Opposition Brief — Area Interstate Trucking, Inc. v. Indiana Department of Revenue

| Ea

No. 93-106

In The

Supreme Court of the United States

October Term, 1993

+

AREA INTERSTATE TRUCKING, INC., INDIANA

MATERIAL TRANSFER, INC., ADVANCE

TRANSPORTATION COMPANY, BRYAN TRUCK LINE,

INC., CHURCHILL TRUCK LINES, INC., FRANKS &

SON, INC., GREAT AMERICAN LINES, INC., KAT, INC.,

and MOGLE ENTERPRISES, INC. on behalf of

themselves and all others similarly situated,

Petitioners,

V.

INDIANA DEPARTMENT OF REVENUE and

KENNETH L. MILLER, as Acting Commissioner

of the Indiana Department of Revenue,

Respondents.

- a

On Petition For Writ Of Certiorari

To The Supreme Court Of Indiana

¢

RESPONDENTS’ BRIEF IN OPPO‘SITION

*

RicHARD A. Huser

Counsel of Record foi Respondents

Locke REYNOLDs Bowp & WEISELL

1000 Capital Center South

201 North Illinois Street

Indianapolis, Indiama 46204

(317) 237-3800

Juuia M. BLacKWELL

Rosert W. WRIGHT

Co-Counsel for Respondents

= BEST AVAILABLE COPY

QUESTIONS PRESENTED

Respondents, Indiana Department of Revenue and

Kenneth L. Miller, Acting Commissioner of the Indiana

Department of Revenue, restate the questions presented

in the Petition for Writ of Certiorari as follows:

A. Whether the United States Supreme Court is

bound by the Indiana Tax Court’s construction of the

Motor Carrier Fuel Tax.

B. Whether the Indiana Tax Court’s construction of

the Motor Carrier Fuel Tax violates Petitioners’ rights to

equal protection and due process of law under the United

States Constitution.

C. Whether the United States Supreme Court

should adopt a new, “sliding-scale” approach to its

rational-basis scrutiny of state tax statutes.

ii

LIST OF PARTIES

Respondents adopt Petitioners’ list of parties with

regard to petitioners, with the exception that no class has

been certified as of this date. (Supplemental Appendix at

14). Respondents are not corporations.

iii

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED ......................... i

ee IA ys bees cs ocd cc bliviecce. ii

TABLE OF AUTHORITIES......................... iv

Bo 8 | a 1

og ag ee 2

CONSTITUTIONAL PROVISIONS AND STATUTES

SE a Does ara gs ah cd ov 046 Said ans ne 3

STATEMENT OF THE CASE....................... 3

REASONS WHY THE PETITION SHOULD BE

oe 6 Van nk avd cc. bi boos ciaenccs,,, 5

1. The Indiana Tax Court’s construction of the

Indiana Motor Carrier Fuel Tax is binding upon

the United States Supreme Court............. 6

2. The Indiana Tax Court’s construction of the

Indiana Motor Carrier Fuel Tax does not violate

Petitioners’ rights to equal protection and due

process of law under the United States Consti-

EE ne ee 8

3. The alleged complexity of the Indiana Motor

Carrier Fuel Tax does not warrant modification

of the firmly established rational-basis stan-

dard for review of equal protection challenges

oe a 14

a 15

iv

TABLE OF AUTHORITIES

Page

CAsEs

Area Interstate Trucking, Inc. v. Indiana Dep't of

Revenue, 605 N.E.2d 272 (Ind. Tax Ct. 1992),

PIE N00 0 C0s40 cute vias dicawees navensen passim

Area Interstate Trucking, Inc. v. Indiana State Dep’t of

Revenue, 574 N.E.2d 311 (Ind. App. 1991), trans-

pO RE See re ee eT Oe eT TTT TT COT TET Ee 4,6

Carmichael v. Southern Coal & Coke Co., 301 U.S. 495

So. Se ee errr rr Sree re 6, 9, 10

F.C.C. v. Beach Communications, Inc., 113 S.Ct. 2096

fo Seer errr ere ry err ory rrr rrr. 12, 13

Georgia Ry. & Electric Co. v. City of Decatur, 295

La WT MN A 0d. RG bea eke eGhNkaeak baat eta eK ss 11

Hicks ex rel. Feiock v. Feiock, 485 U.S. 624 (1988)...... 8

Leathers v. Medlock, 111 S.Ct. 1438 (1991) ............ 15

Madden v. Kentucky, 309 U.S. 83 (1940).............. 15

Minotti v. Lensink, 798 F.2d 607 (2nd Cir. 1986),

A 8 eee 7

Nordlinger v. Hahn, 112 S.Ct. 2326 (1992) ..... 13, 14, 15

Road Improvement Dist. No. 1 v. Missouri Pac. R.

ig me Ae OE MOUEE DS Sone ddansaeeeabaccuntnacues 11

Safeway Trails, Inc. v. Furman, 41 N.J. 467, 197 A.2d

366 (1964), appeal dismissed, cert. denied, 379 U.S.

err ee ete ee er eee 12

United States v. Thirty-Seven (37) Photographs, 402

a MO NED as 66566 0505 Kho ee 5 Sa bRAER ed Ke aK kes 9,0 7

Wisconsin v. Mitchell, 113 S.Ct. 2194 (1993) ........... 7

Vv

TABLE OF AUTHORITIES - Continued

Page

STATUTES AND RULES

me Wm & Se COM oso oc fos cx kv cleveeesc nw 2

Ind. Code § 6-6-4.1-1 (1992).............cccccccceceee 4

Ind. Code § 6-6-4.1-1(f) (1992) ....................... 4

Ind. Code § 6-6-4.1-4(a) (1992) ..................... 3, 6

Ind. Code § 6-6-4.1-4.5(a) (1992)..........0...00.... 3, 6

Ind. Code § 6-6-4.1-6 (1988).................0.0...05. 3

Ind. Code § 33-3-5-15 (1988) ...............0..00000-. 6

Indiana Trial Rule 56(C)........................... 2, 4

CONSTITUTIONAL PROVISIONS

U.S. Const. amend. XIV, § 1..................00-24.. 3

OTHER AUTHORITIES

J. Hartman, Federal Limitations on State and Local

Taxation, § 12:3 at 670 (1981).........2............ 10

No. 93-106

¢

In The

: Supreme Court of the United States

October Term, 1993

*

AREA INTERSTATE TRUCKING, INC., INDIANA

MATERIAL TRANSFER, INC., ADVANCE

TRANSPORTATION COMPANY, BRYAN TRUCK LINE,

INC., CHURCHILL TRUCK LINES, INC., FRANKS &

SON, INC., GREAT AMERICAN LINES, INC., KAT, INC.,

and MOGLE ENTERPRISES, INC. on behalf of

themselves and all others similarly situated,

Petitioners,

V.

