# Amicus Curiae Brief — American Trucking Assns., Inc. v. Smith

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_0247%3A12

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1990
- **Citation:** 496 U.S. 167

## Text

i de tteme Court, U.S,
oa a

P1989

JOSEPH F. SFANIO‘L, JR.
CLEPK

=.)

No. 88-325

IN THE

Supreme Court of the Unite

OCTOBER TERM, 1988

—--

, ee

_

AMERICAN TRUCKING ASSOCIATIONS, INC., et al.,

7 Petitioners

MAURICE SMITH, DIRECTOR, ARKANSAS HIGHWAY
AND TRANSPORTATION DEPARTMENT, et al.,
Respondents

On Writ of Certiorari to the Supreme Court of Arkansas

BRIEF OF THE STATES OF VERMONT, CONNECTICUT
AND NEW JERSEY AS AMICI CURIAE
IN SUPPORT OF RESPONDENTS

JEFFREY L. AMESTOY

Attorney General of Vermont
THOMAS R. VIALL

(Counsel of Record)

Assistant Attorney General
Vermont Agency of Transportation
133 State Street

Montpelier, VT 05602

(802) 828-2831

PETER N. PERRETTI, JR.

Attorney General of New Jersey

Mary R. HAMILL

Deputy Attorney General

Richard J. Hughes Justice Complex
CN 112

Trenton, NJ 08625

(609) 292-1537

CLARINE NARDI RIDDLE

Acting Attorney General of
Connecticut

JANE D. COMERFORD

Assistant Attorney General

30 Trinity Street

Hartford, CT 06106

(203) 566-4899

WILSON - Eras PrinTiNG Co., Inc. - 789-0096 - WASHINGTON, D.C. 20001

Se

» so? Sie, as
*

TABLE OF CONTENTS

py OF BM Nips 5 | ane

INTEREST OF THE AMICI CURIAE ....00

INTRODUCTION AND SUMMARY un.
I. THE COURT’S DECISION IN SCHEINER

Il.

SHOULD BE EFFECTIVE PROSPECTIVELY
ONLY BECAUSE IT OVERRULED CLEAR
PAST PRECEDENT ON WHICH THE LITI-
GANTS RELIED AND RETROSPECTIVE AP-
PLICATION WILL NOT FURTHER OPERA-
TION OF THE NEW RULE, BUT WILL PRO-
DUCE SUBSTANTIAL INEQUITABLE RE-
STD seicesscsanenitineintnceniniilehenimnpabiiabiimomanerensesnematemnes

A. The Chevron Test Is Still Valid ............00.......

B. Scheiner Overruled Clear Past Precedent on
Which the Litigants Relied —..........000000000000....

C. Petitioners Espouse the Inapplicable and Un-
necessary Alternative From Chevron’s First
Factor and Do So Inaccurately .........00000000.....

D. Prospectively-Only Operation Fully Serves
the Purpose and Effect of the New Scheiner
TR ET EER ie ee ee a ee Pe

E. Equitable Considerations Require Prospective-
Only Application of the New Scheiner Rule..

THE HISTORY OF “FLAT FEES” IN VER-
MONT AND NEW JERSEY ILLUSTRATE
THE HARSH RESULTS THAT WOULD
FLOW FROM WHOLESALE REVERSAL OR
RESTRICTION OF THE CHEVRON TEST...

A. New Jersey's “Fiat Fee” .................................
B. Vermont’s History of “Flat Fees”

C. Relevance of Vermont’s and New Jersey’s
Flat Fees to the Instant Case .......0

TEE ccecessencnsncstarescersmnemenenniicniinnntianinninenne

11

14

20

24

il

TABLE OF AUTHORITIES

Cases: . Page

Aero Mayflower Transit Co. v. Board of Railroad

Commissioners, 332 U.S. 495 (1947) ...... aaa passim
Aero Mayflower Transit Co. v. Georgia Public

Service Comm’n, 295 U.S. 285 (1935) -............... passim
American Trucking Associations, Inc. v. Conway,

146 Vt. 574, 508 A.2d 405 (1986), cert. denied,

107 S.Ct. 3262 (1987) (ATA #1) ~.......0....----..-... 22-23
American Trucking Associations, Inc. v. Conway,

142 Vt. 17, 451 A.2d 42 (1982) (ATA #1A).... 22
American Trucking Associations, Inc. v. Conway,

146 Vt. 579, 508 A.2d 408 (1986), cert. denied,

107 S.Ct. 3262 (1987) (ATA #2) _.....-.. 2, 22-23
American Trucking Associations, Inc. v. Conway,

[Vt.] St. Tax Rep. (CCH) para. 200-306 (Vt.

Super. Ct., Washington Co., Feb. 11, 1988), on

appeal, No. 88-156 Vt. Sup. Ct. -....................... 19
American Trucking Associations, Inc. v. Quinn, 437
OG GQ EEE ews 22

American Trucking Associations, Inc. v. Kline, No.
07-14-1667-85 MVT (N.J. Tax Ct., Sept. 8,

SD ecncadinns centtastsassmmmeanttinaempa 18, 21
American Trucking Associations, Inc. v. Scheiner,

CG —————————EEEEE passim
Ashland Oil, Inc. v. Rose, 350 S.E.2d 531 (W.Va.

1986), appeal docketed, No. 88-421 ....................... 3
Capitol Greyhound Lines v. Brice, 339 U.S. 542

(SE ee 8
Chevron Oil Co. v. Huson, 404 U.S. 97 (1971) _....... passim
Chicot Co. Drainage District v. Baxter State Bank,

GS ————————EEEEEEE 6

Cipriano v. City of Howma, 395 U.S. 701 (1969) .... 14
City of Phoenix v. Kulodziejski, 399 U.S. 204

a ee 14
Commonwealth Edison v. Montana, 453 U.S. 609

(| ovens 4, 8-11
Complete Auto Transit, Inc. v. Brady, 430 U.S.

a a en 3-4, 9-11
Exzon Corp. v. Hunt, 475 U.S. 305 (1986).............. 26

iii

TABLE OF AUTHORITIES—Continued

Page
Exxon Corp. v. Hunt, 109 N.J. 110, 534 A.2d 1
i weuseesnecneveevees 26
Great Northern Ry. Co. v. Sunburt Oil & Refin-
ing Co., 287 U.S. 358 (1982) ...........2... eee. 2
Griffith v. Kentucky, 107 S.Ct. 708 (1987) _........ 7
Kane v. New Jersey, 242 U.S. 160 (1916)... 3,8
Lemon v. Kurtzman (Lemon I), 403 U.S. 602
EEE | LES EE 14-16
Lemon v. Kurtzman (Lemon II), 411 U.S. 192
ES ee 4, 13, 14-16
Linkletter v. Walker, 381 U.S. 618 (1965) ............. 6
Massachusetts v. United States, 4385 U.S. 444
Se ee 4,8
Metropolitan Life Ins. Co. v. Commissioner, 372
N.W.2d 399 (N.D. 1985) -..................ececceceeeceeeeeeeee 18
National Can Corp. v. Washington Dept. of Reve-
nue, 749 P.2d 1286 (Wash.), cert. denied, 108
EE Se 3,12
Northern Pipeline Construction Co. v. Marathon
Pipe Line Co., 458 U.S. 50 (1982) 000. 14

