Vitol v. United States

United States Court of Appeals

for the Fifth Circuit

United States Court of Appeals

Fifth Circuit

FILED

March 23, 2022

No. 20-20237 Lyle W. Cayce

Clerk

Vitol, Incorporated,

Plaintiff—Appellant,

versus

United States of America,

Defendant—Appellee.

Appeal from the United States District Court

for the Southern District of Texas

USDC No. 4:18-CV-2275

Before King, Elrod, and Willett, Circuit Judges.

Don R. Willett, Circuit Judge:

This interlocutory appeal poses a statutory-interpretation question of

first impression: Is butane a “liquefied petroleum gas” (LPG) under 26

U.S.C. § 6426(d)(2)? Vitol claims that butane is an LPG and therefore an

“alternative fuel” that can be mixed with a “taxable fuel” to qualify for the

tax credit under § 6426(e). On these grounds, Vitol sued the United States

in federal court, seeking an $8.8 million tax refund. Vitol moved for partial

summary judgment on whether butane is an LPG under 26 U.S.C.

§ 6426(d)(2). The trial court denied the motion, concluding that butane is

No. 20-20237

not an LPG under 26 U.S.C. § 6426(d)(2), but certified its order for

interlocutory appeal.

Vitol argues that the common understanding of LPG includes

butane—game over. The term LPG, however, as used in § 6426(d)(2)’s

definition of alternative fuel, fits within a broader statutory scheme that

precludes any taxable fuel from also qualifying as an alternative fuel. And

butane is a taxable fuel under that same statutory scheme. Text cannot be

divorced from context, and statutory meaning is not always common

meaning. Congress’s words must be read as part of a contextual whole. We

affirm the denial of partial summary judgment and conclude that butane is

not an LPG under § 6426(d)(2).

I. Background

A. Factual and Procedural Background

The parties do agree on the facts. Vitol sued the United States for a

tax refund of $8.8 million, claiming that the IRS should have allowed a tax

credit under 26 U.S.C. § 6426(e) for fuel blended with butane, a product

Vitol introduced in 2013. Vitol argues that butane is a “liquefied petroleum

gas” under § 6426(d)(2) and therefore an “alternative fuel” eligible for the

§ 6426(e) credit when mixed with a “taxable fuel.” The United States argues

that butane is a “taxable fuel” and therefore not an eligible “alternative

fuel.”

Vitol sought partial summary judgment on the legal issue of whether

butane is an LPG under § 6426(d)(2). The magistrate judge recommended

that the district court deny the motion, concluding that butane was not an

LPG under § 6426. The district court adopted the magistrate judge’s

recommendations, overruling Vitol’s objections. The district court granted

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No. 20-20237

Vitol’s request to certify the order for interlocutory appeal and stayed the

case. 1 We granted Vitol’s motion for leave to file an interlocutory appeal.

B. Statutory and Regulatory Framework

The tax code imposes excise taxes on fuel. 2 Two of those code

provisions matter here, each involving a web of statutory and regulatory

definitions. First, § 4081 imposes an excise tax on “taxable fuels,” defined at

§ 4083 to mean “(A) gasoline, (B) diesel fuel, and (C) kerosene.” The term

“gasoline” is further defined to include “gasoline blend[s]” and, “to the

extent prescribed in regulations,” “any gasoline blend stock” that is a

“petroleum product component of gasoline.” 3 The regulations include

twenty-four examples of “[g]asoline blendstocks,” one of which is butane. 4

Second, § 4041(a)(2)(A) imposes an excise tax on “alternative fuels,”

defined there as “any liquid[, ]other than gas oil, fuel oil, or any product tax-

able under section 4081.” 5 Regulations referencing § 4041(a)(2)(A) describe

alternative fuel as follows: “(1) Except as provided in paragraph . . . (2) of this

section,” alternative fuel “means any liquid fuel,” which includes “[a]ny liq-

uefied petroleum gas (such as propane, butane, pentane, or mixtures of the

1

For purposes of this opinion, the “trial court” refers to the conclusions of the

magistrate judge as adopted by the district judge.

2

26 U.S.C. §§ 4041, 4081. Unless otherwise indicated, the statutory and regulatory

provisions are those in effect during the year 2013, the first year for which Vitol claims the

credit. This corresponds to the 2012 version of the U.S. Code and the April 1, 2012 edition

of the Code of Federal Regulations.

3

26 U.S.C. § 4083(a)(2).

4

26 C.F.R. § 48.4081–1(c)(3)(i)(B) (“provid[ing] definitions for purposes of the

tax on taxable fuel imposed by section 4081”). The regulation uses the term “blendstock,”

id., while statute uses the term “blend stock,” 26 U.S.C. § 4083(a)(2)(B)(i). The parties

have not indicated this difference is material, so we do not address it.

5

The term “special motor fuel” appears throughout the relevant statutes and

regulations. The parties agree that this is a predecessor term for “alternative fuel.”