INDIANA DEPARTMENT OF REVENUE and

KENNETH L. MILLER, as Acting Commissioner

of the Indiana Department of Revenue,

Respondents.

.

On Petition For Writ Of Certiorari

To The Supreme Court Of Indiana

+

RESPONDENTS’ BRIEF IN OPPOSITION

¢

OPINIONS BELOW

Petitioners improperly seek a writ of certiorari with

respect to an unpublished final order of the Supreme

Court of Indiana issued on April 14, 1993 (A. la). The

Writ of Certiorari, if issued, should in fact be directed to

the Indiana Tax Court with respect to the decision of the

Indiana Tax Court reported at 605 N.E.2d 272 (1992)

1

(A. 2a), which decision was rendered a final judgment by

the Indiana Tax Court pursuant to Indiana Trial Rule

56(C) on January 26, 1993. (Supplemental Appendix at 1).

¢

JURISDICTION

Petitioners seek to invoke this Court’s jurisdiction

pursuant to 28 USC § 1257(a) (1992). Petitioners essen-

tially dispute the Indiana Tax Court’s construction of the

Indiana Motor Carrier Fuel Tax and the wisdom of the

application of that tax to motor carriers traveling on the

Indiana Toll Road. The United States Supreme Court

lacks jurisdiction to address either of these issues.

Petitioners have improperly requested that the Writ

of Certiorari be directed to the Surpeme Court of Indiana

rather than to the Indiana Tax Court. The Writ of Cer-

tiorari, if issued, should be directed to the Indiana Tax

Court, the highest court of the state that actually ruled on

the merits. Additionally, Petitioners failed to include a

copy of the final judgment sought to be reviewed in the

Appendix of their Petition, and Petitioner’s jurisdictional

statement does not reference the date of entry of the

judgment sought to be reviewed. Respondents have

included a copy of that judgment in the Supplemental

Appendix at 1.

Petitioners contend that the Petition draws into ques-

tion the validity of a state statute on the ground that it is

repugnant to the United States Constitution. Although

this Court would have jurisdiction to address that ques-

tion, the state statute in question is not repugnant to the

United States Constitution.

—E— eee aaa

3

CONSTITUTIONAL PROVISIONS AND

STATUTES INVOLVED

The primary relevant statutory provisions are Ind.

Code §§ 6-6-4.1-4(a) and 6-6-4.1-4.5(a) (1992).

Respondents acknowledge that the Petition for Writ

of Certiorari argues that the state statute in question is

violative of Section 1 of the Fourteenth Amendment to

the United States Constitution. While Respondents deny

that the state statute in question is in any way repugnant

to the United States Constitution, Respondents agree that

the subject matter of the Writ involves Section 1 of the

Fourteenth Amendment to the United States Constitu-

tion.

In addition to the remaining statutory provisions and

regulations set forth in Petitioners’ Appendix, Ind. Code

§ 6-6-4.1-6 (1988) is also a relevant statutory provision.

(Supplemental Appendix at 3).

4

STATEMENT OF THE CASE

Petitioners filed a two count Amended Verified Peti-

tion to Enjoin Collection of Tax and Original Tax Appeal

(“Amended Verified Petition”) with the Indiana Tax

Court on July 22, 1991. Count I requested declaratory and

injunctive relief, and Count II requested a refund of taxes

already paid.

Petitioners filed a Motion for Summary Judgment on

Count I of the Amended Verified Petition, raising the

following issues:

I. Whether the Indiana toll road is a “high-

way” as defined under I.C. 6-6-4.1-1(f) for

purposes of the Motor Carrier Fuel Tax?

II. Whether imposition of the Motor Carrier

Fuel Tax upon fuel consumed in operating

on the Indiana toll road is constitutional?

(A. 4a)

Respondents filed a Cross-Motion for Summary

Judgment on these same issues. Following full briefing

and oral argument, the Tax Court denied Petitioners’

Motion and granted Respondents’ Cross-Motion for Sum-

mary Judgment on both issues by its published opinion

dated December 29, 1992. This Partial Summary Judg-

ment Order was rendered final pursuant to Indiana Trial

Rule 56(C) on January 26, 1993.

The Indiana Tax Court was not the first Indiana court

of appellate jurisdiction to consider the issues raised by

Petitioners’ Amended Verified Petition. One of the Peti-

tioners, Area Interstate Trucking, Inc., had previously

filed a Motion to Intervene in a class action lawsuit in the

Johnson County, Indiana Circuit Court. The Motion to

Intervene raised these same issues, albeit in a different

procedural context. The Trial Court denied Area’s Motion

to Intervene. The Indiana Court of Appeals affirmed the

Trial Court’s decision in Area Interstate Trucking, Inc. v.

Indiana State Dep't of Revenue, 574 N.E.2d 311 (Ind. App.

1991), transfer denied, and the Indiana Supreme Court

denied transfer on October 8, 1991.

Petitioners operate “commercial motor vehicles” sub-

ject to the Motor Carrier Fuel Tax, Ind. Code § 6-6-4.1-1

(1992). Petitioners are subject to this tax because they

operate vehicles upon Indiana highways. Petitioners are

required to calculate the amount of taxable fuel based on

the mileage their vehicles operate on Indiana highways,

including the Indiana toll road. Petitioners are required to

include toll road mileage in their calculation because the

Indiana Toll Road is a highway, as defined by the Motor

Carrier Fuel Tax statute. Both the Indiana Court of

Appeals and the Indiana Tax Court have now so held.