Norton v. Sheldon County, 118 U.S. 425 (1886) _.. 5-6
Private Truck Council of America, Inc. v. State,
221 N.J. Super. 89, 534 A.2d 13 (N.J. App. Div.
1987), aff’d o.b., 111 N.J. 214, 544 A.2d 33

a scussueusuccenecserence 26
San Antonio Independent School District v. Rod-
Er 16
Solem v. Stumes, 465 U.S. 638 (1984)... to ERED 11
Solomon v. Atlantis Development, Inc., 145 Vt. 70,
a 3
Spector Motor Service v. O’Connor, 340 U.S. 602
Ne cecensseceuerscs 8, 9-10
State v. Caplan, 100 Vt. 159 (1927) 2000000. 19
Statutes:
Rome Ve. Mets Ne. FO nce cannes. 22
Vt. Stat. Ann. tit. 19, § 11 (1986) 0 19

Vt. Stat. Ann. tit. 23, §§ 415, 8007, and 3010 (Supp.
EE EE 19, 22

iv
TABLE OF AUTHORITIES—Continued

Vt. Stat. Ann. tit. 23, § 3001 et seq. (Supp. 1982) ....
26 U.S.C. § 4481 et seq. (Internal Revenue Code of

BODE), B QUE CO COG inn acceenecccen ccc cserccesecnessessccscwrsesseres
BO Fe, I, OD isceericisinstnintitiineniitinioreiemmnavimnions
I FG occcccestentccnssiiersencemnarinneninmeainmnnedanaenien
ENS, EE OO RSE
EF Ba, ee ED eeicccistincncstncccirrescsnesenssintin
N.J. Stat. Ann. § 64 :390A-189 ...........................0000ccce00ee2
PE, Fa, Be re etiietenin errr cnesecicenscsiesasinsensiiies

Miscellaneous:

Traynor, Quo Vadis, Prospective Overruling: A
Question of Judicial Responsibility, 28 Hastings
BD BI CIGD cncerennsscrensinssiienniantibintiantanitatabieniptathinee

Indiana Highway Cost Allocation Study: Final
Report, FHWA and Indiana Dept. of Highways

Vermont Legislature’s Motor Truck Taxation Com-
mittee Hearing of August 26, 1987 -.....................
Reply Brief of Appellant in American Trucking
Associations, Inc. v. Scheiner, 107 S.Ct. 2829
§ 7 MS SU

Page
22

IN THE

Supreme Court of the United States

OCTOBER TERM, 1988

No. 88-325

AMERICAN TRUCKING ASSOCIATIONS, INC., et al..,
Petitioners
Vv.

MAURICE SMITH, DIRECTOR, ARKANSAS HIGHWAY
AND TRANSPORTATION DEPARTMENT, et ai.,
Respondents

On Writ of Certiorari to the Supreme Court of Arkansas

BRIEF OF THE STATES OF VERMONT, CONNECTICUT
AND NEW JERSEY AS AMICI CURIAE
IN SUPPORT OF RESPONDENTS

Pursuant to Rule 36 of the Rules of this Court, the
States of Vermont, Connecticut and New Jersey, by their
Attorneys General, respectfully submit this Brief as amici
curiae in support of Respondents.

INTEREST OF THE AMICI CURIAE

In American Trucking Associations, Inc. v. Scheiner,
107 S.Ct. 2829 (1987), the Court held unconstitutional
certain flat highway user fees (“flat fees”) imposed by
states on motor carriers. These fees were specifically

2

dedicated to fund transportation facilities and were in-
validated for not being proportional to the services ren-
dered by the state. This case presents the issue, remanded
to the Pennsylvania Supreme Court in Scheiner, 107 S.Ct.
at 2847-2848, whether the rule announced in Scheiner
should be applied prospectively only or retroactively, so
as to require the refund of fees or taxes collected prior
to the effective date of Scheiner.

Vermont, we believe, is unique among the states pres-
ently in litigation with American Trucking Associations,
Inc. (“ATA”) over the prospective application of
Scheiner. In ATA v. Conway, [Vt.] St. Tax Rep. (CCH)
para. 200-306 (Vt. Super. Ct., Washington Co., Feb. 11,
1988), on appeal, No. 88-156 Vt. Sup. Ct.), a single trial
judge, by interim relief, established an escrow of Ver-
mont’s “flat fees” in April, 1986. At that time this
Court’s numerous precedents consistently upheld the va-
lidity of “flat fees.” Vermont and other states relied on
their validity.

In addition to Arkansas and Pennsylvania, at least
Vermont, New Jersey, and Kentucky have the identical
issue pending or soon to be raised in state supreme courts.
It is unlikely the Vermont Supreme Court will decide
the Vermont case before this Court rules in the instant
ease. This Court’s disposition of ATA’s challenge to the
Arkansas Supreme Court decision may affect the dispo-
sition of the pending case before the Vermont Supreme
Court.

INTRODUCTION AND SUMMARY

Scheiner should be held to apply prospectively only.
The realization that the Constitution is silent on the ques-
tion of prospectivity/retrospectivity dates at least to the
decision of Great Northern Ry. Co. v. Sunburt Oil &
Refining Co., 287 U.S. 358 (1932). Since then the Court
has applied decisions prospectively only many times in
civil cases; the Court has also developed criteria to assess

3

whether decisions should be applied prospectively. Chev-
ron Oil Co. v. Huson, 404 U.S. 97 (1971). State courts
have adopted the Chevron test, Solomon v. Atlantis De-
velopment, Inc., 145 Vt. 70, 483 A.2d 253 (1984) and, in
addition to the instant case the application of the Chev-
ron test has played a central role in cases brought to the
Court, e.g., National Can Corp. v. Washington Dept. of
Revenue, 749 P.2d 1286 (Wash.) appeal dismissed, cert.
denied, 108 S.Ct. 2030 (1988) and Ashland Oil, Inc. v.
Rose, 350 S.E.2d 5381 (W.Va. 1986), appeal docketed,
No. 88-421.

The facts of the instant case do not lend themselves to
a reconsideration of the Chevron test, which is still valid
and should survive, but the Court is presented with a
case for identification of appropriate events that can
serve as the “break point” for prospective application of
Scheiner and other appropriate cases.

