Roehl Transport, Inc. v. Wisconsin Div. of Hearings and Appeals, 97-0211

CourtCourt of Appeals of Wisconsin
Writing for the CourtBefore EICH; EICH
Citation213 Wis.2d 452,570 N.W.2d 864
PartiesROEHL TRANSPORT, INC., a Wisconsin corporation, Petitioner-Appellant, v. WISCONSIN DIVISION OF HEARINGS AND APPEALS, Respondent-Respondent.
Docket NumberNo. 97-0211,97-0211
Decision Date25 September 1997

Page 864

570 N.W.2d 864
213 Wis.2d 452
ROEHL TRANSPORT, INC., a Wisconsin corporation, Petitioner-Appellant,
No. 97-0211.
Court of Appeals of Wisconsin.
Submitted on Briefs Aug. 8, 1997.
Opinion Released Sept. 25, 1997.
Opinion Filed Sept. 25, 1997.

Page 866

[213 Wis.2d 454] On behalf of the petitioner-appellant, the cause was submitted on the briefs of Carl D. Fortner of Foley & Lardner of Milwaukee, Wisconsin; Carl L. Meissner of Zappen & Meissner of Marshfield, Wisconsin; and Richard C. Hutchison of Hutchison, Neider, Ward & King of Salt Lake City, Utah.

On behalf of the respondent-respondent, the cause was submitted on the brief of James E. Doyle, Attorney [213 Wis.2d 455] General, with Susan K. Ullman, Assistant Attorney General.


EICH, Chief Judge.

Roehl Transport, Inc., a large interstate trucking firm based in Wisconsin, challenged the imposition and collection of state taxes on fuel used by its truck fleet. Roehl claimed that fuel consumed while its trucks are idling in excess of eight minutes is not taxable and that the Wisconsin Department of Transportation lacks authority to collect taxes on behalf of two neighboring states. The parties agreed to have Roehl's challenge heard and determined by a hearing examiner in the Division of Hearings and Appeals, 1 rather than by the department, as is usually the case. 2 The examiner ruled that the taxes were properly imposed on fuel consumed while idling--except during off-highway use--and were properly collected by the department. Roehl petitioned the circuit court for review, and it affirmed the division's decision.

Roehl renews its arguments on appeal. But our de novo review of the division's interpretation and application of the relevant statutes, rules and interstate [213 Wis.2d 456] compacts satisfies us that all issues have been correctly decided. We affirm the circuit court's order.

The facts were stipulated. Wisconsin imposes an excise or "use" tax on fuel consumed by interstate motor carriers, including fuel purchased in another state and "consumed by qualified motor vehicle[s] while operated on the highways of this state." Section 341.45(1g)(a), STATS. Under § 341.45 and the administrative rules adopted thereunder, carriers must maintain records of all fuel purchases and report to the department the amount of "taxable" fuel (fuel consumed in highway operation) and "non-taxable" fuel (fuel consumed in off-highway operation) used by its fleet. 3

Wisconsin is a party to an interstate compact known as the International Fuel Tax

Page 867

Agreement, or IFTA, which is designed to facilitate the collection of state fuel taxes from interstate motor carriers. 4 Under IFTA's terms, insofar as they are applicable here, the department is authorized to collect fuel taxes from Wisconsin-based carriers both on its own behalf and on behalf of other states who are parties to the compact.

Roehl, believing that significant amounts of fuel were being consumed by its trucks while they were stationary, installed measuring devices on each truck [213 Wis.2d 457] to monitor idling time. Knowing that idling time fell into two distinct categories--stops on the highway, such as waiting at railroad crossings, and off-highway idling, as when drivers would keep the engines running while sleeping in order to maintain a comfortable cab temperature--Roehl elected to treat all fuel consumed by its trucks while idling for periods of time exceeding eight minutes as non-taxable off-highway consumption, and in 1988 adjusted its tax payments accordingly.

The department conducted an audit of Roehl's fuel tax reports and filings for the years 1988-92, determined that Roehl had improperly withheld payment for fuel consumed while idling, and assessed additional taxes and penalties totaling $194,246.85. The assessment included taxes due to other IFTA member states as well.