The Motor Carrier Fuel Tax is not imposed upon fuel

consumed in operations exclusively upon private prop-

erty or upon the portion of fuel used to operate auxiliary

equipment mounted on motor vehicles Subject to the tax,

because such fuel consumption is not for purposes of

operating or propelling commercial motor vehicles on

highways in Indiana.

*

REASONS WHY THE PETITION SHOULD BE DENIED

Petitioners have failed to identify a valid basis for grant-

ing the Writ. Their Petition invites this Court to interpret

state legislation contrary to a state appellate court’s inter-

pretation, to apply general rules of law to inapplicable fac-

tual situations, and to alter the firmly established standard

for review of equal protection challenges to state tax statutes.

None of these requests provide a valid basis for review by

this Court. The Indiana Tax Court's well-reasoned and well-

articulated decision does not necessitate this Court's reitera-

tion of firmly established precedent of this Court.

‘

1. The Indiana Tax Court’s construction of the Indiana

Motor Carrier Fuel Tax is binding upon the United

States Supreme Court.

The Petition for Writ of Certiorari presented in this

case does not involve a conflict between a state appellate

court decision (i.e. the decision of the Indiana Tax Court)!

and the United States Supreme Court decision of Car-

michael v. Southern Coal & Coke Co., 301 U.S. 495 (1937) as

alleged by Petitioners. Rather, the Petition involves dis-

gruntled taxpayers who insist that the Indiana Motor

Carrier Fuel Tax should be given an interpretation which

is more favorable to them. Because it is not the function

of this Court to construe that state statute, the Petition for

Writ of Certiorari should be denied.

The Indiana Motor Carrier Fuel Tax is imposed “on

the consumption of motor fuel by a carrier in its opera-

tions on highways in Indiana.” Ind. Code § 6-6-4.1-4(a)

(1992); Ind. Code § 6-6-4.1-4.5(a) (1992). As previously

determined by both the Indiana Court of Appeals and the

Indiana Tax Court, the plain and ordinary meaning of

highway includes a toll road. Area Interstate Trucking, Inc.

v. Indiana State Dep’t of Revenue, 574 N.E.2d 311 (Ind. App.

1991), transfer denied; Area Interstate Trucking, Inc. v. Indi-

ana Dep't of Revenue, 605 N.E.2d 272, 277 (Ind. Tax Ct.

1992), review denied. Petitioners agree that they are subject

to this tax as motor carriers providing for-hire transporta-

tion services through the operation of their trucks and

1 The Indiana Tax Court is considered a court of appellate

jurisdiction. Decisions of the Indiana Tax Court may be

appealed to the Indiana Supreme Court. Ind. Code § 33-3-5-15

(1988).

tractor-trailer vehicles on Indiana highways. Petitioners,

however, argue that the “plain” and “clear” objective of

this legislation is to assess a tax in direct proportion to

the “consumption” of roads in Indiana, and that the

purpose of the tax is to collect from taxpayers their

proportionate share of the cost of maintaining the roads

upon which they travel.

Petitioners’ view of the legislative intent behind the

Indiana Motor Carrier Fuel Tax deserves no consideration

by this Court because it is directly contradicted by the

Indiana Tax Court’s decision. The Indiana Tax Court spec-

ifically held that “the motor carrier fuel tax is appor-

tioned on the basis of the benefit of the use of Indiana’s

public roads, regardless of whether the roads are sup-

ported by the tax.” Area Interstate Trucking, Inc. v. Indiana

Dep't of Revenue, 605 N.E.2d at 277. The purpose of this

tax, as determined by the Indiana Tax Court, is simply to

charge motor carriers for the use of the public roads in

Indiana. Id. This Court must accept the Indiana Tax

Court’s interpretation of this Indiana legislation.

There is no doubt that the United States Supreme

Court is bound by a state court’s construction of a state

Statute. Wisconsin v. Mitchell, 113 S.Ct. 2194, 2198 (1993).

The United States Supreme Court lacks “jurisdiction

authoritatively to construe state legislation.” United States

v. Thirty-Seven (37) Photographs, 402 U.S. 363, 369 (1971).

Likewise, “legislative intent is a matter of state law, on

which the highest court of a state speaks with finality.”

Minotti v. Lensink, 798 F.2d 607, 610 (2nd Cir. 1986), cert.

denied, 482 U.S. 906 (1987) (citation omitted). This Court is

not at liberty to depart from a state appellate court's

resolution of issues of state law. Hicks ex rel. Feiock v.

Feiock, 485 U.S. 624, 629 (1988).

This rule applies with equal force to the decision of

the Indiana Tax Court, an intermediate appellate state

court.

Where an intermediate appellate state court

rests its considered judgment upon the rule of

law which it announces, that is a datum for

ascertaining state law which is not to be disre-

garded by a federal court unless it is convinced

by other persuasive data that the highest court

of the state would decide otherwise . . . . This is

the more so where, as in this case, the highest

court has refused to review the lower court’s

decision rendered in one phase of the very liti-

gation which is now prosecuted by the same

parties before the federal court.

Feiock, 485 U.S. at 630 n.3 (citations omitted). The Indiana

Tax Court’s interpretation of the Motor Carrier Fuel Tax,

which the Indiana Supreme Court refused to review, is

binding upon this Court.

2. The Indiana Tax Court’s construction of the Indiana

Motor Carrier Fuel Tax does not violate Petitioners’

rights to equal protection and due process of law

under the United States Constitution.

This Court’s required adherence to the Indiana Tax

Court’s determination of the legislative intent behind the

Motor Carrier Fuel Tax essentially disposes of this Peti-

tion for Writ of Certiorari. As Petitioners concede, the

State of Indiana was not compelled by any constitutional

requirement to tax fuel consumption in direct relation to

9

the benefits taxpayers enjoy. (Petitioners’ Brief, pp. 9-10).

As finally determined by the Indiana Tax Court, the State

of Indiana chose to tax the use of all highways in Indiana,

regardless of whether the highway was directly sup-

ported by the tax. Area Interstate Trucking, Inc. v. Indiana

Dep't of Revenue, 605 N.E.2d at 277. Thus, no equal protec-

tion violation is presented to this Court, and there is no

conflict with Carmichael.