There can be no doubt that Scheiner overruled clear
past precedent on which the states and Petitioners relied.
“Flat fees” were an economic fact of life in interstate
commerce sanctioned by the Court from 1916 until
Scheiner. See Kane v. New Jersey, 242 U.S. 160 (1916).
Such fees are still levied on trucks in interstate commerce
by Congress. Federal Heavy Vehicle Use Tax, § 4481
et seq. of the Internal Revenue Code of 1954, 26 U.S.C.
§ 4481 et seq. And every state imposes “flat fees” in the
form of registration fees on virtually all vehicles regard-
less of the number of miles traveled. But even if the
Court determines Scheiner did not establish new law by
overruling clear past precedent, the decision cannot be
said to have been foreshadowed. [he watershed case of
Complete Auto Transit, Inc. v. Brady, 430 U.S. 274
(1977) and the case it overruled, Spector Motor Service
v. O'Connor, 340 U.S. 602 (1951) concerned taxes on the
“privilege” of doing business in a state and not the use
of a state’s highways. This distinction is pointed up by
the favorable citation of the Aero Mayflower line of “flat

4

fee” cases in Massachusetts v. United States, 435 U.S.
444 (1978), upholding a minimum “flat fee” on aircraft,
and the exclusion of the issue from another “privilege”
tax case, Commonwealth Edison v. Montana, 453 U.S.
609 (1981) several years after Complete Auto. :

Prospective-only application of Scheiner will fully serve
the purpose of the new rule. Scheiner has removed any
barriers to free trade among the states that “flat fees”
may have presented. Retrospective application would not
provide the ability to turn back the clock to reverse any
discrimination and barriers that formerly existed. Fur-
thermore, the requirement of refunds would free peti-
tioners and their class from the permissible burden of
paying their share of taxes needed to construct and main-
tain state highway systems.

Substantial “injustice or hardship” will occur in sev-
eral states if Scheiner is applied retrospectively. Several
hundreds of millions of dollars in fees, plus interest, are
at stake in the several states in litigation with ATA.
States will be forced to refund this money unless the
Court determines they were entitled to rely on the prece-
dents and/or lack of foreshadowing of Scheiner. The
Court has recogn‘zed that “statutory or even judge-made
rules of law are hard facts on which people must rely in
making decisions and in shaping their conduct,” Lemon
v. Kurtzman (Lemon II), 411 U.S. 192 at 199 (1973),
and that “(u)ntil judges say otherwise, state officers .. .
have the power to carry forward the directives of the
state legislature.” Id. at 208. Now that the Court has
“said otherwise,” the states no longer have a justifiable
“reliance interest” in earlier Court opinions validating
“flat fees.”

Other equitable considerations requiring prospective-
only application of the new Scheiner rule are:

1. Any harm to petitioners was de minimus.

5

2. Petitioners have consistently not argued that “flat
fees” were excessive.

3. Truckers did in fact “pass on” the costs of “flat
fees” to their customers.

4. Large trucks have consistently been paying less
than their cost responsibility to the states.

5. Truckers have and will continue to benefit directly
from the expenditure of the “flat fees” for the construc-

tion and maintenance of highways, the truckers’ very
lifeblood.

Finally, to illustrate that treatment of “flat fees” and
prospectivity by other states and courts vary greatly
from the instant case, the chronology and lessons from
the Vermont and New Jersey experiences are presented.
The Court will see facts far different from those in the
instant case, facts that show why the new rule in Scheiner
should be applied prospectively only.

I. THE COURT’S DECISION IN SCHEINER SHOULD
BE EFFECTIVE PROSPECTIVELY ONLY BE-
CAUSE IT OVERRULED CLEAR PAST PRECE-
DENT ON WHICH THE LITIGANTS RELIED AND
RETROSPECTIVE APPLICATION WILL NOT FUR-
THER OPERATION OF THE NEW RULE, BUT
WILL PRODUCE SUBSTANTIAL INEQUITABLE
RESULTS.

The issues before the Court are whether Arkansas, and
ultimately several other states with identical and similar
issues pending in state courts, must make refunds to
non-domestic truckers (the petitioners) who paid flat
highway user fees, (“flat fees”) pursuant to state law,
and, if so, as of what date.

While courts initially adopted the common law doctrine
that an invalidated statute must be deemed a nullity from
the moment of its adoption (“. . . in legal contemplation

6

as inoperative as though it had never been passed” (Nor-
ton v. Sheldon County, 118 U.S. 425, 442 [1886]), the
rigidity of the rule and the impractical and harsh results
which it compelled in invalidating all past transactions
made in reliance upon a purportedly legitimate statute
led the Court in Chicot Co. Drainage District v. Baxter
State Bank, 308 U.S. 371 (1940), to reason that the
“broad statements” of absolute retrospective invalidity
espoused in Norton were unjustified:

The actual existence of a statute, prior to such a
determination, is an operative fact and may have
consequences which cannot justly be ignored. The
past cannot always be erased by a new judicial dec-
laration. . . . Questions of rights claimed to have
become vested, of status, of prior determinations
deemed to have finality and acted upon accordingly,
of public policy in the light of the nature both of the
statute and of its previous application, demand
examination. [308 U.S. at 374.]

Synthesizing the concerns expressed in Chicot, the Court
in Chevron, supra, in 1971 set forth three factors which
govern modern prospectivity ‘retroactivity analysis in
civil cases:

First, the decision to be applied nonretroactively

must establish a new principle of law, either by over-
ruling clear past precedent on which the litigants

may have relied, . . . or by deciding an issue of first
impression whose resolution was not clearly fore-
shadowed. ... Second, ... “we must * * * weigh the

merits and demerits in each case by looking to the
prior history of the rule in question, its purpose and
effect, and whether retrospective operation will fur-
ther or retard its operation.” Linkletter v. Walker,
381 U.S. 618, at 629 (1965). Finally, we have
weighed the inequity imposed by retroactive applica-
tion, for “{w]here a decision of this Court would
produce substantial inequitable results if applied
retroactively, there is ample basis in our cases for

7

avoiding the “injustice or hardship” by a holding of
nonretroactivity.” [404 U.S. at 106-7, citations
omitted. ]

The amici would emphasize that the first or threshold
factar in Chevron is disjunctive. The establishment of a
new principle of law is required. But this can be “either
by overruling clear past precedent .. .” or by “deciding
an issue of first impression... .” Jd.

A. The Chevron Test Is Still Valid.

Petitioners have not set forth any reasons why the
Chevron test is inappropriate or outmoded. The actions
of Arkansas and orders of its supreme court in the in-
stant case, and Florida’s legislature in Case No. 88-192,
do not bring to the Court the question of the propriety
or validity of the Chevron test. For, regardless of the
factors in any test sanctioned by the Court, proper ap-
plication will depend on the ability, objectivity, and in-
tegrity of those applying it.