3

No. 20-20237

same).” 6 Paragraph (2) of that section reiterates that alternative fuel “does

not include any product taxable under the provisions of section 4081.” 7

The above provisions impose taxes, as summarized here:

The tax code also provides credits reducing those § 4081 and

§ 4041(a)(2)(A) excise taxes, for fuel that is made from certain components. 8

The § 4041 tax for alternative fuel can be reduced by the alternative fuel

credit at § 6426(d). The § 4081 tax for taxable fuel can be reduced by the

alternative fuel mixture credit at § 6426(e), for fuel that is “a mixture of

6

26 C.F.R. § 48.4041–8(f)(1).

7

Id. § 48.4041–8(f)(2).

8

26 U.S.C. § 6426.

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No. 20-20237

alternative fuel and taxable fuel.” 9 (Vitol seeks that § 6426(e) credit here.)

The definition of “alternative fuel,” for purposes of § 6426(d) and (e),

comes from § 6426(d):

For purposes of this section, the term

“alternative fuel” means—

(A) liquefied petroleum gas,

(B) P Series Fuels (as defined by the

Secretary of Energy under section 13211(2) of

title 42, United States Code),

(C) compressed or liquefied natural gas,

(D) liquefied hydrogen,

(E) any liquid fuel which meets the

requirements of paragraph (4) and which is

derived from coal (including peat) through

the Fischer-Tropsch process,

(F) compressed or liquefied gas derived from

biomass (as defined in section 45K(c)(3)),

and

(G) liquid fuel derived from biomass (as

defined in section 45K(c)(3)).

Such term does not include ethanol, methanol,

biodiesel, or any fuel (including lignin, wood

residues, or spent pulping liquors) derived from

the production of paper or pulp.

The definition of “taxable fuel,” for § 6426(e) purposes, incorporates by

reference “subparagraph (A), (B), or (C) of section 4083(a)(1).”

9

26 U.S.C. § 6426(a)(1) (providing that the credit at subsection (e) runs “against

the tax imposed by section 4081”).

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No. 20-20237

These provisions reducing taxes can be summarized as follows:

Tax-Credit Provisions

26 U.S.C. § 6426(a)(1) reduces 26 U.S.C. § 6426(a)(2) reduces

§ 4081 taxes according to §§ 6426 § 4041 taxes according to

(b), (c), and (e) § 6426(d)

§ 6426(e): “Alternative fuel § 6426(d): “Alternative fuel

mixture credit” credit”

(e)(2) “alternative fuel (d)(2) “[f]or purposes of this

mixture” = “a mixture of section, alternative fuel” =

alternative fuel and taxable “(A) liquefied petroleum gas”

fuel (as defined in

subparagraph (A), (B), or (C)

of section 4083(a)(1))”

As discussed above, § 4083 defines taxable fuel to mean gasoline, including

gasoline blend stocks as provided by regulation (one of which lists butane as

an example).

II. Jurisdiction

The trial court had jurisdiction under 28 U.S.C. § 1346(a) and 26

U.S.C. § 7422. We accepted interlocutory appellate jurisdiction under 28

U.S.C. § 1292(b) based on the certification of the trial court.

III. Standard of Review

The parties agree that the standard of review is de novo. Vitol argues

on reply that this is not an appeal from a grant of summary judgment,

susceptible of affirmance on any grounds supported by the record; rather, our

review on interlocutory appeal is limited to questions material to the trial

court’s order. The import of this argument is unclear—the order on appeal

is a denial of partial summary judgment. But we can disregard it, given the

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No. 20-20237

parties’ agreement and precedent stating that “statutory interpretation of

the Internal Revenue Code . . . is a matter of law that we review de novo.” 10

IV. Discussion

For the following reasons, the plain language of the statute, taken in

context, excludes butane from the definition of a liquefied petroleum gas

under § 6426(d)(2). Therefore, we AFFIRM the denial of partial summary

judgment. Relying on the statute’s plain language, we need not and do not

address the absurdity canon, Revenue Ruling 2018–2, or Vitol’s affidavit.

We begin with some housekeeping items:

First, we apply the standard tools of statutory interpretation in their

proper order. The United States begins by urging us to construe the credit

narrowly because tax credits are a matter of legislative grace. But that’s not

the right order. The narrow construction of tax breaks is a substantive canon

of statutory interpretation. 11 And “substantive canons of construction are not

applied at the outset of textual inquiry.” 12 “Why? Because a substantive

canon (and the social policy it enhances) can never defeat concrete text (and

the congressional policy it enshrines).” 13 Therefore, only if we determine

that a statute is ambiguous—that is, “after plain meaning and application of

10

Schaeffler v. United States, 889 F.3d 238, 242 (5th Cir. 2018).

11

See Lawrence Zelenak, The Court and the Code: A Response to the Warp and Woof

of Statutory Interpretation, 58 Duke L.J. 1783, 1789 (2009) (referring to this rule as a

substantive canon).

12

Thomas v. Reeves, 961 F.3d 800, 820 (5th Cir. 2020) (Willett, J., concurring).

13

Id. (relying on then-professor Amy Coney Barrett, Substantive Canons and

Faithful Agency, 90 B.U. L. Rev. 109, 117 (2010)).

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No. 20-20237

the interpretive canons are found lacking”—“do the so-called substantive

canons . . . come into play.” 14

Second, we need not consider legislative history or abstract

congressional purpose. “The truest indication of what Congress intended is

what Congress enacted.” 15 The United States makes several arguments

invoking legislative history, including some that postdates the statute in

question, and both parties argue that their interpretations of the statute best

serve the statute’s purpose. We decline to consider the legislative history,

not least because the United States relies heavily on subsequent legislative

history, which is deemed unauthoritative even by judges who consider

legislative history. 16

Having set the textual table, we begin “by examining the plain

language” of the statute, 17 the words Congress chose. 18 We assume that the

plain meaning of those words is the same as their ordinary (i.e., “common”

14

Id. at 815.