Carmichael plainly sets forth, as the Indiana Tax Court

recognized, the general rule that a taxpayer cannot resist

the payment of a tax merely because it is not expended

for purposes which are peculiarly beneficial to it. As this

Court explained:

A tax is not an assessment of benefits. It is,

as we have said, a means of distributing the

burden of the cost of government. The only

benefit to which the taxpayer is constitutionally

entitled is that derived from his enjoyment of

the privileges of living in an organized society,

established and safeguarded by the devotion of

taxes to public purposes. . . . Any other view

would preclude the levying of taxes except as

they are used to compensate for the burden on

those who pay them, and would involve the

abandonment of the most fundamental principle

of government - that it exists primarily to pro-

vide for the common good. A corporation can-

not object to the use of the taxes which it pays

for the maintenance of schools because it has no

children.

Carmichael, 301 U.S. at 522-23 (citation omitted). This

firmly established rule has led the Court to reject argu-

ments such as the one advanced by Petitioners.

10

This Court has repudiated the suggestion,

whenever made, that the Constitution requires

the benefits derived from the expenditure of

public moneys to be apportioned to the burdens

of the taxpayer, or that he can resist the pay-

ment of the tax because it is not expended for

purposes which are peculiarly beneficial to him.

Id. at 523.

The principles set forth in Carmichael similarly

require repudiation of Petitioners’ suggestion that the

Indiana Motor Carrier Fuel Tax is unconstitutional as

applied to them because the State does not use revenues

generated by that tax for the benefit of the Indiana Toll

Road and its patrons. The tax charges motor carriers for

the use of the public roads in Indiana. Area Interstate

Trucking, 605 N.E.2d at 277. “[C]ommon carriers for hire,

which make the highways their place of business, may

properly be charged extra compensation for such use.” Id.

at 278 (quoting J. Hartman, Federal Limitations on State and

Local Taxation § 12:3 at 670. (1981) (footnotes omitted)).

Petitioners make the Indiana highways, including the

Indiana Toll Road, their place of business and may prop-

erly be charged extra compensation for such use. The

Indiana Tax Court’s decision is consistent with the hold-

ing of Carmichael.

Petitioners assert that this case falls within an excep-

tion to the general rule, citing a footnote in Carmichael.

The footnote cited, however, addresses a factual situation

which is not present here. This case does not involve a tax

assessed upon real property owners in a local govern-

mental district based on the value of benefits accruing to

11

those property owners from a specific improvement pro-

ject.2 The benefits derived from the tax need not be, and

in this instance are not, apportioned to the burdens of the

taxpayer. “[T]he state is not required to use the revenues

generated by the motor carrier fuel tax from operations

on the Indiana toll road for the benefit of the Indiana toll

road and its patrons.” Area Interstate Trucking, 605 N.E.2d

at 277.

The State of Indiana’s decision to tax toll road usage

does not violate Petitioners’ equal protection or due pro-

cess rights. As Petitioners concede, they are subject to the

Indiana Motor Carrier Fuel Tax because they are motor

carriers providing for-hire transportation services and

their vehicles consume fuel in operations upon Indiana

highways, which include the Indiana Toll Road. (Peti-

tioners’ Brief, p. 4). “In light of the legislative purpose to

ensure that motor carriers pay for their use of the state’s

roads, the distinctions between Indiana toll road users”

and the exempt users “are plain enough.” Area Interstate

Trucking, 605 N.E.2d at 277. Consumers of fuel used for

vehicles operated exclusively on private property, for

? Petitioners fail to discuss, or even to cite, the cases in that

footnote addressing this different question. Neither Georgia Ry.

& Electric Co. v. City of Decatur, 295 US. 165 (1935) nor Road

Improvement Dist. No. 1 v. Missouri Pac. R. Co., 274 U.S. 188 (1927)

involve a factual situation which is even remotely similar tu the

one presented in this case. In each of those cases, the statute or

ordinance which directed an assessment for the cost of improve-

ments required that the assessment be measured by the benefit

each local taxpayer received from the improvement project. In

each case, the assessment levied was ruled improper either

because there was no benefit to the taxpayer, or the assessment

was not properly made in proportion to the benefit received.

12

vehicles operated out-of-state, and for auxiliary equip-

ment, unlike toll road users, are not providing for-hire

transportation services in operations upon Indiana public

roads.

Petitioners present a similarly meritless assertion that

their equal protection rights are violated based upon

what they consider to be the “real impact” of the tax.

Petitioners claim that they are the only taxpayers

required to pay tax for vehicular use of public roads not

supported by the tax collected. They claim, but fail to

establish, that there is no conceivable basis to support the

tax of toll road usage. See F.C.C. v. Beach Communications,

Inc., 113 S.Ct. 2096, 2102 (1993). One conceivable basis for

taxing toll road usage is to compensate Indiana for the

indirect burdens imposed by the toll road. As noted by

the Supreme Court of New Jersey:

[T]he State incurs many expenses in connec-

tion with the use of the Turnpike and Parkway.

Subsidiary roads are high-cost roads to the State

because of the traffic congestion thereon result-

ing from Turnpike and Parkway traffic. And the

State incurs other expenses in the administra-

tion of its road laws in connection with toll road

use.

Safeway Trails, Inc. v. Furman, 41 N.J. 467, 197 A.2d 366,

376 (1964), appeal dismissed, cert. desied, 379 U.S. 14 (1964).

The indirect benefits afforded to the toll road users are

more than sufficient to meet the minimal requirements of

the rational-basis test.

Further, Petitioners’ assertion that they are the only

taxpayers required to pay tax for vehicular use of public

13

roads not supported by the tax collected is a misstate-

ment of fact. Even if every other road in Indiana were

eligible to receive funds from the Motor Carrier Fuel Tax,

Petitioners have not established that every alley, street

and county road in Indiana does in fact receive such

funds. The Legislature’s determination that the Toll Road

does not need funds from the Motor Carrier Fuel Tax is

no different than a local official determining that an alley

does not need funds in any particular year. The real

impact of the tax is the same: funds are used by the State

of Indiana where they are needed most. This discretion is

precisely the reason for the deferential standard for

review afforded to equal protection challenges to tax

Statutes.