The Chevron test is still valid and should survive. It
should not be constricted and made more difficult to apply
based on different, though compelling, interests of justice
in criminal procedure cases. See, Griffith v. Kentucky,
107 S.Ct. 708 (1987). The second and third factors of
the Chevron test provide for the ad hoc analysis neces-
sary when a new rule of law is established under one of
the alternative thresholds of the first factor.

With proper application, and a valid determination of
prospectivity, the Court does, however, need to adopt a
rule or establish guidelines to set the proper date for
prospective application. Depending on the case-specific
facts, the date of prospective application will vary. Pos-
sible dates include:

1. The opinion date.
2. The date of the mandate.

8

3. The date petitioners sought to enforce Scheiner.

4. The date a local tribunal provided for timely en-
forcement.

B. Scheiner Overruled Clear Past Precedent on Which
the Litigants Relied.

The first factor of the Chevron test sets forth alterna-
tive thresholds. For the “flat fee’ issue, Scheiner “estab-
lished a new principle of law . . . by overruling clear
past precedent on which the litigants have relied.” Chev-
ron, Id. at 106. Thus Chevron’s threshold factor is satis-

fied.

The petitioners are unable to cite a single case where
the Court overturned facially neutral “flat fees” that
were not excessive in amount prior to Scheiner. A long
list of court opinions upholding flat fees begins with
Kane v. New Jersey, supra, in 1916, includes the first
Aero Mayflower case, Aero Mayflower Transit Co. v.
Georgia Public Service Comm'n, 295 U.S. 285 (1935),
and culminates with Capitol Greyhound Lines v. Brice,
339 U.S. 542 (1950). Furthermore, as noted by Justice
O’Connor in her dissent in Scheiner the Aero Mayflower
line of cases was “apparently cited with approval as re-
cently as Massachusetts v. United States, 435 U.S. 444,
463-464,” which was decided in 1978. Scheiner, 107 S.Ct.
at 2848. In 1981, in Commonwealth Edison Co. v. Mon-
tana, 453 U.S. 609 (1981), the Court at 622, n. 12 put
aside from its consideration “ ‘user’ fees or ‘taxes’ that
were designed and defended as a specific charge imposed
by the state for use of state-owned or state-provided
transportation . . . facilities.” Given this history of “flat
fees,” it is inconceivable that an objective observer could
determine other than that Scheiner overruled clear past

precedent.

9

C. Petitioners Espouse the Inapplicable and Unneces-
sary Alternative From Chevron’s First Factor and
Do So Inaccurately.

Petitioners have attempted to persuade the Court that
the Chevron test is not applicable to Scheiner. But cita-
tions to Complete Auto and Commonwealth Edison as
authority that the Scheiner decision was foreshadowed
are misplaced, even assuming the alternative “fore-
shadowing” alternative of the first factor in Chevron is
applicable.

Close analysis of Complete Auto and the case it over-
turned, Spector Motor Service v. O’Connor, supra, shows
those cases expressly were not intended to consider the
Aero Mayflower “flat fee” cases. Complete Auto consid-
ered only the constitutionality of the so-called “privilege”
taxes, i.e., where a state imposed a tax on a foreign cor-
poration simply for the privilege of doing business in the
state. The Aero Mayflower “flat fee” cases dealt with
user fees for the specific use of a state’s highways or
other facilities. Moreover the two separate lines of cases
made special effort to keep the two different types of
taxes or fees separate.

In Aero Mayflower Transit Co. v. Board of Railroad
aaa 332 U.S. 495 (1947), at 504, the Court
said:

Appellant therefore confuses a tax “assessed for a
proper purpose and .. . not objectionable in amount”
... that is, a tax affirmatively laid for the privilege
of using the state’s highways, with a tax not imposed
on that privilege but upon some other such as the
privilege of doing interstate business. Though neces-
sarily related in view of the nature of interstate
motor traffic, the two privileges are not identical .. .
(emphasis added)

Four years later, in 1951, the Court noted in Spector,
supra, at 340 U.S. 606:

10

There is no ground upon which the tax can be said to
rest upon the use of highways by motor trucks... .

The Court went on: “The tax is not levied as compensa-
tion for the use of highways.” Jd. at 607, smd then in
footnote 4 the Court citéd to Aero Mayflower, Id. at 607,
and other flat fee cases as examples of valid highway
user taxes.

Likewise, thirty years later in Complete Auto the tax
challenged was for the privilege of doing interstate busi-
ness. 430 U.S. at 274. The Court presented a lengthy
discussion of the cases involving “privilege taxes,” Jd. at
279-283, yet none of the discussion focused on the “flat
feo” cases, which involved taxes specifically for the use
of state highways.

Thus, the Court in Complete Auto specifically kept
alive the distinction between cases involving “privilege
taxes” and cases involving taxes levied as compensation
for the use of highways.

This was made clear again in Commonwealth Edison,
when in 1981 the Court applied the Complete Auto test
to a “privilege tax.” In noting the difference between
the two types of taxes the Court stated:

Consequently, in reviewing appellant’s contentions,
we put to one side those cases in which the Court
reviewed challenges to “user” fees, or “taxes” that
were designed and defended as a specific charge im-
posed by the state for use of state-owned or state-
provided transportation or other facilities and ser-
vices. ... As the Court has stated “such imposition,
although termed a tax, cannot be tested by standards
which generally determine the validity of taxes.”

Commonwealth Edison, supra, 453 U.S. at 621, 622,
n. 12.

Contrary to “foreshadowing” Scheiner, Complete Auto
and Commonwealth Edison clearly kept alive the distinc-

11

tion between “privilege taxes” and “user fees.” The new
rule as to the former in Complete Auto provided no clues
to conscientious state administrators that “flat fees”
would be struck down eleven years later.

In order to function in modern society state officials
and others must be able to rely on the Court’s procedents
until they are overruled or altered by statute. This is so
even if one applies the second alternative (foreshadow-
ing) from Chevron’s first factor:

A decision that overrules much-criticized precedent
may well have been clearly foreshadowed. ... Our
cases indicate that even in this situation authorities
are generally entitled to rely on existing case law,
whatever its disrepute. Solem v. Stumes, 465 U.S.
638, at 646, n. 6 (1984).

D. Prospective-Only Operation Fully Serves the Pur-
pose and Effect of the New Scheiner Rule.

In the second factor of the Chevron test the Court
must
. . . weigh the merits and demerits in each case by
looking to the prior history of the rule in question,
its purpose and effect, and whether retrospective
operation will further or retard its operation. Chev-
ron, supra, 404 U.S. at 107.

The history is helpful in this analysis. “Flat fees”
were permissible and constitutional so long as they were
not excessive. The purposes included providing the states
the ability to run their financial affairs regarding high-
ways as best fit their fiscal and administrative needs so
long as the level of taxes was not excessive and to have
interstate commerce pay its fair share of the tax burden.
The new rule, set in the central purpose of the Commerce
Clause, is intended to create an area of free trade among
states, Scheiner, 107 S.Ct. 2829 at 2838, and allow for
interstate commerce to be made to pay its fair share of
the tax burden. Complete Auto, 430 U.S. 274, at 288.

