otherwise, the issue—even

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2 LUCK, J., concurring and dissenting in part 23-11893

if properly preserved at trial—will be considered abandoned.”);

Marek v. Singletary, 62 F.3d 1295, 1298 n.2 (11th Cir. 1995) (“Issues

not clearly raised in the briefs are considered abandoned.” (citation

omitted)).

The government’s only substantive reference to interest was

in a footnote in the statement-of-the-case section of the initial brief.

But the footnote was not enough to preserve sufficiently for appeal

the interest refund issue. See Tallahassee Mem’l Reg’l Med. Ctr. v.

Bowen, 815 F.2d 1435, 1446 n.16 (11th Cir. 1987) (“In this case, the

single footnote in the Secretary’s initial brief did not sufficiently

preserve the mootness issue.”); see also Asociacion de Empleados del

Area Canalera v. Panama Canal Comm’n, 453 F.3d 1309, 1316 n.7 (11th

Cir. 2006) (“[T]hat argument is waived because it appears only in a

footnote in their initial brief and is unaccompanied by any argu-

ment.” (citation omitted)); Greenbriar, Ltd. v. City of Alabaster, 881

F.2d 1570, 1573 (11th Cir. 1989) (“Although Greenbriar refers to the

district court’s dismissal of its amendment in its Statement of the

Case in its initial brief, it elaborates no arguments on the merits as

to this issue in its initial or reply brief. Accordingly, the issue is

deemed waived.”). And if the footnote wasn’t enough to preserve

the issue, then the citations hidden at the end of the buried foot-

note in the statement-of-the-case section of the brief certainly were

not enough either. Nobody points to any case holding otherwise.

Even if the lone reference in the statement-of-the-case foot-

note was enough to preserve the interest refund issue, the govern-

ment did not argue that the district court erred in ordering the

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23-11893 LUCK, J., concurring and dissenting in part 3

interest refund. Instead, sans citations, the two-sentence footnote

said: “The [district] court also held that to the extent Rockwater

was not liable for the tax, it was not liable for the interest on the

tax. The court should not be interpreted to hold that its ‘reasona-

ble cause’ finding exempts Rockwater from statutory interest.”

But there is no other way to interpret the district court’s or-

der. The district court found that “Rockwater had reasonable cause

for any delay in paying the tax.” And then the district court applied

that finding to order the interest refund: “Because Rockwater does

not owe the tax, and alternatively because it otherwise had reason-

able cause for its delay in paying it, neither penalties nor interest

are appropriate.” The only way to read what the district court

wrote is that the “reasonable cause” finding applied to Rockwater’s

request for a penalty refund and an interest refund. Because the

government didn’t raise the interest refund issue, and because, even

if it did, the government is wrong in its statement-of-the-case foot-

note, I would affirm that part of the district court’s order.

The majority opinion comes to a contrary conclusion be-

cause, it says, Rockwater never argued or claimed on appeal that it

was due an interest refund. But this turns the preservation rules

on their head. Rockwater is the appellee. It won the three specific

pots of money in the district court, including a refund on the inter-

est it paid to the government because there was reasonable cause

for the delay in payment. Rockwater had no obligation to chal-

lenge an issue it won below. None. Besides, Rockwater did argue

that the government “did not address,” and therefore “abandoned,”

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4 LUCK, J., concurring and dissenting in part 23-11893

any argument that the district court erred in finding reasonable

cause. Not just me.

The only party with the obligation to raise on appeal any

errors with the district court’s order was the government as the ap-

pellant. If the government really believed, as the majority opinion

does, that the district court erred in awarding interest based on the

reasonable cause finding, then it should have plainly and promi-

nently raised the issue on appeal, as every other appellant is re-

quired to do. But not only did the government fail plainly and

prominently to raise the interest refund issue, it failed even to men-

tion the word interest in the argument section of its brief. Not one

time, which means we must affirm.

That result is neither illogical nor nonsensical. Instead, it

flows naturally from an appellant’s failure to challenge a specific

pot of money awarded by the district court. Affirming is what we

have done in countless appeals where the appellant has not suffi-

ciently preserved an issue, and it is what we would do in any other

appeal where the appellant does not plainly and prominently raise

an issue. That is as true for the government as it is for any other

party-appellant.

* * * *

For the other pots of money—the refunds for the excise

taxes and the penalties—I concur in the judgment. As the majority

opinion explains, there were two requirements that Rockwater had

to meet to qualify for the off-highway transportation vehicle ex-

emption to the excise tax. Rockwater had to show that: (1) its

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23-11893 LUCK, J., concurring and dissenting in part 5

peanut wagon “is specially designed for the primary function of

transporting a particular type of load other than over the public

highway”; and (2) because “of this special design such vehicle’s ca-

pability to transport a load over the public highway is substantially

limited or impaired.” 26 U.S.C. § 7701(a)(48)(A)(i). In Part III.A.,

the majority opinion elegantly and comprehensively explains why

there’s no genuine dispute that Rockwater did not meet the first

requirement. I happily join that part of the opinion.