15

Thomas, 961 F.3d at 826 (Willett, J., concurring).

16

Graham Cty. Soil & Water Conservation Dist. v. U.S. ex rel. Wilson, 559 U.S. 280,

298 (2010) (Stevens, J.) (“Needless to say, this letter does not qualify as legislative

‘history,’ given that it was written 13 years after the amendments were enacted. It is

consequently of scant or no value for our purposes.”); accord Cent. Bank of Denver, N.A. v.

First Interstate Bank of Denver, N.A., 511 U.S. 164, 185 (1994) (Kennedy, J.) (“[T]he

interpretation given by one Congress (or a committee or Member thereof) to an earlier

statute is of little assistance in discerning the meaning of that statute.”); Sullivan v.

Finkelstein, 496 U.S. 617, 632 (1990) (Scalia, J., concurring in part) (“Arguments based on

subsequent legislative history, like arguments based on antecedent futurity, should not be

taken seriously, not even in a footnote.”).

17

Schaeffler, 889 F.3d at 242.

18

Thomas, 961 F.3d at 810 (Willett, J., concurring).

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No. 20-20237

or “natural”) meaning, 19 which is often derived from dictionaries. 20 Of

course, this assumption is not set in stone and yields when (1) the statute

provides another definition, 21 or (2) when the ordinary meaning is

incompatible with the statutory context. 22

Based on the statutory text and context, we conclude that butane is

not an LPG under § 6426(d)(2). Although the common meaning of LPG

includes butane, § 6426(d)(2) is a subsidiary part of a broader statutory

framework that treats a given fuel as either a taxable fuel or an alternative

fuel, but not both. Section 6426 separates taxable fuels and alternative fuels

using two distinct subparts. And in those subparts, § 6426 expressly

references the structural relationships between its credits and the taxes they

offset, imposed at § 4081 and § 4041. And those provisions, in turn, define

alternative fuels to exclude any taxable fuel. Thus, the statutory framework

is mutually exclusive: A given fuel is either taxable or alternative, but not

both. The statutory context of § 6426 provides sound reason to depart from

butane’s common meaning.

The rest is downhill. Section 4083 defines butane as a taxable fuel for

purposes of the excise tax imposed at § 4081. If butane is a taxable fuel, it

19

Yates v. United States, 574 U.S. 528, 535 (2015) (referring to ordinary or natural

meaning as “its dictionary definition”).

20

Schaeffler, 889 F.3d at 242 (“[T]he words of the statute . . . are assumed to carry

their ordinary meaning.”).

21

FCC v. AT & T Inc., 562 U.S. 397, 403 (2011).

22

Yates, 574 U.S. at 537 (“[T]he plainness or ambiguity of statutory language is

determined not only by reference to the language itself, but as well by the specific context

in which that language is used, and the broader context of the statute as a whole.”

(alterations omitted)).

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No. 20-20237

cannot be an alternative fuel; therefore, butane is not an LPG under

§ 6426(d)(2).

Vitol’s arguments and counterexamples do not unseat this conclusion.

A. Text and ordinary meaning

To start off, Congress wrote the words “liquefied petroleum gas.”

And the ordinary meaning of LPG, the parties agree, includes butane.

Accordingly, unless one of the two assumption-defeating options (statutory

definition or statutory context) overcomes it, the plain meaning of LPG

includes butane under § 6426(d)(2). We conclude that no statutory

definition overcomes ordinary meaning here, but statutory context does.

B. Statutory definition

As for the first assumption-defeating possibility, a statutory definition,

§ 6426(d)(2) does not define the term “liquefied petroleum gas,” nor does a

statutory definition appear in the other subsections of § 6426.

But wait, the United States argues: We should treat LPG as if it’s

statutorily defined because its common meaning “conflicts with the statutory

or regulatory definition of related terms.” The United States provides no

authority for the principle that a statutory term may be statutorily defined—

and its common meaning disregarded—by virtue of its relationship with other

terms that are statutorily defined. We need not adopt such a principle, or

address the argument in the context of statutory definitions, because it is fully

addressed below, in our analysis of statutory context. 23

23

See FCC, 562 U.S. at 404 (“The construction of statutory language often turns

on context, which certainly may include the definitions of related words.” (citation

omitted)).

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No. 20-20237

C. Statutory context

The crux of this case is whether the second assumption-defeating

principle applies. Unless the “statutory text or context” provides “sound

reason” for us “to disregard the ordinary meaning,” the assumption holds 24

and the plain meaning of LPG (which includes butane) controls.

The parties’ disagreement boils down simply. According to the

United States, the term LPG must be interpreted consistently within its

broader, mutually exclusive statutory scheme, which treats a given fuel, for

tax purposes, as either an “alternative fuel” or a “taxable fuel.” According

to Vitol, Congress did not expressly exclude butane from qualifying as an

LPG under § 6426(d)(2), which would have been necessary because the

statutory scheme permits a given fuel to be both a taxable fuel and an

alternative fuel.