12

It is impossible for retrospective application of the new
rule to “encourage free trade among the states since
whatever chill was imposed on interstate trade is in the
past” and all affected states have discontinued collecting
the offending fees. See National Can Corp. v. Dept. of
Revenue, supra.

Furthermore, if the Court affords retroactive applica-
tion and requires refunds in Arkansas prior to Scheiner,
foreign-registered trucks will escape responsibility for
their share of the tax burden. Upon extension to pending
cases in other states the petitioners and others will reap
further enormous windfalls. Retroactive application with
refunds of all “flat fees” would create an open or “win-
dow” period of fee-free time for out-of-state motor car-
riers to the detriment, at least in some of the states, of
those whose trucks are registered in-state.

“Flat fees” that do not meet the test set forth in
Scheiner, 107 S.Ct. at 2847, are now known to be im-
permissible. By application of Scheiner states can pro-
spectively adopt fees that will serve to have interstate
commerce pay its share of tax burdens while not running
afoul of the central Commerce Clause purpose.

Also, the central purpose of the Commerce Clause—
free trade among the states—cannot be enhanced by
retroactive application of Scheiner. The conduct now de-
termined to be unconstitutional by Scheiner has already
occurred and cannot be rectified with hindsight. Forcing
Arkansas and other states to pay refunds will do nothing
to ensure freer trade among the states for the past pe-
riods. And retroactive application will discriminate
against and be detrimental to other taxpayers by freeing
much of interstate commerce from paying its share of
the tax burden.

Since the discriminatory nature of “flat fees” on inter-
state commerce—at least where such fees are revenue

a |

13

producing as opposed to cost-recovering—is now settled,
there is no further potential for states to adopt impermis-
sible flat fees and validly claim a “reliance interest” on
long-standing Court opinions. See also Lemon v. Kurtz-
man (“Lemon II), supra. Therefore, there can be no
validity to the argument that refunds should be ordered
as a remedial measure to ensure that the states will not
enact discriminatory highway taxes in the future. Even
under the illogical assumption that the payment of re-
funds would affect the thinking of present or future
legislatures, there is no valid suggestion that any state
has acted in bad faith or will do so in the future in the
enactment of “flat fees.”

Retrospective application and refunds are not neces-
sary as a reward to petitioners for litigating the “flat
fee” issue and as an incentive to others to attack un-
sound law. As primarily “an institutional litigant .. .
with interest in overturning legal rules ... ,” Petitioners
—ATA and its Litigation Center—should find “incentive
and reward enough in achieving only prospective over-
ruling.” Traynor, “Quo Vadis, Prospective Overruling:
A Question of Judicial Responsibility,” 28 Hastings L.J.
533, 546-547 (1977). And the other petitioners will bene-
fit from prospective application of the new rule.

Lastly, prospective-only application of the Court’s de-
cision will not interfere with or retard operation of the
new rule. There can be no actual indication in the record
that “flat fees” in fact hindered free trade in the past;
nor is it possible to show that refunding “flat fees” col-
lected prior to Scheiner’s effective date will increase such
trade in the future. Petitioners have not demonstrated
any actual harm; indeed their claim is based on the argu-
ment that no harm need be demonstrated because of the
argued inherent discrimination of flat fees. At page 8
of its reply brief in Scheiner, ATA stated:

In fact, appellants have never challenged the level
of either the marker fee or the axle tax. (Emphasis
in original. ) ,

14

The effect of the prior rule—validity of “flat fees’—
has now been determined to be discriminatory against in-
terstate commerce. But the Court did not so opine until
its Scheiner decision on June 23, 1987. Retrospective ap-
plication of Scheiner will neither further the new
Scheiner rule nor retard the old Aero Mayflower rule. If
discrimination in fact occurred under the old rule, it has
occurred and cannot be reversed; those affected cannot be
relieved from any past discrimination. Applying the
Scheiner decision retrospectively would deplete state cof-
fers without resulting in any freer trade among the
states either in the past or the future. In addition, it
would allow petitioners to receive windfalls and avoid
paying their share of the tax burden to construct and
maintain the highways in several states.

E. Equitable Considerations Require Prospective-Only
Application of the New Scheiner Rule.

The third, and last, part of the Chevron test is the
weighing of the inequity imposed by retrospective appli-
cation, for

(w)here a decision of this Court would produce sub-
stantial inequitable results if applied retrospectively,
there is ample basis in our cases for avoiding the
“injustice or hardship” by a holding of nonretro-
activity. Chevron, supra, 404 U.S. at 107.

The Court has, a number of times, held legislation un-
constitutional and given only prospective effect to its
holdings in order to avoid undue administrative or finan-
cial burdens on government, e.g., Northern Pipeline
Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50
(1982); Lemon II, Supra; City of Phoenix v. Kulodziej-
ski, 399 U.S. 204 (1970); Cipriano v. City of Houma,
395 U.S. 701 (1969).

The Court’s decision in Lemon II, supra, is particularly
instructive. In Lemon v. Kurtzman (Lemon I), 403 U.S.
602 (1971) the Court held that a Pennsylvania statute

15

under which the state reimbursed private sectarian
schools for secular educational services was unconstitu- -
tional. The issue then arose regarding the propriety of
payments for services rendered prior to the Court’s opin-
ion. The lower court enjoined future payments, but per-
mitted the state to pay $24 million to schools for services
provided before Lemon I. The Court affirmed, stating:

ee The process of reconciling the constitutional inter-

ests reflected in a new rule of law with reliance in-
terests founded upon the old is “among the most
difficult of those which have engaged the attention
of courts, state and federal. ...” (Citation omitted.)
Consequently, our holdings in recent years have em-
phasized that the effect of a given constitutional rul-
ing on prior conduct “is subject to no set ‘principle
of absolute retreactive invalidity’ but depends upon
a consideration of ‘particular relations . . . and par-
ticular conduct . . . of rights claimed to have become
vested, of status, or prior determinations deemed to
have finality’; and ‘of public policy in the light of
the nature both of the statute and of its previous
application.’” (Citations omitted.) [S]tatutory or
even judge-made rules of law are hard facts on
which people must rely in making decisions and in
shaping their. conduct. This fact of legal life under-
pins our modern decisions recognizing a doctrine of
nonretroactivity. Appellants offer no persuasive rea-
son for confining the modern approach to those con-
stitutional cases involving criminal procedure or
municipal bonds, and we ourselves perceive none.
(Emphasis added.) Lemon II, supra, 411 U.S. at
198-199.