Petitioners’ real complaint with the Motor Carrier

Fuel Tax deals with their perception of the wisdom and

equity of that tax. See Area Interstate Trucking, Inc. v.

Indiana Dep't of Revenue, 605 N.E.2d at 278.

Time and again, however, this Court has

made clear in the rational-basis context that the

“Constitution presumes that, absent some rea-

son to infer antipathy, even improvident deci-

sions will eventually be rectified by the

democratic process and that judicial interven-

tion is generally unwarranted no matter how

unwisely we may think a political branch has

acted.”

Nordlinger v. Hahn, 112 S.Ct. 2326, 2335-36 (1992) (citation

omitted). This Court need not grant a Writ of Certiorari in

this case simply to remind Petitioners that it is not the

function of this Court to comment on the wisdom of

legislative decisions. See Beach Communications, 113 S.Ct.

at 2101.

14

3. The alleged complexity of the Indiana Motor Carrier

Fuel Tax does not warrant modification of the firmly

established rational-basis standard for review of

equal protection challenges to state tax statutes.

Petitioners implicitly concede that no writ is war-

ranted in this case by asserting that this Court should

heighten the standard of review for equal protection chal-

lenges to state tax statutes. Petitioners suggest that this

Court adopt a “sliding-scale”> approach to reviewing

such challenges. This approach conflicts with the well-

established approach followed by this Court.

[T]his Court’s cases are clear that, unless a

classification warrants some form of heightened

review because it jeopardizes exercise of a fun-

damental right or categorizes on the basis of an

inherently suspect characteristic, the Equal Pro-

tection Clause requires only that the classifica-

tion rationally further a legitimate state interest.

Nordlinger, 112 S.Ct. at 2331. The Motor Carrier Fuel Tax

does not jeopardize any fundamental right, such as free-

dom of speech, nor does it categorize on the basis of an

inherently suspect characteristic, such as race or nation-

ality. Petitioners have failed to establish any basis for a

heightened standard of review in this case.

Petitioners suggest that the rational-basis standard

for review should evolve with regard to modern-day tax

3 This approach is totally unworkable, because it leaves no

definite standard to be applied and would require this Court to

review virtually every equal protection challenge to new tax

laws.

PIE i a

15

cases. More than 50 years ago, this Court commented on

the wisdom of the rational-basis standard:

The broad discretion as to classification pos-

sessed by a legislature in the field of taxation

has long been recognized. . . . [T]he passage of

time has only served to underscore the wisdom

of that recognition of the large area of discretion

which is needed by a legislature in formulating

sound tax policies.

Madden v. Kentucky, 309 U.S. 83, 87-88 (1940). Fifty years

later, this Court still adheres to that philosophy. Leathers

v. Medlock, 111 S.Ct. 1438, 1446 (1991), (quoting Madden,

309 U.S. at 87-88). The “standard is especially deferential

in the context of classifications made by complex tax

laws.” Nordlinger, 112 S.Ct. at 2332. Because Petitioners’

arguments regarding the standard for review of equal

protection challenges have been soundly rejected by this

Court, the Court should deny the Petition for Writ of

Certiorari in this case.

¢

CONCLUSION

The Motor Carrier Fuel Tax is imposed on the con-

sumption of motor fuel by a carrier in its operations on

highways in Indiana. Both the Indiana Court of Appeals

and the Indiana Tax Court have held that the Indiana Toll

Road is a highway within the meaning of the statute, and

that holding is not challenged by the Petitioners herein.

16 y

The Indiana Tax Court has construed the purpose of

the Motor Carrier Fuel Tax statute as simply to charge

motor carriers for the use of the public roads in Indiana.

This Court is bound by that construction, and Petitioners’

efforts to advance a different interpretation, 1.e., that the

purpose of the Motor Carrier Fuel Tax is to charge motor

carriers only for their use of highways supported by the

tax, is improper and cannot form the basis for the issu-

ance of a Writ of Certiorari.

_ The Indiana Legislature has broad powers in the classi-

fication of taxpayers and the creation of taxes. The Motor

Carrier Fuel Tax is apportioned on the basis of the use of

Indiana’s public roads, regardless of whether the roads are

supported by the tax. The State of Indiana is not required to

use the revenues generated by the Motor Carrier Fuel Tax

from operations on the Indiana Toll Road for the benefit of

the Indiana Toll Road and its patrons. The State of Indiana’s

decision to tax toll road usage does not violate Petitioners’

equal protection or due process rights.

The Petition for Writ of Certiorari should be denied.

Respectfully submitted,

RicHARD A. HusER

Counsel for Respondents

Locke REYNOLDs Boro &

WEISELL

1000 Capital Center South

201 North Illinois Street

Indianapolis, Indiana 46204

(317) 237-3800

Juuia M. BLACKWELL

Rosert W. WRIGHT

Co-Counsel for Respondents

SUPPLEMENTAL APPENDICES

App. 1

APPENDIX J

IN THE INDIANA TAX COURT

CASE NO. 49T10-9105-TA-00022

AREA INTERSTATE TRUCKING, )

INC., INDIANA MATERIAL )

TRANSFER, Inc., ADVANCE )

TRANSPORTATION COMPANY, _ )

BRYAN TRUCK LINE, INC., )

CHURCHILL TRUCK LINES, )

INC., FRANKS & SON, INC., )

GREAT AMERICAN LINES, )

INC., KAT, INC. and MOGLE )

ENTERPRISES, INC., on behalf )

of themselves and all others )

)

)

)

)

)

)

)

)

)

)

)

FILED

JAN 26 1993

similarly situated,

Petitioners,

VS.

INDIANA DEPARTMENT OF

REVENUE and KENNETH L.

MILLER, as Acting

Commissioner of the Indiana

Department of Revenue,

Respondents.

