Renzenberger, Inc. v. N.M. Taxation & Revenue Dep't

• Decision Date: 26 July 2017
• Docket Number: NO. A-1-CA-34999,A-1-CA-34999
• Citation: 409 P.3d 922
• Parties: RENZENBERGER, INC., Plaintiff-Appellant, v. STATE of New Mexico TAXATION AND REVENUE DEPARTMENT, Defendant-Appellee.
• Court: Court of Appeals of New Mexico

409 P.3d 922

RENZENBERGER, INC., Plaintiff-Appellant,

v.STATE of New Mexico TAXATION AND REVENUE DEPARTMENT, Defendant-Appellee.

NO. A-1-CA-34999

Court of Appeals of New Mexico.

Filing Date: July 26, 2017

Certiorari Denied, December 6, 2017, No. S-1-SC-36662

Betzer, Roybal & Eisenberg, P.C., Benjamin C. Roybal, Albuquerque, NM Sanchez, Mowrer & Desiderio, P.C., Robert J. Desiderio, Albuquerque, NM, for Appellant.

Hector H. Balderas, Attorney General, New Mexico Taxation and Revenue Department, Elena Romero Morgan, Special Assistant Attorney General, Santa Fe, NM, for Appellee.

Multistate Tax Commission, Helen Hecht, General Counsel, Bruce Fort, Counsel, Washington, D.C., Amicus Curiae.

JAMES J. WECHSLER, Judge

{1} We determine in this appeal that a taxpayer's transport as a motor carrier of an interstate railroad's employees from point to point in New Mexico is not "transportation of a passenger traveling in interstate commerce by motor carrier" in order to preempt New Mexico gross receipts tax under a federal statute, 49 U.S.C. § 14505(2) (2012). We therefore affirm the district court's summary judgment denying a refund of taxes paid.

BACKGROUND

{2} Renzenberger, Inc. (Taxpayer) contracted with Union Pacific Railroad and Burlington Northern Santa Fe (the railroads) to transport railroad employees to and from railroad trains both within New Mexico and from New Mexico to another state.¹ The railroads carried freight across state lines in the United States. Taxpayer asserted that its service was necessary because interstate railroad carriers needed to comply with federal safety regulations and union rules concerning crew hours and that Taxpayer's service enables railroads to "provide relief services to allow the railroads to continue to operate without undue delay."

{3} Defendant State of New Mexico Taxation and Revenue Department (the Department), after an audit, assessed Taxpayer for gross receipts tax, penalties, and interest for the period from March 31, 2005 through August 31, 2010. The Department assessed liability only for gross receipts tax on revenue derived from transportation between locations in New Mexico, not for transportation from a location in New Mexico to a location in another state. Taxpayer timely paid the assessed liability, penalties, and interest in full and filed an application for refund with the Department for the amounts paid. The Department denied the application, and Taxpayer filed a complaint for tax refund in the First Judicial District Court.

{4} In the district court, the parties filed cross-motions for summary judgment. After a hearing, the district court denied Taxpayer's motion and granted the Department's motion.

49 U.S.C. § 14505

{5} In 1995, Congress passed the Interstate Commerce Commission Termination Act (the ICCTA) with the intent of deregulating certain industries. 49 U.S.C. §§ 101 - 80504 (2012). Within the ICCTA, Congress enacted 49 U.S.C. § 14505 to restrict states and local subdivisions from burdening interstate passenger travel by motor carrier. Title 49 U.S.C. § 14505 reads:

A State or political subdivision thereof may not collect or levy a tax, fee, head charge, or other charge on—

(1) a passenger traveling in interstate commerce by motor carrier;

(2) the transportation of a passenger traveling in interstate commerce by motor carrier;

(3) the sale of passenger transportation in interstate commerce by motor carrier; or

(4) the gross receipts derived from such transportation.

In recognition of the Supremacy Clause of the United States Constitution, the New Mexico Legislature enacted NMSA 1978, Section 7-9-55(A) (1993), providing that "[r]eceipts from transactions in interstate commerce may be deducted from gross receipts to the extent that the imposition of the gross receipts tax would be unlawful under the United States [C]onstitution."

{6} There is no question in this case that the Department deducted receipts from Taxpayer's service revenues that included transportation between locations in New Mexico and locations in other states. The issue of this appeal is, rather, whether 49 U.S.C. § 14505 preempts the Department's assessment of gross receipts tax on the revenues from Taxpayer's service between locations in New Mexico. If 49 U.S.C. § 14505 applies, Taxpayer would have been entitled to also deduct revenues for transportation between locations in New Mexico.

STANDARD OF REVIEW

{7} Because the outcome of this appeal depends on our interpretation of 49 U.S.C. § 14505, and because the district court made its interpretation by way of summary judgment, we review the district court's ruling de novo. See Maestas v. Zager , 2007-NMSC-003, ¶ 8, 141 N.M. 154, 152 P.3d 141. When interpreting a statute, our primary goal is to give effect to the legislative intent. Key v. Chrysler Motors Corp. , 1996-NMSC-038, ¶ 13, 121 N.M. 764, 918 P.2d 350. We endeavor to do so by first examining the plain language of the statute.