We conclude that the statutory context of § 6426 forecloses Vitol’s

position. The credits bestowed by § 6426 are structurally framed within the

provisions imposing the taxes in the first instance: § 4081 (taxable fuel) and

§ 4041 (alternative fuel). In subpart (1), the credit under § 6426(d) is

introduced as offsetting the alternative-fuel tax under § 4041. In subpart (2),

the credit under § 6426(e) is introduced as offsetting the taxable-fuel tax

under § 4083. The separate subparts suggest a cordoning off between taxable

fuels and alternative fuels. That suggestion is confirmed by the tax-imposing

24

Id. at 407; accord Buttecali v. United States, 130 F.2d 172, 174 (5th Cir. 1942) (“In

the construction of a statute, language is to be given its common and ordinary meaning

unless it appears from the context that a different meaning plainly was intended by the

enacting body.”); cf. also Taniguchi v. Kan Pac. Saipan, Ltd., 566 U.S. 560, 569 (2012) (“To

be sure, the word ‘interpreter’ can encompass persons who translate documents, but

because that is not the ordinary meaning of the word, it does not control unless the context

in which the word appears indicates that it does.”).

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No. 20-20237

statutes § 6426(a) references, § 4081 and § 4041, which constitute the

foundation for the § 6426 credits.

For there to be a § 6426 credit, there must first be a § 4081 or § 4041

tax. And those provisions leave no doubt that a given fuel is excluded from

the tax regime for alternative fuels if it qualifies as a taxable fuel. The

definition of “alternative fuels” in § 4041(a)(2)(A) is “any liquid[, ]other

than gas oil, fuel oil, or any product taxable under section 4081.” 25 Two

provisions emphasize this point, and those provisions appear immediately

before and immediately after the regulation that defines alternative fuel. 26

This makes clear that the credit arises from a dichotomous statutory scheme,

in which a given fuel is ineligible to be taxed as “alternative” by virtue of

being taxed as a taxable fuel.

Nor does the structure of the credits permit a fuel to change identities

simply when mixed with something else. The statute sets forth the definition

of “alternative fuel” once, in § 6426(d). Subsection (d) provides a credit

against a tax that is never imposed on a taxable fuel. And § 6426(e), providing

the credit against the § 4081 taxable-fuel tax for mixtures of alternative fuel

and taxable fuel, identifies which alternative fuels can render a fuel eligible

for the credit by referring back to the same, dichotomous definition already

set forth at subsection (d).

25

The term “special motor fuel” appears throughout the relevant statutes and

regulations. The parties agree that this is a predecessor term for “alternative fuel.”

26

26 C.F.R. § 48.4041–8(f)(1) (“(1) Except as provided in paragraph . . . (2) of this

section,” alternative fuel “means any liquid fuel, including—(i) Any liquefied petroleum

gas (such as propane, butane, pentane, or mixtures of the same).”); id. § 48.4041–8(f)(2)

(explaining that alternative fuel “does not include any product taxable under the provisions

of section 4081”).

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No. 20-20237

In sum, the statutory context provides that a given fuel is either a

taxable fuel or an alternative fuel, but not both.

This rule applies to butane, excluding it from the definition of LPG

under § 6426(d)(2) as a taxable fuel within the meaning of the statutory

scheme. The parties started out agreeing that butane meets the definition of

“taxable fuel” for purposes of this appeal. The parties’ briefing appears to

differentiate between butane derived from petroleum, and butane derived

from natural gas, but the parties have disclaimed any such arguments. In

addition, to the extent Vitol is concerned about the effects of this appeal on

the credit corresponding to alternative fuel that is not part of a mixture under

§ 6426(d)—beyond the credit Vitol seeks in this litigation, for alternative fuel

mixed with taxable fuel under § 6426(e)—the fault lies with Vitol, who

defines the issue certified for appeal as the definition of LPG under

§ 6426(d)(2), which governs both the neat and mixture credits.

In any event, as provided at the beginning, “taxable fuels” is defined

at § 4083 to include “gasoline,” which is further defined to include, “to the

extent prescribed in regulations,” “any gasoline blend stock” that is a

“petroleum product component of gasoline.” 27 And the regulations list

butane as an example of a “[g]asoline blendstock[].” 28 As such, butane is

classified as a taxable fuel within a statutory scheme structured as a

dichotomy between taxable fuels and alternative fuels. Butane cannot be an

LPG under § 6426(d)(2) or an alternative fuel for purposes of either § 6426

credit. The statutory context of LPG—its subsidiary location in a scheme

27

26 U.S.C. § 4083(a)(2).

28

Again, the parties have not indicated that any difference between “blendstock”

and “blend stock” is material, so we do not address it. See supra note 4.

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No. 20-20237

that treats a given fuel as taxable or alternative—provides “sound reason” to

depart from the common meaning of LPG in this case. 29

Vitol’s contrary arguments are unpersuasive. Vitol argues that § 4041

expressly excludes fuels taxable under § 4083 to avoid taxing the same barrel

twice, a risk that isn’t present in § 6246. But whatever its reasons for doing

so, Congress imposed the tax using mutually exclusive language, as § 4041

expressly excludes liquids “other than gas oil, fuel oil, or any product taxable

under section 4081.” The credit expressly joins itself to that mutually

exclusive framework, by referencing § 4081 and §4083, by tying distinct

credits to each provision in separate subsections, and by providing a singular

definition of “alternative fuel.”