At a hearing before the Division of Hearings and Appeals, Roehl argued that IFTA superseded Wisconsin law and exempted all fuel consumed while idling from the Wisconsin tax. It argued that because IFTA defined the "taxable event" as "the consumption of fuels used in the propulsion of vehicles," Wisconsin could tax only the fuel used in propelling vehicles forward. IFTA Articles of Agreement, art. III(a) (rev.Feb.1993). The division's examiner disagreed, concluding that no conflict existed between IFTA and the taxing provisions of § 341.45, STATS. The examiner ruled that, under § 341.45(1g)(a) and WIS. ADM.CODE § TRANS 152.04(2)(b), the only applicable exemption was for operation--whether moving or idling--while not on a state highway. The examiner also rejected Roehl's argument that the department lacked authority under IFTA (or its predecessor, WMIFTA) to collect taxes on behalf of other states.

[213 Wis.2d 458] On review, the circuit court affirmed the division in all respects and denied Roehl's request for further hearings.

I. Standard of Review

In administrative appeals, we review the agency's decision, not the circuit court's. Sterlingworth Condominium Ass'n v. DNR, 205 Wis.2d 710, 712, 556 N.W.2d 791, 794 (Ct.App.1996). Here, as in a growing number of appeals, the parties disagree as to the appropriate standard of judicial review of the division's decision. The division maintains that, at the very least, we owe due deference to its decision and need only look to see whether it is reasonable. Roehl argues that we must review the division's decision independently, paying it no deference whatsoever. We conclude that Roehl is correct.

As in all such inquiries, we begin with the proposition that the interpretation of statutes and their application to the facts present questions of law for courts to decide. However, in recognition of the expertise and experience in various fields possessed by state regulatory and administrative agencies, we will defer to an agency's interpretation and application of a statute in certain situations. We accord the highest degree of deference to an agency's decision when: (1) the agency is charged with administration of the statute at issue; (2) its interpretation is based on "its expertise or specialized knowledge"; (3) the interpretation provides "uniformity and consistency in the application of the statute"; and (4) it is one "of long standing." Harnischfeger Corp. v. LIRC, 196 Wis.2d 650, 660, 539 N.W.2d 98, 102 (1995). 5

Page 868

[213 Wis.2d 459] If those criteria are met, we will sustain the agency's interpretation if it is reasonable, even if another interpretation is equally reasonable--or even more reasonable than the agency's. UFE Inc. v. LIRC, 201 Wis.2d 274, 287 n. 3, 548 N.W.2d 57, 63 (1996). See also MCI Telecomm. Corp. v. State, 209 Wis.2d 310, 562 N.W.2d 594 (1997).

We will also defer--although to a slightly lesser degree--to the legal interpretation of an agency that is charged with administration of the statute involved if it has developed some expertise in the particular area, but "has not developed the expertise which necessarily places it in a better position to make judgments regarding the interpretation of the statute than a court." UFE Inc., 201 Wis.2d at 286, 548 N.W.2d at 62. In such a case we will also sustain the agency's interpretation if it is reasonable, but only if no other interpretation is more reasonable than the agency's. Id. at 287, 548 N.W.2d at 62-63. 6

[213 Wis.2d 460] In this case, however, we are called upon to review not the decision of a "line" agency charged with the administration and enforcement of the statutes involved, and possessed of expertise or specialized knowledge in a particular regulatory field, but that of an individual hearing examiner assigned to hear the case by an official of the Department of Administration--a department created to provide management services and assistance to state agencies and departments. Section 16.001, STATS.

If we were reviewing a decision of the Department of Transportation, there would be little question that it would be entitled to considerable deference. But we are not. Nor is it the decision of an independent agency--such as the Tax Appeals Commission--created for the express purpose of reviewing decisions of a line agency. See William Wrigley, Jr., Co. v. DOR, 176 Wis.2d 795, 801, 500 N.W.2d 667, 670 (1993) (we defer to decisions of the Tax Appeals Commission because it is "the final administrative authority" for review of Department of Revenue decisions and is experienced in interpreting and applying tax statutes); DOR v. Heritage Mut. Ins. Co., 208 Wis.2d 582, 589, 561 N.W.2d 344, 347 (Ct.App.1997) (Tax Appeals Commission entitled to deference because it "has primary responsibility for [tax] policy determinations").

The division, relying on the department's expertise in conducting the original audit that determined Roehl's liability for the taxes, argues that since the audit "is at the root of this case," we should defer to the division's decision upholding the audit's conclusions. It is true, as the division points out, that the circuit court originally remanded the matter to the department for a hearing. But, as we have noted above, rather than proceed[213 Wis.2d 461] before the department, the parties instead decided to have one of the division's hearing examiners conduct the hearing.

The cases to which we have referred above demonstrate that judicial deference to administrative agency decisions is based on the agency's statutory responsibilities with respect to the statute or statutes in question, and its experience, expertise or specialized knowledge in the area under consideration. It is only when these criteria are met that the judicial system--the branch of government...

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