The Court stated that the problem essentially related
to “the appropriate scope of federal equitable remedies,
a problem arising from enforcement of a state statute
during the period before it had been declared unconstitu-
tional,” and that “equitable remedies are a special blend
of what is necessary, what is fair, and what is work-

16

able.” Jd. at 199 (footnote omitted). The Court noted
that “reliance interests weigh heavily in the shaping of
an appropriate equitable remedy,” id. at 203, and added:

Appellants ask, in effect, that we hold those
charged with executing state legislative directives to
the peril of having their arrangements unraveled if
they act before there has been an authoritative judi-
cial determination that the governing legislation is
constitutional. Appellants would have state officials
stay their hands until newly enacted state programs
are “ratified” by the federal courts, or risk dracon-
ian, retrospective decrees should the legislation fall.
In our view, appellants’ position could seriously un-
dermine the initiative of state legislators and execu-
tive officials alike. Until judges say otherwise, state
officers .. . have the power to carry forward the di-
rectives of the state legislature. Those officials may,
in some circumstances, eject to defer acting until an
authoritative judicial pronouncement has been se-
cured; but particularly when there are no fixed and
clear constitutional precedents, the choice is essen-
tially one of political discretion and one this court
has never conceived as an incident of judicial review.
We do not engage lightly in post hoc evaluation of
such political judgment, founded as it is on “one of
the first principles of constitutional adjudication—
the basic presumption of the constitutional validity
of a duly enacted state or federal law.” San Antonio
Independent School District v. Rodriquez, 411 U.S.
1, at 60, 93 S.Ct. 1278, at 1311, 36 L.Ed.2d 16
(1973) (Stewart, J., concurring).

Lemon II, supra, at 207-208.

The principles and result of Lemon II as it applied to
Lemon I are equally valid in the present case as it re-
lates to Scheiner, for Arkansas and other states were able
to follow over six decades of unflinching Supreme Court
validation of “flat fees.”

17

In addition, the following equitable considerations also
dictate the necessity for prospective-only application of
the rule in Scheiner.

1. In the absence of a bona fide argument that there
has been any harm to petitioners, there is no basis or
reason for applying the new rule retrospectively so as to
provide refunds. As noted, ATA did not question the
reasonableness of the marker fee and axle tax challenged
in Scheiner.

2. The justified “reliance interest” that grew up
around the pre-Scheiner rule evinces the inequitable re-
sults of retroactive application of the new rule in
Scheiner. This is evidenced by Justice O’Connor’s
dissent :

. . . this particular issue has been settled now for
over 50 years and Congress has not seen fit to pre-
empt these taxes by exercising its commerce power,
though, of course, it has had recent occasion to con-
sider and reconsider the problems of the trucking
industry.

& * & ®
. . . the reliance interest sought to be protected by
the doctrine of stare decisis has grown up around
the settled rule. ... In my view, Pennsvlvania, in
structuring its program, for financing highway con-
struction and repair, had every reason to rely upon
the settled understanding that flat highway taxes
reasonably related to the extent of the benefit con-
ferred do not violate the Cominerce Clause.
Scheiner, supra, 107 S.Ct. 2848-2849.

3. Balanced against the states’ reliance on the “flat
fee” cases and the need for the reveny’. for highway
programs is the lack of measurable economic harm to the
petitioners. In Vermont and New Jersey, at least, any
economic harm suffered by truckers on account of “flat
fees” was minute.’

1 Assuming only a thousand miles travelled in a state in a “fee”
year (less than eight one-way trips through Vermont on I-89 or

18

4. Small as this potential financial harm was, ATA has
admitted truckers did not in reality bear it. The burden
of “flat fees” was passed on to petitioners’ customers in
the form of higher shipping rates. Having not borne the
economic burden of the “flat fees” in the first place, re-
funds to petitioners will be windfalls.

ATA’s admission that truckers Jo not in fact bear the
burden of truck taxes results in the conclusion that “any
financial harm suffered by the plaintiffs by virtue of their
payment of the tax is negligible at best.” Metropolitan
Life Ins. Co. v. Commissioner, 373 N.W.2d 399, at 412
(N.D. 1985). The equity in relation to providing refunds
to reimburse those who paid the “flat fees”, thus, does

1-91), with a tare weight of 30,000 lbs. and payload of only 40,000 Ibs.
(legal payload capacity would be 40,000 Ibs. for a gross vehicle
weight of 80,000 lbs.), the additional cost per truck would be only
five cents ($.05) per mile of operation and 1.6 miles or .16 cents
($.0016) per pound of payload. In ATA v. Kline, No. 07-14-1667-85
MVT (N.J. Tax Co., Sept. 8, 1988) the parties stipulated that the
per mile cost to operate in New Jersey during 1984 was approxi-
mately 90 cents per mile, and that the $25 decal fee accounted for
one to two percent of the cost, i.e., between .9 and 1.56 cents per
mile, even less than the Vermont example.

2 Petitioners, through ATA, have admitted this. In testimony
before the Vermont Legislature’s Motor Truck Taxation Study
Committee on August 26, 1987. ATA’s State Government Relations
Manager, Cynthia Elliott, testified :

First of all I would like to clarify where the burden of the
trucking industry taxes ultimately falls. When I say the burden
of the trucking industry taxes, I refer to those of the interstate
trucking industry. The fact is that in the end everyone who uses
interstate service provided by trucker, and in the case of Ver-
mont that is 89 percent of your manufacturers and shippers,
you eventually pay increased taxes through rate increases. Vir-
tually everyone needs the services of the trucking industries
and ultimately everyone pays for them.

Later in her testimony, Ms. Elliott clarified that the burden of
Vermont’s “flat fee” was not passed on directly, e.g., by a direct
add-on to shipping contracts, but rather was passed on over time
through rate increases.

19

not favor retrospective application of Scheiner and con-
comitant refunds to the truckers.

5. The 1982 cost allocation study of the Federal High-
way administration (“FHWA”) and the ones done by
states in the late 1970’s and 1980’s have determined that
large trucks have not been paying their cost responsibil-
ity. Indiana Highway Cost Allocation Study: Final Re-
port, at 46, FHWA and Indiana Dept. of Highways
(1985). Indeed, unchallenged affidavits in the Vermont
ease (ATA v. Conway, Vermont Supreme Court Docket
No. 88-156) show that for 1985 large trucks paid, at
best, 72% of their cost responsibility to Vermont. At
worst, they paid 52%. With similar situations in other
states as noted in the Indiana Study, denial of pre-
Scheiner “flat fee” revenues will exacerbate this situation
for the period in question.

6. Appellee truckers have benefitted and will continue
to benefit directly from the expenditure of the “flat fees”
collected. In Vermont and other states the “flat fees”
were dedicated to the Transportation Fund by law (19
V.S.A. §11) and they were used primarily, if not ex-
clusively, for construction, maintenance, and policing of
highways. Clearly petitioners have used and intend to
use Vermont’s highways with their heavy trucks. Their
actions show that they do not wish to bear their share of
the tax burden, however.