FINAL JUDGMENT ENTRY PURSUANT

TO IND. TRIAL RULE 56(C)

The Court, having issued an opinion in this case on

December 29, 1992 and having denied Petitioners’

Motions for Summary Judgment and granted Respon-

dents’ Cross-Motion for Summary Judgment, hereby

finds that there are no genuine issues of material fact

with respect to Count I of Petitioners’ Amended Verified

a

App. 2

Petition to Enjoin Collection of Tax and Original Tax

Appeal (“Amended Petition”) and that summary judg-

ment should be entered thereon. Such summary judg-

ment, being entered upon less than all of the claims in

this case, is hereby rendered final pursuant to ind. Trial

Rule 56(C) based upon the Court’s express findings

herein that there is no just reason for delay and that

Petitioners, if they so choose, should be permitted to file

with the Indiana Supreme Court a Petition for Review of

the Court’s December 29, 1992 opinion.

IT IS THEREFORE ORDERED, ADJUDGED, AND

DECREED that final summary judgment is hereby

entered in favor of Respondents on Count I of the

Amended Petition this 26th day of January, 1993.

/s/ Thomas G. Fisher

Thomas G. Fisher, Judge

Indiana Tax Court

COPIES TO:

James H. Hanson

Michael J. Tosick

SCOPELITIS, GARVIN, LIGHT & HANSON

1777 Market Tower

10 West Market Street

Indianapolis, IN 46204

Richard A. Huser

Kevin Charles Murray

LOCKE REYNOLDS BOYD & WEISELL

1000 Capital Center South

201 North Illinois Street

Indianapolis, IN 46204

App. 3

APPENDIX K

6-6-4.1-6 Credits against tax

Sec. 6. (a) A carrier is entitled to a credit against

the tax imposed under section 4 of this chapter if the

carrier, or a lessor operating under the carrier’s annual

permit, has:

(1) paid the tax imposed under IC 6-6-1.1 or IC

6-6-2.1 on motor fuel purchased in Indiana;

(2) consumed the motor fuel outside Indiana;

and

(3) paid a gasoline, special fuel, or road tax

with respect to the fuel in one (1) or more other

states or jurisdictions.

(b) The amount of credit for a quarter is equal to the

tax paid under IC 6-6-1.1 and IC 6-6-2.1 on motor fuel

that:

(1) was purchased in Indiana;

(2) was consumed outside Indiana; and

(3) with respect to which the carrier paid a

gasoline, special fuel, or road tax to another

state or jurisdiction.

(c) To qualify for the credit, the carrier shall submit

any evidence required by the department of payment of

the tax imposed under IC 6-6-1.1 or IC 6-6-2.1.

(d) A credit earned by a carrier ina particular quar-

ter shall be applied against the carrier’s tax liability

under this chapter for that quarter before any credit

carryover is applied against that liability under section 7

App. 4

of this chapter. As added by Acts 1982, P.L.59, SEC.1.

Amended by P.L.77-1985, SEC.28.

App. 5

APPENDIX L

AREA INTERSTATE TRUCKING, INC.,

Appellant-Intervenor-Plaintiff,

Vv.

INDIANA STATE DEPARTMENT OF REVENUE,

Appellee-Defendant.

No. 41A01-9012-CV-506.

Court of Appeals of Indiana,

First District.

June 26, 1991.

Trucking company brought class action against

Department of Revenue contending that Department

improperly assessed motor carrier fuel tax to extent

trucking company’s dump trucks used fuel in common

fuel reservoir to operate mechanism which raised and

lowered beds of trucks, as well as to move them along

highway. Carrier filed motion to intervene, alleging that

some of its fuel was used to traverse toll roads instead of

public highways. The Johnson Circuit Court, Jeffrey C.

Eggers, J., denied motion, and carrier appealed. The

Court of Appeals, Baker, J., held that: (1) toll roads were

“highways” within meaning of motor carrier fuel tax

Statutes, and (2) carrier did not use its fuel for locomotion

along highway and for “another commercial purpose,”

and thus did not come within definition of class.

Affirmed.

Carrier that used some of its motor fuel to traverse

toll roads did not come within class of carriers operating

equipment having common fuel reservoir for locomotion

eT

App. 6

along highway and for “another commercial purpose,” in

action for refund of motor carrier fuel tax attributable to

other commercial purpose, given determination that toll

road was “highway” within meaning of motor carrier fuel

tax statutes. West’s A.I.C. 6-6-4.1-1 et seq.

James H. Hanson, Lynne D. Lidke, Michael J. Tosick,

Scopelitis, Garvin, Light & Hanson, Indianapolis, Tom G.

Jones, Jones, Loveall & Johnson, Franklin, for appellant-

intervenor-plaintiff.

Kevin Charles Murray, Locke Reynolds Boyd &

Weisell, Indianapolis, for appellee-defendant.

BAKER, Judge.

Today we! are asked whether a toll road is a high-

way. We determine that it is. The question arises out of

Area Interstate Trucking, Inc.’s (Area) appeal from the

trial court’s final judgment denying Area’s motion to

intervene in a class action against the Indiana State

Department of Revenue (the Department) to recover

improperly assessed motor carrier fuel taxes.

Because we conclude a toll road is a highway, we

hold Area was not a class member under the class defini-

tion and affirm the trial court’s denial of Area’s motion to

intervene in the class action.

1 This action is before this court, instead of before the Indi-

ana Tax Court, because the action was commenced in the Mar-

ion Superior Court on June 27, 1986, whereas the Indiana Tax

Court did not come into existence until July 1, 1986. See

IND.CODE § 33-3-5-1.

App. 7

FACTS

Schwerman Trucking Company (Schwerman) oper-

ates dump trucks which have a common fuel reservoir

containing the fuel to propel the truck and operate a

mechanism which raises and lowers the beds of the dump

trucks. On June 27, 1986, Schwerman filed a class action

against the Department contending that the Department

had improperly assessed the motor carrier fuel tax pur-

suant to IND.CODE § 6-6-4.1-1 et seg. and that Schwer-

man and the class members were due tax refunds. The

trial court approved a stipulation for class certification

entered into by Schwerman and the Department which

defined the class as follows:

“That the class is composed of the following

taxpayers: each person and/or entity who oper-

ates equipment which has a common fuel! reser-

voir for locomotion along the highway and for

another commercial purpose and who are sub-

ject to the taxes imposed by the Indiana Code, as

amended I.C. 6-6-4.1-1, et seq.”