Vitol argues that the statutory scheme permits a fuel to be both taxable

and alternative because the word “mixture” prevents a taxpayer from

receiving a credit for using the same fuel as the taxable fuel and the alternative

fuel in a product. Butane + butane ≠ mixture, Vitol says, whereas butane +

different taxable fuel = mixture. So the definition of the alternative fuel (here,

LPG) doesn’t need to do that work. As an example, Vitol points to renewable

diesel, which the IRS deemed eligible for the neighboring § 6426(c)

“biodiesel mixture” tax credit when mixed with a different taxable fuel, even

though renewable diesel itself (as a diesel) is a taxable fuel under § 4081. 30

But the better understanding, consistent with the otherwise mutually

exclusive statutory scheme, is that renewable diesel is an exception to the

rule, so Congress made the exception expressly. And the absence of such an

exception for butane, when one exists for renewable diesel, is itself telling

under expressio unius.

29

FCC, 562 U.S. at 407.

30

Notice 2007-37, 2007-1 C.B. 1003.

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No. 20-20237

Vitol also argues that other fuels are treated as both taxable fuels under

§ 4081 and alternative fuels under § 6426. Liquid fuels generated from the

Fischer-Tropsch process, like gasoline, jet fuel, and diesel fuel, are

alternative fuels under § 6426(d)(2), despite falling into the taxable-fuel

categories of gasoline, kerosene, and diesel under § 4081. Amicus Valero

raises the same argument as to hexane and pentane. This argument is

abandoned, as the United States notes. 31 Regardless, as the United States

explains, and Vitol does not counter on reply, Vitol fails to demonstrate that

these identified examples are in fact taxable fuels under § 4081.

Vitol invokes expressio unius, pointing to the “flush language” at the

bottom of § 6426(d)(2) that identifies exceptions to that definition of

alternative fuel. The list mentions “ethanol, methanol, biodiesel,” and fuels

“derived from the production of paper or pulp,” but the list does not mention

butane. As the United States explains, however, none of those substances is

expressly defined as a taxable fuel, and butane is. In other words, butane was

never eligible for the credit because it was a taxable fuel, so express language

saying so would have been redundant. Vitol has another explanation:

Congress intended to eliminate double tax credits. And if Congress meant to

exclude from § 6426(d)(2) any product taxable under § 4081, Vitol says,

Congress would have said so—as it expressly did in § 4041. But this ignores

the foundational role of § 4041 in the statutory scheme, and § 6426’s

subsidiary one. The credit is structurally dependent on the tax itself.

V. Conclusion

The plain language of the statute does not permit a given substance to

be treated as both a taxable fuel and an alternative fuel, which is the treatment

31

Freeman v. Cty. of Bexar, 142 F.3d 848, 851 (5th Cir. 1998) (“[A] party who

objects to the magistrate judge’s report waives legal arguments not made in the first

instance before the magistrate judge.”).

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No. 20-20237

Vitol seeks for butane. Although the common meaning of LPG includes

butane, that statutory term cannot be divorced from its statutory context.

The consistent, mutually exclusive treatment of taxable and alternative fuels

provides sound reason that the plain language of the statute departs from that

common meaning. Therefore, we AFFIRM.

16

No. 20-20237

Jennifer Walker Elrod, Circuit Judge, dissenting:

This case comes down to ordinary meaning. The government starts

with the deck stacked against it, as it concedes that if ordinary meaning

controls, it loses. To win, then, the government has to show that Congress

meant for a term to mean something other than what everyone reading it

thinks it means. That task would be easy if the statute defined the term to

mean something else, but here it does not. So the government is left to argue

that it is “apparent” that the “statutory context” gives the term some other

meaning. The government draws a complicated line of logical inferences to

make that argument. But at the end of the day, it makes more sense that

Congress meant what it said when it used a term that its primary audience

would readily understand. 1 The majority, in my view, was too quick to

discard the ordinary meaning, and thus I respectfully dissent.

I.

Start with the “straightforward and easy” route. 2 Vitol wants a tax

credit for mixing butane with gasoline. Congress gives a tax credit for the sale

or use of “alternative fuel mixture[s].” 3 According to that tax credit

provision, the term “alternative fuel mixture” means “a mixture of

1

See David S. Louk, The Audiences of Statutes, 105 Cornell L. Rev. 137, 142 (2019)

(“Too often, [the statutory] drafters’ imperative—to identify the audience(s) and provide

an effective statutory scheme for the audience(s) to follow and implement—is lost in the

judicial interpretive enterprise.”); cf. Office of the Legislative Counsel, U.S. House of

Representatives, 104th Cong., HLC No. 104-1, House Legislative Counsel’s Manual on

Drafting Style 5 (1995) (instructing legislators to “IDENTIFY THE AUDIENCE.—

Decide who is supposed to get the message.”).

2

See Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal

Texts 70 (2012).