7. “Flat fees” have been an economic fact of life in
Vermont and New Jersey for decades. See State v. Cap-
lan, 100 Vt. 159 (1927) and N.J. Stat. Ann. § 54:39A-
10. And the precursor to the most recent “flat fee” in
Vermont was in place for 30 years, from 1951 until
1981, when the first Fuel User License Fee (FULF) was
adopted. See 23 V.S.A. §§ 415 and 3007. The long-term
existence of these “flat fees” demonstrates that they have
played an integral role in transportation finances, in-
cluding construction of the interstate system, and that at

20

least two states—Vermont and New Jersey—had long-
standing reliance interests on the continued validity of
“flat fees” prior to the Court’s opinion in Scheiner.

Il. THE HISTORY OF “FLAT FEES” IN VERMONT
AND NEW JERSEY ILLUSTRATE THE HARSH
RESULTS THAT WOULD FLOW FROM WHOLE-
SALE REVERSAL OR RESTRICTION OF THE
CHEVRON TEST.

A. New Jersey’s “Flat Fee.”

New Jersey’s truck identification marker fee (“decal
fee”) was first imposed in 1963 as part of the newly
enacted motor fuels use tax. 1963 N.J. Laws, c. 44, N.J.
Stat. Ann. § 54:39A-10.

When enacted in 1963, the decal fee was $3. 1963
N.J. Laws, c. 44, § 10. In 1979 the fee was increased to
$6, 1979 N.J. Laws, c. 4, $1, and in 1984 the fee was
increased to $25 by 1984 N.J. Laws, c. 73, § 34. At all
times the fee was identical for New Jersey and out-of-
state trucks. There were no challenges to the fee be-
tween 1963 and 1984. The 1984 increase in the fee was
part of a package designed to fund the New Jersey
Transportation Trust Fund Authority Act, the purpose
of which is to maintain the state’s highway system. The
$25 fee went into effect on July 10, 1984, and was chal-
lenged on October 31, 1984 by ATA.

ATA initially requested a preliminary injunction, but
later withdrew that request and sought an escrow of the
decal fee as well as certification of a class of out-of-state
based carriers. The New Jersey Tax Court’s denial of
interim relief and its certification of a class were af-
firmed on interlocutory appeal.

The parties then proceeded to prepare for trial. Be-
fore the Tax Court could rule, this Court handed down
its opinion in Scheiner.

21

On August 18, 1987, New Jersey advised the Tax
Court and ATA that it could no longer defend the $25
fee in light of Scheiner, would stop collecting the fee on
the following day, and would voluntarily refund all fees
collected after June 23, 1987. New Jersey further ad-
vised that it would not refund some $34 million collected
from carriers based out-of-state between the July 10,
1984 effective date of the fee increase and June 24, 1987,
as it believed the Scheiner opinion should have only pros-
pective effect.

The parties then filed supplementary briefs on the
prospectivity issue. Additionally, New Jersey retained
‘he services of an economist who supplied a written re-
port and testified in depositions that the economic bur-
den of the decal fee was passed forward within one year
at the most to the carriers’ customers. ATA contested
this assertion with its own expert.

On December 4, 1987, the Owner-Operators Independ-
ent Drivers Association (“OOIDA”) moved to intervene
claiming that in many cases where truckers used owner-
operators the decal fee was charged to the owner-
operators pursuant to lease agreements and that accord-
ingly any refunds should be paid to the owner-operators
rather than to the carriers.

On September 8, 1988, in an unpublished letter opin-
ion, the New Jersey Tax Court held that Scheiner should
be given retroactive effect and that New Jersey should
accordingly refund the $34 million collected from out-of-
state truckers. No final order has yet been entered be-
cause the parties, including OOIDA, are negotiating a
distribution plan under the court’s supervision. Unless
foreclosed by this Court’s decision in the instant case,
New Jersey intends to appeal.

22

B. Vermont’s History of “Flat Fees.”

“Flat fees” were first adopted in Vermont in 1925,
Acts 1925, No. 70. The specific form of “flat fee” was in
effect, unchallenged, from 1951, initially at $10 per year
plus $3 per trip, and amended upward three times, until
1981. In 1981 ATA and two corporate truck carriers chal-
lenged the “flat fee” provision then applicable against all
non-Vermont trucks when the Vermont legislature in-
creased the annual fee from $20 to $40 per year and the
trip fee from $10 to $15 (ATA v. Conway, 146 Vt. 574
508 A.2d 405 [1986] cert. denied 107 S.Ct. 9262 [1987]
[(“ATA #1”]). The trial court upheld the “flat fees,”
but the Vermont Supreme Court remanded with direc-
tions but without determination on the merits. (ATA v.
Conway, 142 Vt. 17, 451 A.2d 42, [1982] [“ATA
#1A”)}.)

Prior to definitive determination by the courts in ATA
#1 the legislature instituted a diesel fuel tax (23 V.S.A.
§§ 3001 et seq.) and its accompanying $50 fuel user
license fee (“FULF”) (23 V.S.A. §§ 3007, 3010, and
415). That too was challenged shortly after passage in
1982, ATA v. Conway, 146 Vt. 579, 508 A.2d 408 (1986),
cert. denied 107 S.Ct. 3262 (1987) (“ATA #2”). In its
order the trial court rejected the Aero Mayflower line of
cases of this Court and adopted the reasoning of the
Maine Supreme Court in ATA v. Quinn, 437 A.2d 623
(Me., 1981), and declared the FULF unconstitutional
because of the relative cost differences per mile of travel
applicable to Vermont and non-Vermont trucks.

The Vermont Supreme Court, in its decisions in ATA
#1 and ATA #2 did not reach the issue decided by the
trial court in ATA #2. Instead it held that the “flat
fees” were facially discriminatory because in ATA #1,
even though the “flat fees” were in lieu of a diesel fuel
tax, they were applicable only to non-Vermont trucks,

23

and in ATA #2 the “flat fee’—charged against all
trucks—was a credit against the cost of Vermont
registrations.*

Because of the late date of the Vermont Supreme
Court’s decisions in ATA #1 and ATA #2—February
21, 1986—in relation to Vermont’s legislative session, the
legislature chose to replace the facially discriminatory
“flat fees” by re-adopting the FULF and terminating the
facial discrimination, thus making the FULF consistent
with this Court’s Aero Mayflower line of cases. Three
days later ATA filed suit against five Vermont officials
challenging the constitutionality of the FULF on behalf
of a class of motor carriers having their base truck reg-
istrations in states other than Vermont. Simultaneously,
ATA moved for an injunction or escrow of funds col-
lected. The trial court judge who had ruled in ATA’s
favor in ATA #2 was sought out in another county for
the purpose of interim relief, but the case was filed in a
different county; the judge ordered ex parte interim re-
lief in the form of escrow.