Marbob Energy Corp. v. N.M. Oil Conservation Comm'n , 2009-NMSC-013, ¶ 9, 146 N.M. 24, 206 P.3d 135. "The plainness or ambiguity of statutory language is determined by reference to the language itself, the specific context in which that language is used, and the broader context of the statute as a whole." Robinson v. Shell Oil Co. , 519 U.S. 337, 341, 117 S.Ct. 843, 136 L.Ed.2d 808 (1997). If there is an ambiguity or a lack of clarity, we will turn to other aspects of statutory construction, including the purpose of the statute and its legislative history. See Marbob , 2009-NMSC-013, ¶ 9, 146 N.M. 24, 206 P.3d 135.

{8} Additionally, because we are interpreting a federal statute that is designed to preempt state taxation, the United States Supreme Court has indicated that the party advocating preemption has the burden of demonstrating the congressional intent "to supplant state law." De Buono v. NYSA-ILA Med. & Clinical Servs. Fund , 520 U.S. 806, 814, 117 S.Ct. 1747, 138 L.Ed.2d 21 (1997) (internal quotation marks and citation omitted). The Court has recognized in such cases that principles of federalism support state sovereignty with regard to its taxing authority and has applied a "presumption against pre-emption" that requires "the clear and manifest purpose of Congress" for preemption. Id. at 813 n.8, 117 S.Ct. 1747 (internal quotation marks and citation omitted); Dep't of Revenue of Or. v. ACF Indus., Inc. , 510 U.S. 332, 344-45, 114 S.Ct. 843, 127 L.Ed.2d 165 (1994).

{9} The parties dispute the import of this presumption in this case. While the Department and Amicus Curiae Multistate Tax Commission advance the use of the presumption, Taxpayer asserts that the United States Supreme Court "is currently split as to the existence of a presumption against preemption [,]" and, regardless, if there is such a presumption in this case, it only means that "Taxpayer has the burden of persuading [this] Court that, as a matter of law, the unambiguous language" of 49 U.S.C. § 14505 prohibits the imposition of the tax at issue.

{10} We need not address either the existence or the scope of this federal presumption because we apply a similar presumption concerning the interpretation of state-established exemptions and deductions. In Security Escrow Corp. v. New Mexico Taxation &Revenue Department , 1988-NMCA-068, ¶ 8, 107 N.M. 540, 760 P.2d 1306, we stated that "[w]here an exemption or deduction from tax is claimed, the statute must be construed strictly in favor of the taxing authority, the right to the exemption or deduction must be clearly and unambiguously expressed in the statute, and the right must be clearly established by the taxpayer." We see no reason to not employ such a construction in considering whether our state statute is preempted by federal law.

STATUTORY INTERPRETATION ANALYSIS

{11} The focus of our statutory interpretation inquiry is the language of Subsection 2 of 49 U.S.C. § 14505, "a passenger traveling in interstate commerce by motor carrier[.]" The phrases "traveling in interstate commerce" and "by motor carrier" and the word "passenger" all have bearing on our analysis. We first turn to the phrase "traveling in interstate commerce," and we subsequently address the use of the phrase "by motor carrier" and the word "passenger."

"Traveling in Interstate Commerce"

{12} The district court interpreted "traveling in interstate commerce" to require "at the very least ... trips across a state line by motor carrier carrying passengers[.]" Taxpayer advances a broader approach. According to Taxpayer, the statutory language "in interstate commerce" includes "all activities that have a substantial affect on interstate commerce, including activities that are solely intrastate." Under Taxpayer's approach, 49 U.S.C. § 14505 preempts even Taxpayer's transportation of railroad crew members from point to point in New Mexico from New Mexico gross receipts taxation because the transportation is "in interstate commerce" as an integral part of the railroads' activity in interstate commerce.

A. Effect on Commerce

{13} Taxpayer relies on United States v. Yellow Cab Co. , 332 U.S. 218, 67 S.Ct. 1560, 91 L.Ed. 2010 (1947), overruled on other grounds by Copperweld Corp. v. Indep. Tube Corp. , 467 U.S. 752, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984). Yellow Cab involved a complaint alleging violations of the Sherman Antitrust Act, 15 U.S.C. §§ 1, 2 (2004), which prohibits "unreasonable restraints on interstate commerce[.]" Yellow Cab , 332 U.S. at 225, 67 S.Ct. 1560 ; see 15 U.S.C. § 1 ("Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several [s]tates, or with foreign nations, is declared to be illegal."). As pertinent to this case, in Yellow Cab , there were allegations of a conspiracy to restrict competition for contractual taxicab services to transport interstate railroad passengers with their luggage from one railroad station to another within Chicago. 332 U.S. at 228, 67 S.Ct. 1560. Stating that such transportation was ...