Record at 34.

Area filed a motion for the court to recognize a

subclass and appoint Area as its representative and a

motion to intervene, arguing its claim was like Schwer-

man’s in that some of the fuel used by Area, a carrier, was

used to traverse toll roads instead of public highways.

Area argued toll roads are not highways and, therefore,

the portion of Area’s fuel consumed on the toll roads was

fuel consumed for another commercial purpose and, in

accordance with IND.CODE § 6-6-4.1-1(d), is not subject

to the motor carrier fuel tax.

App. 8

The trial court denied Area’s motion to intervene and

entered final judgment on the order, after finding that the

motion was untimely and raised a question of law and

fact not common to Schwerman’s dispute with the

Department, and that Area’s intervention would preju-

dice settlement between the original parties by causing

substantial delay. Area then filed this appeal. Subse-

quently, Schwerman and the Department filed a settle-

ment agreement with the court acknowledging the

agreement would have no effect on Area’s claims.

In its order denying Area’s motion to intervene, the

trial court did not conclude explicitly that Area was not a

member of the Schwerman class but restated the defini-

tion of the Schwerman class, noted the definition of high-

way found in IND.CODE § 6-6-4.1-1(f), stated that

IND.ADMIN.CODE tit. 45, r. 13-2-11 (1984) indicates a

toll road is a highway for the purposes of IND.CODE

§ 6-6-4.1-1, and found, “Common Sense points to a con-

clusion that had the Legislature and the Department of

State Revenue intended toll road usage to not be highway

and to be ‘another commercial purpose’, specific lan-

guage to this effect would have been used.” Record at

264, Item 7. See also Record at 263, Items 3-5.

From the court’s findings we may infer that it would

find Area is not a class member if it were faced with the

issue. Both parties ask us, for the sake of judicial econ-

omy, to decide whether Area is a class member. Area

contends that its use of fuel upon the Indiana toll road is

fuel consumption “for another commercial purpose”, just

as is Schwerman’s auxiliary power equipment fuel usage

for the dump bed mechanism. Area argues it is, therefore,

a member of the class defined by Schwerman and the

ae —

App. 9

Department. The Department contends a toll road is a

highway and, therefore, the sole purpose of the equip-

ment operated by Area is for locomotion along a highway

and not for any other commercial purpose. Therefore, the

Department concludes, Area was not a class member.

DISCUSSION AND DECISION

Both Area and the Department agree the key issue in

this case is the meaning and scope of the class definition

stipulated to by Schwerman and the Department.? Speci-

fically, the question is whether Area’s claim for refunds of

taxes paid on fuel used for transportation on a toll road

brings it within the definition of class membership. On

appeal, Area concedes that if it is not a class member

there is no question of whether Schwerman was repre-

senting Area adequately and Area is not entitled to inter-

vene.

As the appellant, Area has the burden of demonstrat-

ing reversible error. The trial court’s judgment is clothed

with a presumption that it is correct. Indiana Dept. of

Revenue v. Waterfield Mortgage Co. (1980), Ind.App., 400

N.E.2d 212, 214.

2 Area initially raised as additional issues on appeal the

trial court’s findings that Area’s motion to intervene was

untimely, concerned questions not common with the disputes

between Schwerman and the Department, and would prejudice

settlement of the class claims. In its reply brief, however, Area

abandons those issues. We agree with the parties that an answer

to the question regarding Area’s class membership is disposi-

tive. Therefore, we do not address the additional issues raised

by Area.

App. 10

Our goal in construing statutes and regulations is to

seek out and give effect to the intent of our legislature.

Superior Construction Co. v. Carr (1990), Ind., 564 N.E.2d

281, 284; Hamilton County Dept. of Public Welfare v. Smith

(1991), Ind.App., 567 N.E.2d 165, 169. In attempting to

determine legislative intent, we give considerable defer-

ence to an interpretation of a statute by an administrative

agency charged with administering the statute. Indiana

State Prison and State Employees’ Appeals Commission v. Van

Ulzen (1991), Ind.App., 567 N.E.2d 1164, 1167; Dept. of

Revenue v. United States Steel Corp. (1981), Ind.App., 425

N.E.2d 659, 666. Furthermore, “a long adhered to admin-

istrative interpretation dating from the legislative enact-

ment, with no subsequent change having been made in

the statute involved, raises a presumption of legislative

acquiescence which is strongly persuasive upon the

courts.” Baker v. Compton (1965), 247 Ind. 39, 42, 211

N.E.2d 162, 164.

A carrier, meaning a “person who operates or causes

to be operated a commercial motor vehicle on any high-

way in Indiana”, IND.CODE § 6-6-4.1-1(a), is charged

with paying the motor fuel tax quarterly to the Depart-

ment, IND.CODE §§ 6-6-4.1-4(a); 6-6-4.1-1(e) which is

charged, under IND.CODE § 6-6-4.1-5(a), with depositing

revenue collected from the motor fuel tax into the state

highway fund. Thus, the Department is charged with

administering the motor carrier fuel tax and we will pay

great deference to its interpretation of IND.CODE

§ 6-6-4.1-1 et seq.

By the authority provided it in IND.CODE

§ 6-8.1-3-3, the Department adopted the rules in

IND.ADMIN.CODE tit. 45, r. 13-1-11 (1984) on July 13,

App. 11

1984. Those rules provide: “(a) The term ‘highway’ shall

mean the entire width between the boundary lines of

every thoroughfare that is open in any part to the use of

the public for purposes of vehicular travel. (b) For pur-

poses of IC 6-6-4.1-1, a toll road is a highway.” No legisla-

tive change has been made that would indicate the

legislature placed a different interpretation on

IND.CODE § 6-6-4.1-1 since July 13, 1984. We give sub-

stantial weight both to the Department's interpretation of

its own regulations and to the legislature’s acquiescence

in the administrative interpretation.

Although the doctrine of “legislative acquiescence is

a useful tool of statutory construction, it is not a sufficient

independent basis for affirming a judgment.” Indiana

Department of State Revenue v. Mercantile Mortgage Co.