We could have ended there because, as the majority opinion

explains, Rockwater’s peanut wagon “must satisfy both criteria to

be exempt from taxation as ‘off-highway transportation vehicles.’”

Because the peanut wagon clearly didn’t meet the first require-

ment, the company was not exempt from the excise tax. But the

majority opinion, in Part III.B., then goes on to decide that there’s

no genuine dispute that Rockwater did not meet the second ex-

emption requirement.

I wouldn’t reach the second requirement because, to me,

whether there’s a genuine dispute that the special design of the pea-

nut wagon substantially limited or impaired the wagon’s capability

to transport a load over the public highway is a harder call and an

unnecessary one. The majority opinion is right that the statutory

factors weigh in the government’s favor. But the statutory factors

are not exclusive, and other factors weigh in favor of Rockwater.

Rockwater’s peanut wagon, for example, had an all-steel de-

sign, oversized sand feet, an open top, a top-hinged lift gate, and a

perforated floor that is raised eighteen inches higher than a normal

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6 LUCK, J., concurring and dissenting in part 23-11893

trailer’s floor. The all-steel design and oversized sand feet increased

the peanut wagon’s weight, which hindered its capability to

transport loads economically over the public highways. The open

top exposed the load to the elements, the top-hinged lift gate disal-

lowed traditional loading and unloading, and the perforated floor

was far weaker than a normal one. Those features made it difficult,

if not impossible, to transport anything other than peanuts. And

the raised floor raised the wagon’s center of gravity, which in-

creased the rollover risk during transport.

With similar evidence, two of our sister circuits have af-

firmed jury verdicts finding a substantial limitation under the sec-

ond requirement. See GLB Enters. v. United States, 232 F.3d 965 (8th

Cir. 2000); Flow Boy, Inc. v. United States, No. 82-1823, 1984 WL

15513 (10th Cir. Jan. 20, 1984). In Flow Boy, for example, the Tenth

Circuit affirmed the jury’s verdict finding that the specialized ce-

ment trailers’ capability to transport a load over public highways

was substantially limited because it was not economically efficient

to operate the loaded cement trailers on the public highway. See

1984 WL 15513, at **1–2. The Tenth Circuit explained that the

jury’s finding was supported by credible evidence showing that the

cement trailers were too heavy to carry optimal loads over the pub-

lic highway, hindering the trailers’ economic efficiency. See id.

Similarly, in GLB Enterprises, the Eighth Circuit affirmed a

jury’s verdict finding that the specialized cotton trailers’ capability

to transport a load over public highways was substantially limited

because it was less safe to operate the loaded cotton trailers on the

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23-11893 LUCK, J., concurring and dissenting in part 7

public highway. See 232 F.3d at 967. There, the cotton trailers’ spe-

cial design features—that significantly increased its weight (which

impaired braking) and changed its center of gravity (which in-

creased rollover risk)—made the trailers dangerous enough that a

special permit was necessary to operate the trailers over public

highways when loaded at a certain capacity. Id. at 968. Even

though the peanut wagon here did not require a special permit to

operate over the public highways, its special design features, which

increased the wagon’s weight and rollover risk, raised similar eco-

nomic and safety concerns as Flow Boy’s cement trailers and GLB

Enterprises’s cotton trailers.

The majority opinion doesn’t address some of these con-

trary facts or the caselaw from our sister circuits because, it says,

“the parties’ cross-motions for summary judgment agreed that no

material facts were in dispute and, on appeal, the parties did not

argue that a jury question exists on any issue.” But whether the

peanut wagon’s special design substantially limited or impaired its

capability to transport a load over the public highway was very

much in dispute, as it was in Flow Boy and GLB Enterprises. Indeed,

the dispute takes up an entire section of the government’s initial

brief. In any event, the majority opinion misses the point. We

should not go out of our way to reach an alternative ground

(whether it’s a judge question or jury question) where there’s some

doubt whether we’re right. Better to decide only one ground

where we’re clearly right than to stretch to decide a second unnec-

essary alternative ground where we’re not.

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8 LUCK, J., concurring and dissenting in part 23-11893

Because the majority opinion is so clearly right about the

first exemption requirement in Part III.A., I would resolve the ex-

cise tax refund issue on that ground without getting into the more

complicated conflicting evidence on the second exemption require-

ment.