On June 23, 1987, the Court handed down the Scheiner
case. Twenty-five days later the Court’s mandate issued
in Scheiner pursuant to Court Rule 25. However, the
Court’s Scheiner opinion changed the “flat fee” rule, and
established anew that:

1. Revenue producing—as opposed to cost recovering—
“flat fees” in interstate commerce are probably discrimi-
natory against interstate commerce.

2. The test in Scheiner, 107 S.Ct. at 2847, is that “flat
fees” are valid “when they are the only practicable means
of collecting revenues from users and the use of a more

%’The Vermont Supreme Court denied refunds based on the
doctrine of sovereign immunity and the court denied cert., 107
S.Ct. 3262 (1987), in both ATA #1 and ATA #2 as part of a com-
bined petition.

24

finely gradated user fee schedule would pose genuine
administrative burdens.”

~ 3. The Court remanded the question of refunds for a
determination whether the ruling should be applied ret-
roactively. Id. at 2847-2848.

On September 11, 1987, ATA filed a motion for sum-
mary judgment based on Scheiner and asked for refund
of all fees paid. The Vermont officials countered with a
cross motion for summary judgment on the issue of re-
funds. The Vermont officials determined that the 5-4
decision in Scheiner was controlling in the pending case
and did not oppose injunction of the FULF. In early
1988, the superior court ordered that full refunds were
to be made. The Vermont officials appealed and oral ar-
gument was held on October 13, 1987.

C. Relevance of Vermont’s and New Jersey’s Flat Fees
to the Instant Case.

The facts surrounding Vermont’s and New Jersey’s
“flat fees” establish:

1. The New Jersey decal fee was enacted in 1963,
well before Complete Auto was handed down. Vermont
had “flat fees” as part of its highway use fees for over
sixty years. Under the Court’s “flat tax” analysis as set
forth in Scheiner, New Jersey’s decal fee, e.g., at $3 in
1963 was as unconstitutional as a $25 fee in 1984.‘

2. No one challenged New Jersey’s decal fee for 20
years or Vermont’s predecessor flat fee to the FULF for
30 years.

3. The increases in the New Jersey fee from $6 to $25
in 1984 and the Vermont fee from $20 to $40 in 1981
were parts of broad packages to increase funds for high-

*If the cost of issuing a decal is currently $1 in New Jersey,
which ATA did not contest, it was less in 1963, and thus the fee,
even at $3, plainly exceeded the cost of issuance.

25

way programs. Both states sought to raise revenue from
both in-state vehicles (through registration fees) and
from other in- and out-of-state vehicles through increases
in the fuels tax and the decal fee and, in the case of
Vermont through both increases in registration fees and
the flat fees on out-of-state trucks.

4. The New Jersey decal fee was purely and simply a
“flat fee’ with no hint of facial discrimination, as was
the most recent Vermont FULF.

5. As a result of the certification of a class and the
sanctioning of a single class-wide refund claim, New
Jersey is at risk for the full $34 million rather than a
lesser amount as would be the case if its refund claim
statute applied. See N.J. Stat. Ann. 54:39A-19 and N.J.
Stat. Ann. 54:49-14.

6. As New Jersey’s decal fee was not escrowed, the
revenues have been spent.

7. a. New Jersey promptly and fully obeyed this
Court’s holding in Scheiner, conceding that the decal fee
was invalid an! volunteering to refund all fees collected
after June 23, 1987.

b. Vermont also promptly obeyed this Court’s holding
in Scheiner, conceding that the FULF was invalid as soon
as ATA sought to enforce Scheiner in Vermont.

8. a. The propriety of an award of refunds of “flat
fees” involves numerous state law questions including, in
New Jersey, the existence and effect of a statutory re-
fund provision, namely N.J. Stat. Ann. 54:39A-19, the
effect of a stipulation regarding the availability of a
remedy, the propriety of class actions in tax cases, the
propriety of a single refund claim on behalf of a class,
the demonstrable lack of harm to truckers who by con-
tract passed on the burden of the fee to owner-operators,
and the economic argument that truckers generally
passed on the burden of the decal fees to their customers.

26

b. In Vermont state law issues involve the qualifica-
tions of the three plaintiffs to bring and maintain ac-
tions in Vermont’s courts, the propriety of the class ac-
tion and notice of the action provided to the class, the
propriety of the interim relief pursuant to law at the
time it was granted, and-sovereign immunity.

Any ruling by this Court as to the prospective or retro-
active application of the Scheiner opinion should be sensi-
tive to those and other very individualized state law
issues.

Ultimately, the above facts establish that the picture
painted by ATA in the instant case is highly misleading.
New Jersey, e.g., did not in 1984 enact a questionable
flat fee; it simply raised a fee which had gone unchal-
lenged for 20 years. Nor did New Jersey or Vermont
ignore or attempt to evade this Court’s holding in
Scheiner. Nor can it be said that the courts of New
Jersey have reversed the general rule that judicial de-
cisions have retroactive effect for a general rule of pro-
spectivity in state tax cases. In Exxon Corp. v. Hunt, 109
N.J. 110, 534 A.2d 1 (1987), the New Jersey Supreme
Court declined to hold that this Court’s decision pre-
empting the New Jersey spill compensation tax, Exron
Corp. v. Hunt, 475 U.S. 305 (1986), should be prospec-
tively applied. In Private Truck Council of America, Inc.
v. State, 221 N.J. Super. 89, 534 A.2d 13 (N.J. App. Div.
1987), aff'd o.b. 111 N.J. 214, 544 A.2d 33 (1988), the
Appellate Division of the New Jersey Superior Court con-
cluded that New Jersey’s so-called retaliatory truck tax
was unconstitutional and should be refunded from the
date the complaint was filed. Finally, in both New
Jersey’s and Vermont’s flat fee litigation, the trial level
courts have denied the states’ requests for prospective
application of Scheiner. This is hardly consistent with a
pattern of state courts routinely denying refunds of un-
constitutional state taxes.

27

CONCLUSION

For the reasons set forth above, the rule adopted in
Scheiner should be effective prospectively only and the
Court should not use the instant case to reverse or
otherwise eviscerate the Chevron test.

Respectfully submitted,

JEFFREY L. AMESTOY

Attorney General of Vermont
THOMAS R. VIALL

(Counsel of Record )

Assistant Attorney General
Vermont Agency of Transportation
133 State Street

Montpelier, VT 05602

(802) 828-2831

PETER N. PERRETTI, JR.

Attorney General of New Jersey

MaA:.: R. HAMILL

Deputy Attorney General

Richard J. Hughes Justice Complex
CN 112

Trenton, NJ 08625

(609) 292-1537

CLARINE NARDI RIDDLE

Acting Attorney General of
Connecticut

JANE D. COMERFORD

Assistant Attorney General

30 Trinity Street

Hartford, CT 06106

(203) 566-4899

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_0247%3A12. Public record. Not legal advice.