(1980), Ind.App., 412 N.E.2d 1252, 1253. Therefore, we

will independently construe the term “highway” as used

in IND.CODE § 6-6-4.1-1 in accordance with the usual

rules of statutory construction.

“Statutes which impose or levy taxes may not be

extended beyond the clear import of the language of the

statute. Such statutes are to be construed strictly against

the state and in favor of the taxpayer.” Wechter v. Indiana

Department of State Revenue (1989), Ind.Tax, 544 N.E.2d

221, 224, aff’d (1990), Ind., 553 N.E.2d 844. Nevertheless,

in interpreting a statute we give the words used their

ordinary and common meaning rather than “over-

emphasizing a strict literal or selective reading of indi-

vidual words.” Spaulding v. International Bakers Services,

Inc. (1990), Ind., 550 N.E.2d 307, 309. We presume the

legislature intended the ordinary meaning of the statu-

tory language to apply unless such a presumption

App. 12

“would manifestly defeat the object of the provisions.”

Dept. of Revenue v. United States Steel, supra, 425 N.E.2d at

665. The plain and ordinary meaning of words is the

“meaning given to the language by the community and

ordinary reader.” Romain v. A. Howard Wholesale Co.

(1987), Ind.App., 506 N.E.2d 1124, 1126.

IND.CODE § 6-6-4.1-1(f) defines a “highway” as “[T]he

entire width between the boundary lines of every publicly

maintained way that is open in any part to the use of the

public for purposes of vehicular travel.” In common usage, a

“highway” is “la: a road or way on land or water that is

open to public use as a matter of right whether or not a

thoroughfare; a public road or way including the right-of-

way .. . C: a main direct road (as between one town or city

and another)...” Webster’s Third New International Dictionary

(Unabridged) 1069 (1967).

A “toll road” is “a road for the use of which a toll is

collected”. Id. at 2405. As our supreme court stated,

“Roads and highways are generic terms, embracing all

kinds of public ways, such as county and township roads,

streets, alleys, township and plank roads, turnpike or

gravel roads, ...” Strange v. Board (1910), 173 Ind. 640,

652, 91 N.E. 242, 247 (emphasis added). A “turnpike

road” is “a: a toll road; esp.: a toll expressway ...c: a

main road; a paved highway having a crowned surface”.

Webster's Third New International Dictionary (Unabridged)

at 2469. As we stated in Southern Indiana Gas v. Dept. of

Highways (1989), Ind.App., 533 N.E.2d 1289, trans. denied,

“All roads laid out under legislative enactment are public

highways belonging to the State.” Id. at 1293.

In accordance with these definitions, we hold that the

plain and ordinary meaning of a toll road or turnpike is

App. 13

that it is a highway as that term is defined in IND.CODE

§ 6-6-4.1-1(f). We have no reason to think that such a

meaning for toll road would manifestly defeat the legisla-

ture’s objective for the motor carrier fuel tax provisions.

We, therefore, reject Area’s arguments that: (1) a toll road

is not a highway because the motor carrier fue! tax reve-

nues are deposited into a state highway fund which

allegedly is not used to support the toll road, see

IND.CODE §§ 6-6-4.1-5; I.C. § 8-2.1-23-1; LC. § 8-14-1-2;

I.C. § 8-14-1-3; I.C. 8-23-9-55, and (2) a toll road is not

“open”, as the term is used to define “highway” in I.C.

§ 6-6-4.1-1(f), because access is gained by payment of a

toll and is hampered by restrictions.

We repeat that the definition of class membership is

an “entity who operates equipment which has a common

fuel reservoir for locomotion along the highway and for

another commercial purpose”. Record at 34. Thus, the

class definition requires both that an entity be using its

fuel for locomotion along the highway and for another

commercial purpose. We have determined that a toll road

is a highway. Therefore, toll road use does not constitute

“another commercial purpose”. Because Area was using

its common fuel reservoir solely for locomotion along a

highway, and not for another commercial Purpose, Area

was not a class member. Consequently, as Area concedes,

it is not entitled to intervene in Schwerman’s action. The

trial court did not err in denying Area the right to inter-

vene as a Class member in Schwerman’s action against the

Department.

Affirmed.

RATLIFF, C.J., and BARTEAU, J., concur.

App. 14

APPENDIX M

IN THE INDIANA TAX COURT

CASE NO. 49T10-9105-TA-00022

AREA INTERSTATE TRUCKING, )

INC., INDIANA MATERIAL )

TRANSFER, Inc., ADVANCE )

TRANSPORTATION COMPANY, )

BRYAN TRUCK LINE, INC., )

CHURCHILL TRUCK LINES, INC., )

FRANKS & SON, INC., GREAT )

AMERICAN LINES, INC., KAT, )

INC. and MOGLE ENTERPRISES, _ )

INC., on behalf of themselves and _)

all others similarly situated, )

Petitioners, ‘

vs. )

)

)

)

)

)

)

)

INDIANA DEPARTMENT OF

REVENUE and KENNETH L.

MILLER, as Acting Commissioner

of the Indiana Department of

Revenue,

a Ni i a ih ee

Respondents.

ORDER

(Filed Dec. 29, 1992)

This matter is before the Court on the Withdrawal of

Motion for Determination of Class and Praecipe for Hear-

ing filed by Petitioners.

The Court, being first duly advised in the premises,

now finds that permission to withdraw the Motion for

App. 15

Determination of Class and Praecipe for Hearing should

be granted.

IT IS THEREFORE ORDERED that Petitioners are

granted permission to withdraw their Motion for Deter-

mination of Class and Praecipe for Hearing at this time,

Subject to a right to re-file the Motion for Determination

of Class and Praecipe for Hearing at a later date.

Dated: December 29, 1992

/s/ Thomas G. Fisher

Thomas G. Fisher, Judge

Indiana Tax Court

COPIES TO:

James H. Hanson

Michael J. Tosick

SCOPELITIS, GARVIN, LIGHT & HANSON

1777 Market Tower

10 West Market Street

Indianapolis, IN 46204

Richard A. Huser

Kevin Charles Murray

LOCKE REYNOLDS BOYD & WEISELL

1000 Capital Center South

201 North Illinois Street

Indianapolis, IN 46204