3

26 U.S.C. § 6426(d)–(e).

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No. 20-20237

alternative fuel . . . and taxable fuel.” 4 The term “alternative fuel” includes

“liquefied petroleum gas” (LPG), 5 and the term “taxable fuel” includes

“gasoline.” 6 So if butane is an LPG, Vitol deserves a tax credit for mixing

butane with gasoline, because alternative fuel plus taxable fuel equals

alternative fuel mixture tax credit. As everyone in the oil and gas industry

knows, and as the United States readily concedes, butane is an LPG. Indeed,

the government’s own witness testified that “butane is always an LPG.”

That should be the end of it: Vitol gets a tax credit.

That butane is a “taxable fuel” in a different regulation (and, by

extension, a different provision of the Internal Revenue Code) does not

change the analysis. Section 4081 places an excise tax on the extraction,

transfer, or sale of various substances used as fuels. 7 A “taxable fuel”

includes (among others) “gasoline”; 8 “gasoline” includes “gasoline blend

stock”; 9 and a regulation defines butane as one such “gasoline

blendstock[].” 10 What this boils down to: Congress giveth (through a tax

credit under section 6426), and Congress taketh away (through an excise tax

under sections 4081 and 4083) vis-à-vis the IRS (through regulations

promulgated under 26 C.F.R. § 48.4081-1(c)(3)(i)(B)). Perhaps Congress

had good reasons for doing so. 11 Or perhaps the left hand (Congress) knew

4

26 U.S.C. § 6426(e)(2).

5

26 U.S.C. § 6426(d)(2)(A).

6

26 U.S.C. § 4083(a)(1)(A).

7

26 U.S.C. § 4081(a)(1)(A)(i)–(iv).

8

26 U.S.C. § 4083(a)(1)(A).

9

26 U.S.C. § 4083(a)(2)(B).

10

26 C.F.R. § 48.4081-1(c)(3)(i)(B).

11

See infra Part III.A.

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not what the right hand (the IRS) was doing. But we are not here to identify

the most prudent tax policy. That is Congress’s job. 12 Here, Vitol may be

taxed for its use of butane, but it also can get a tax credit for specific uses of

the same. We need not delve any further.

II.

Now for the “gratuitously roundabout and complex” route taken by

the majority opinion. 13 For us to deviate from the ordinary meaning, 14 the

government has to establish that Congress either defined the term differently

in the statute or that the “statutory context” makes it “apparent” that the

term means something other than what everyone thinks it means. See

Camacho v. Ford Motor Co., 993 F.3d 308, 312 (5th Cir. 2021); see also FCC v.

AT&T, Inc., 562 U.S. 397, 407 (2011) (requiring a “sound reason in the

statutory text or context to disregard the ordinary meaning”). The best

12

See Thomas v. Reeves, 961 F.3d 800, 825 (5th Cir. 2020) (en banc) (Willett, J.,

concurring in the judgment) (“[L]anguage codified by lawmakers is like language coded by

programmers. A computer programmer may write faulty code, but the code will perform

precisely as written, regardless of what the programmer anticipated. Courts, no less than

computers, are bound by what was typed . . . .”).

13

See Scalia & Garner at 70 (noting that although interpretation is not always

“straightforward and easy,” “we should not make it gratuitously roundabout and

complex”).

14

See Weatherly v. Pershing, L.L.C., 945 F.3d 915, 921 (5th Cir. 2019) (Willett, J.)

(“Text is the alpha and omega of the interpretive process. Our precedent demands

unswerving fidelity to statutory language, meaning we take lawmakers at their word and

presume they meant what they said.” (internal quotations and citations omitted)); United

States v. Lauderdale County, 914 F.3d 960, 964, 968 (5th Cir. 2019) (Elrod, J.) (noting that

“statutory interpretation begins and, if possible, ends with the language of the statute” and

that appeals to statutory purposes should not be credited if they involve “stretching the

ordinary meaning of any words” (internal quotations and citations omitted)); Schaeffler v.

United States, 889 F.3d 238, 240 (5th Cir. 2018) (King, J.) (“In the absence of any

ambiguity, our examination is confined to the words of the statute.” (internal quotations

and citations omitted)).

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evidence that Congress means something other than the ordinary meaning is

that it specifically defined the term another way. See Digit. Realty Tr., Inc. v.

Somers, 138 S. Ct. 767, 776–77 (2018). But it did not do so in the provision

here. Thus, the United States has a heavy lift to show that the “statutory

context” establishes that butane is not an alternative fuel under the

applicable tax-credit provision even though everyone thinks of butane as an

LPG.

The government starts by presenting a dichotomy, one that all of its

arguments flow from: Under the applicable provisions of the Internal

Revenue Code, no fuel can be both a “taxable fuel” and an “alternative

fuel.” That dichotomy, the government argues, comes from the excise-tax

provisions found in 26 U.S.C. § 4041. Section 4041(a)(2) taxes “alternative

fuels,” and under that section the term “alternative fuels” does not include

any fuel taxable under section 4081. 26 U.S.C. § 4041(a)(2). Under the

corresponding Department of Treasury regulations, butane is listed as a

“gasoline blendstock,” so it is considered “gasoline,” which is a taxable fuel

under section 4801. 26 C.F.R. § 48.4081-1(c)(3)(i)(B). Thus, under these

provisions, butane is a “taxable fuel” but not an “alternative fuel.” The

government’s next step is more of a leap. It argues that this mutually

exclusive dichotomy from the excise-tax provisions applies just the same to

the tax-credit provisions. Because butane is a “taxable fuel” under the

excise-tax regulations, it cannot be an “alternative fuel” under the tax-credit

statutory provision.

