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Marco Petroleum Industries, Inc. v. Commissioner, New Hampshire Department of Safety

Supreme Court of New Hampshire

May 12, 2015


Argued: November 13, 2014


Douglas, Leonard & Garvey, P.C., of Concord (Charles G. Douglas, III on the brief, and Jason R.L. Major orally), for the petitioner.

Joseph A. Foster, attorney general (John J. Conforti, assistant attorney general, on the brief and orally), for the respondent.


The petitioner, Marco Petroleum Industries, Inc. (Marco), appeals an order of the Superior Court (McHugh, J.) affirming a decision of the respondent, the Commissioner of the New Hampshire Department of Safety (DOS). Following an administrative hearing, DOS determined that Marco owed the State $155, 070.71, including interest and penalties, due to Marco's failure to pay the New Hampshire road toll on fuel imported into the state. On appeal, Marco argues that DOS and the trial court erred by finding that Marco was required to pay the road toll because: (1) it was not a "distributor" of motor fuels under RSA 259:21 (2014); (2) it did not "sell" motor fuel under RSA 260:32 (2014) (amended 2014); and (3) it would be unfair to require Marco to pay the New Hampshire road toll because it had already paid the Massachusetts fuel tax. We affirm.

Before addressing the substance of Marco's claims, we provide, for context, an overview of the relevant fees assessed by government entities on the sale of motor fuels. The New Hampshire Motor Vehicle Road Toll Law, see RSA 260:30 (2014), imposes a road toll "upon the sale of each gallon of motor fuel sold by distributors thereof." RSA 260:32. A "distributor" is defined as:

any person, wherever resident or located, who imports or causes to be imported motor fuel into the state, and also any person who refines, distills, prepares, blends, manufactures, or compounds motor fuel within this state . . . . Bringing motor fuel into the state in the fuel supply tank attached to the engine of a vehicle or aircraft shall not be considered importing.

RSA 259:21. The road toll is "imposed as a recompense for the use of the highways." Rymes Heating Oils v. Comm'r, N.H. Dep't of Safety, 151 N.H. 472, 473 (2004) (quotation omitted). "In other words, the road toll fee constitutes a charge for subjecting roads to a given amount of destructive use or wear and tear." Id. (quotation omitted). New Hampshire law makes it unlawful "for any person to sell or use motor fuel upon which the road toll . . . has not been paid, unless the person is a holder of a valid license to engage in business as a distributor of motor fuels." RSA 260:36 (2014).

Similarly, Massachusetts imposes a per gallon "fuel tax" that is paid by the purchaser at the time the fuel is sold. See Mass. Gen. Laws ch. 64A (2011 & Supp. 2014). As with the New Hampshire road toll, the Massachusetts fuel tax is a fee paid by "motor carriers operating their motor vehicles in Massachusetts . . . to support the State's highway system." American Trucking v. Secretary of Admin., 613 N.E.2d 95, 98 (Mass. 1993).

All of the states in the contiguous United States, including New Hampshire and Massachusetts, are parties to the International Fuel Tax Agreement (IFTA). See Illinois Cent. R.R. v. Tennessee Dept. of Revenue, 969 F.Supp.2d 892, 894 (M.D.Tenn. 2013). The IFTA is a "multi-jurisdictional agreement that is intended to encourage cooperation in the administration and collection of motor fuel use tax." May Trucking Co. v. Oregon Dept. of Transp., 388 F.3d 1261, 1262 (9th Cir. 2004) (quotations omitted). The IFTA does not impose a tax; "[r]ather, its member jurisdictions impose the motor fuel taxes, and [the] IFTA permits the uniform administration and collection of those taxes as they pertain to multi-state carriers." Id. at 1262-63. "Under [the] IFTA, an interstate motor carrier pays all its state fuel taxes quarterly to the 'base jurisdiction' in which it registers as a licensee under [the] IFTA." Id. at 1263. "The base jurisdiction then forwards the appropriate tax amounts to each individual state in which the motor carrier operates." Id. "That arrangement prevents a motor carrier from having to make multiple tax payments to the different states in which it operates." Id.

The material facts are undisputed. On multiple occasions between June 2008 and March 2011, Marco contracted with Irving Oil Terminals, Inc. (Irving) for the purchase of diesel fuel. These purchases totaled 603, 138 gallons. Each purchase included the transfer of fuel by Irving, at its facility located in Revere, Massachusetts, into trucks operated by P.S. Marston, LLC (Marston). Marston and Marco share a business address in North Hampton, New Hampshire. Marston transported the fuel from Revere to Marco's facility in North Hampton, New Hampshire. Marston invoiced Marco for the deliveries, and Marco paid those bills. The bill of lading issued by Irving for each sale was identical except for the date of sale, amount of fuel purchased, and the invoice amount. Also in connection with each purchase, Marco paid the Massachusetts fuel tax to Irving, and Irving then forwarded the funds to Massachusetts.

In 2012, DOS audited Marco's "Motor Fuel Distributor" account. DOS concluded that Marco "imported motor fuel into [New Hampshire] without a Motor Fuel Distributor license and therefore failed to report and pay the required [New Hampshire] road toll" on the 603, 138 gallons of fuel purchased from Irving. DOS calculated that Marco owed the State $155, 070.71. Marco challenged the audit by DOS and requested an administrative hearing.

DOS held a hearing in September 2012. Marco argued that it was not liable for the New Hampshire road toll because it was not a "distributor" of motor fuels but, rather, the end purchaser. The DOS road toll audit manager asserted that Marco acted as a "distributor" without a current Motor Fuel Distributor license or IFTA license and unlawfully imported motor fuel into New Hampshire. DOS rejected Marco's argument, finding that ...

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