To sum it up, the government argues that “liquefied petroleum gas,”

a term that is universally understood to include butane, does not include

butane in the tax-credit provisions in section 6426 because:

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(1) an (inapplicable) excise-tax provision, section 4041, says that

“alternative fuels” under that provision do not include any “taxable

fuels” under section 4081;

(2) the excise-tax provision in section 4081 defines “taxable fuels” to

include “gasoline”;

(3) section 4083 then defines “gasoline” to include any “gasoline

blend stock” as defined by applicable regulations;

(4) the applicable regulations list butane as a “gasoline blendstock”;

(5) butane is thus a “taxable fuel[]” and not an “alternative fuel[]”

under the excise-tax provisions;

(6) that same dichotomy applies across the applicable tax-credit

provisions;

(7) butane therefore cannot be an “alternative fuel” under the

alternative fuel mixture tax credit provision; and so,

(8) Vitol is not entitled to a tax credit.

Assume for a moment that the ordinary meaning of “liquefied

petroleum gas” is not universally understood by those in the industry to

include “butane.” All else being equal, the above approach may make sense

to lawyers. But given that the ordinary meaning is known by everyone in the

industry, it must be clear that Congress did not use the word the way everyone

in the industry understands it. The above approach is simply not enough to

show that Congress clearly intended a different meaning.

III.

Despite the various leaps and stretches necessary to make this

argument, the majority opinion adopts it wholesale. But to discard the

ordinary meaning, we need a “sound reason,” not just something that sounds

like a reason. See FCC, 562 U.S. at 407. All of the majority opinion’s

conclusions hinge on the taxable fuel–alternative fuel dichotomy from the

excise-tax provisions. But it is not at all “apparent” that such a dichotomy

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exists in the tax-credit provisions. See Camacho, 993 F.3d at 312 (“When

faced with an undefined statutory term, our job is to apply the ‘common,

ordinary meaning unless a more precise definition is apparent from the

statutory context . . . .’” (quoting Fort Worth Transp. Auth. v. Rodriguez, 547

S.W.3d 830, 838 (Tex. 2018))). And there are ample reasons to think it does

not.

A.

At the most basic level, excise taxes and tax credits do two different

things. We do not need to import the definition of “alternative fuels” from

the excise-tax provision because the tax-credit provision already defines the

term “alternative fuel” to include LPGs. If we were supposed to import the

definition from the excise-tax provision, we could expect some kind of textual

reference from one to the other. Congress did define the term “taxable

fuel[s]” in the tax-credit provision (section 6426) by reference to the excise-

tax provisions (sections 4081 and 4083). So we know Congress knows how

to define by reference; it just did not do so with “alternative fuels.”

We would not make the statutory scheme incoherent by recognizing

that a term can take different meanings in different provisions. 15 When the

15

Indeed, the U.S. Code is rife with different definitions for “alternative fuel.” See

26 U.S.C. § 30B(e)(4)(B) (defining “alternative fuel” as “compressed natural gas,

liquefied natural gas, liquefied petroleum gas, hydrogen, and any liquid at least 85 percent

of the volume of which consists of methanol”); 42 U.S.C. § 16091(a)(2) (defining

“alternative fuel” as “liquefied natural gas, compressed natural gas, hydrogen, propane,

or biofuels”); Id. § 6374(g)(2) (defining “alternative fuel” as “methanol, denatured

ethanol, and other alcohols; mixtures containing 85 percent or more (or such other

percentage, but not less than 70 percent, as determined by the Secretary, by rule, to provide

for requirements relating to cold start, safety, or vehicle functions) by volume of methanol,

denatured ethanol, and other alcohols with gasoline or other fuels; natural gas; liquefied

petroleum gas; hydrogen; coal-derived liquid fuels; fuels (other than alcohol) derived from

biological materials; electricity (including electricity from solar energy); and any other fuel

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question is whether the use or sale of a substance is taxed, section 4041 tells

us whether the substance is an “alternative fuel.” That section does not

technically define “alternative fuel,” but it does identify an excise tax “on

any liquid (other than gas oil, fuel oil, or any product taxable under section

4081 . . .)” that, among other things, is sold or used for motor vehicle fuel.

26 U.S.C. § 4041(a)(2). For section 4041, then, an “alternative fuel” that

may be taxed primarily means a motor vehicle fuel not already taxed under

section 4081. But when the question is one of tax credits, section 6426

specifically defines “alternative fuel” differently—by a list of examples that

includes LPGs. Id. § 6426(d)(2). Again, although section 6426 explicitly

refers to section 4083 to define “taxable fuel[s],” id. § 6426(b)(4)(B), it does

not refer to section 4041 to define “alternative fuel[s].” No conflict, and thus

no reason to look elsewhere.

Not only is there no conflict, but there are plausible reasons why

Congress would treat butane as a “taxable fuel” in one section and an

“alternative fuel” in another. The simplest explanation is that sections 4041

and 4081 ensure that a wide swath of fuels may be taxed, and section 6426

enters the picture next and provides offsetting credits for some specific fuels

that Congress favors. Perhaps some taxable fuels differ as to energy

efficiency or environmental risk. Or maybe Congress wanted to incentivize

the use of certain taxable fuels for their economic or ecological benefits

compared to others. To put it plainly for this case: Congress may decide

butane or other LPGs should be taxed, but also decide that the use of those

the Secretary determines, by rule, is substantially not petroleum and would yield

substantial energy security benefits and substantial environmental benefits”).

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substances, preferable as they are to gasoline, should be incentivized as an

alternative. 16

In any event, it is not up to us to decide whether Congress’s choices

were right, or even to decide between a range of sensible options. Our task is

to determine what the tax-credit provision means when it says “alternative

fuel[s].” Congress specified a list that includes “liquefied petroleum gas.”

Butane is a liquefied petroleum gas. Because it is not “apparent” that

Congress meant anything else, we should look no further.

B.

If Congress meant for the taxable fuel–alternative fuel dichotomy to

apply to the tax-credit provisions, we might expect it to be hard to find other

examples like butane which, depending on the circumstances, could be

categorized as either a taxable substance or as a substance eligible for a tax

credit. But examples abound. 17

16

Purveyors of butane and other LPGs indeed assert that the substances by their

nature provide certain benefits. For background: Butane occurs naturally and can be

extracted from natural gas deposits or through the oil refining process. When butane is

extracted from those substances, it is liquefied, and the resulting product is an LPG. As

the industry uses the term, “liquefied petroleum gas” is a category of hydrocarbon-based

gasses derived from this extraction process.

The most common LPGs—butane and propane—are much like each other on a

molecular level, and those who produce with them claim they have a number of advantages

over standard gasoline. First, they are abundant in the United States and, when added to

the fuel supply, reduce overall gasoline consumption and dependence on foreign oil

sources. Second, LPGs purportedly contain less carbon than gasoline, so they release less

carbon into the atmosphere when burned for energy. Indeed, as between propane and

butane, butane is the more efficient fuel, and it is also less volatile—that is, it is less likely

to escape into the atmosphere during the combustion process. Butane also improves the

cold-weather functioning of personal automobiles given its low vapor pressure (relative to

propane), which helps with ignition.

17

The majority opinion briefly concludes this argument was “abandoned, as the

United States notes.” Ante at 15. To support its position, the majority opinion points to

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No. 20-20237

Consider ethyl tertiary butyl ether (ETBE). ETBE is listed as a

“gasoline blendstock” by the regulations, which makes it a taxable fuel under

the excise-tax provision. See 26 C.F.R. § 48.4081-1(c)(3)(i)(F). But despite

its taxable-fuel status, it is also eligible for the alcohol fuel mixture credit,

which applies to “a mixture of alcohol and a taxable fuel.” 26 U.S.C.

§ 6426(b)(3), (4). Another example is renewable diesel, which is a “diesel

fuel,” making it a “taxable fuel” under the excise-tax provisions. See 26

U.S.C. § 4083(a)(3)(A)(i). But renewable diesel is also treated as biodiesel,

which qualifies for the biodiesel mixture credit in the tax-credit provisions.

26 U.S.C. § 40A(f)(1) (directing that renewable diesel should be treated as

biodiesel); 26 U.S.C. § 6426(c)(5). The majority opinion responds that

“renewable diesel is an exception to the rule” because “Congress made the

exception expressly.” Ante at 14. The same could be said about LPGs:

Congress made the exception for LPGs expressly, and butane is by all

accounts an LPG. Thus, even if the majority opinion is right about the

dichotomous framework, LPGs are just as expressly an “exception” to the

framework as renewable diesel fuel.

These examples illustrate that Congress did not intend a harsh taxable

fuel–alternative fuel dichotomy. Such a dichotomy cannot explain the

statutes’ treatment of several substances in addition to butane; numerous

Freeman v. County of Bexar, 142 F.3d 848, 851 (5th Cir. 1998), for the proposition that a

party objecting to a magistrate judge’s report waives any legal arguments not made to the

magistrate judge initially. Ante at 15 & n.31. A review of that case, however, shows that

this court was referring to instances in which a party fails to assert a legal argument—an

independent ground for victory. Freeman, 142 F.3d at 851–53. Vitol’s points about the

statutory scheme’s treatment of other substances is not an independent legal argument or

ground for relief. Those points are in service of the core legal argument which Vitol did

raise to the magistrate judge: that butane is an LPG under section 6426(d). Vitol need not

have raised and elaborated on every possible point in support of that argument before the

magistrate judge.

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No. 20-20237

substances may be taxed, and be the basis for a tax credit, depending on their

use. All things considered, it is not “apparent” that Congress intended the

statutory context to override LPG’s ordinary meaning. Thus, there is no

“sound reason” to depart from that meaning.

* * *

If text is the “alpha and the omega of the interpretive process,” Reed

v. Taylor, 923 F.3d 411, 415 (5th Cir. 2019), ordinary meaning is the Star of

Bethlehem. We should not stray from it unless Congress has made some

other meaning abundantly clear. Here, virtually everyone agrees that the

ordinary meaning of “liquefied petroleum gas” encompasses butane. At

least in this case, the easy answer and the right answer are the same. Because

the majority holds otherwise, I respectfully dissent.

26