Greyhound Corp. v. United States

KOELSCH, Circuit Judge

(dissenting) :

I have no quarrel with my brothers in their view that the government should give financial encouragement to all persons who, by providing transportation services to commuters, expose themselves to the attendant financial risks.

But I am unable to read into 26 U.S. C. §§ 6416(b)(2)(H) and 6421(b) any such Congressional mandate; the plain language of these provisions more narrowly restricts this financial aid.

Both sections 6416(b)(2)(H) and 6421(b)(1) authorize tax rebates for fuel1 used in vehicles “while engaged in furnishing schéduled common carrier public passenger land transportation service along regular routes.” The allowances are thus made potentially available to any operator of a public transportation, or transit, system.

However, § 6421(b)(2), which is incorporated in § 6416(b)(2)(H),2 limits its benefits to the operators of transit systems falling within a specific class, i. e., the class of transit systems which are sufficiently “local” in nature to satisfy the “60 percent” test set forth in that subsection. A claimant is entitled to the relevant allowance “only if at least 60 percent of the total passenger fare revenue derived during . . . [the relevant] quarter from scheduled service described in paragraph (1) by the person filing the claim was attributable to commuter fare revenue derived during such quarter by such person from such scheduled service.”

It is implicit in both statutes that any “person” furnishing “scheduled common carrier public passenger land transportation service along regular routes” operates a “transit system,” though neither statute specifically employs that latter phrase in its text. The majority misconstrues § 6421(b)(2) when it permits Greyhound, in applying the “60 percent” test, to divide its system by excluding from its “total passenger fare revenue” all revenue derived from its mainline service operations, for clearly Greyhound, and not a chosen segment of its transportation operations, is the “person filing the claim” within the meaning of the statute. 26 U.S.C. § 7701(a)(1).3 *872The significance of this insight is not merely that “Greyhound was . a proper claimant under § 6421(b)(2),” as the majority observes, but that Greyhound’s own “total passenger fare revenue” derived from its own “scheduled common carrier public passenger land transportation service along regular routes” must be considered in applying the “60 percent” test.

*871Ҥ 7701. Definitions.
(a) When used in this title, where not otherwise distinctly expressed or manifestly incompatible with the intent thereof—
(1) Person. — The term ‘person’ shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation.”

*872Insofar as the findings of the trial court establish that Greyhound operates two distinct types of transportation service, the findings are undisputed by the government and immaterial to the question before the court. The fact that one type of transportation service is operated by a separate and distinct department of a transit company, with separate employees and equipment, and the maintenance of separate accounting, does not justify the exclusion from “total passenger fare revenue” of the revenue derived therefrom. Rev.Rul. 67-92, 1967-1 Cum.Bull. 361. Moreover, the distinction between “local” and “mainline” service found by the trial court and upheld by the majority has no basis in the statute; it is authored by the management of the company making the claim. The only relevant distinction between types of transportation service contained in the statute is that between service from which “commuter fare revenue [is] derived” and service from which the claimant’s “total passenger fare revenue [is] derived.” If revenue from the former exceeds 60 percent of revenue from the latter, the test is met.

Insofar as the trial court concluded that Greyhound operates two distinct transit systems and may therefore claim the statutory allowance on behalf of one of them without reference to the revenue of the other, it was in error, for the statute, in its plain terms, contemplates that a claimant furnishing “scheduled common carrier public passenger land transportation service along regular routes” derives its “total passenger fare revenue” from the totality of its passenger transportation operations.

While the majority observes that the title to an Act may not be employed to limit the plain language of the text, it nevertheless attaches considerable significance to the headings of § 6421 (“Gasoline Used for Certain Nonhigh-way Purposes or by Local Transit Systems”) and subsection (b) {“Local Transit Systems”). However, its discussion overlooks the interpretation of the operative text, wholly consistent with the headings, that subsection (b)(1) authorizes an allowance for operators of transit systems which are sufficiently “local” or commuter-oriented in nature to qualify under the “60 percent” test of subsection (b)(2). Thus, subsection (b)(2) merely sets forth the statutory definition of a qualifying or “local” transit system, and the heading of § 6421 (b) refers to such qualifying systems, all other systems being beyond the coverage of the statute. Similarly, gasoline used by other than qualifying systems is not “Gasoline Used ... by Local Transit Systems.” However, the headings need not, and should not, be considered since the language of the operative text is plain and unambiguous.

The majority derives little assistance from its citation of Public Service Coordinated Transport v. United States, 367 F.2d 417, 177 Ct.Cl. 337 (1966). That decision makes but passing reference to the “60 percent” limitation of § 6421(b) (2) and does not attempt to construe it; rather, the court construes the phrase “bus which is of the transit type” contained in a different statute, 26 U.S.C. § 4483(c). Moreover, that latter statute provides that a “person,” and not a system, meets the “60 percent” test.4

*873Nor is the majority’s position enhanced by the relevant Treasury Regulations. The primary regulation explaining the “60 percent” test, 26 C.F.R. § 48.6421(b)-l(b), makes clear that it is the “total passenger fare revenue” of “the person filing a claim for payment” which must be considered.5 Other regulations, 26 C.F.R. §§ 48.6421(e)-1(a)(1), (a)(2), (b)(1), and (b) (2) (ii), all cited by the majority, stand not for the proposition that claims are to be submitted by local transit systems, but that the allowance is available on fuel used “by local transit systems.” Even assuming arguendo that claims are intended to be submitted by “transit systems,” these regulations provide no authority that Greyhound operates a “local” or qualifying transit system as contemplated by the statute. Further, 26 C.F.R. § 48.6421(c)-l(b) (2) (ii) (i) requires that the claim set forth the “internal revenue district in which the claimant’s last income tax return was filed.”

Another provision, 26 C.F.R. § 48.-6421(b)-l(d), presents an illustration containing the following language:

“Example. The XYZ Corporation operates a local transit system furnishing scheduled common carrier public passenger land transportation service along regular routes in the city of Grandville and also operates a similar intercity service to Jones-boro.”

Although this language may arguably be read to mean that XYZ Corporation’s local service operations in Grandville constitute a distinct local transit system, it is manifest that such a “system” is neither a proper claimant under subsection (b) (2) nor an entity on whose behalf a claim may be made, for the example goes on to demonstrate that XYZ Corporation, as the “person filing the claim,” must include both its local and intercity operations in computing its “total passenger fare revenue” under the test. The hypothetical XYZ Corporation is a virtual microcosm of Greyhound, and thus it follows from the example that Greyhound must include reveune from both its local and mainline operations in determining its “total passenger fare revenue” under the test.

“(b) 60-percent passenger fare revenue test. For purposes of section 6421 and this section, the ‘60-percent passenger fare revenue test’ is met in a particular calendar quarter if during the calendar quarter the person filing a claim for payment under section 6421(b)—

I find nothing in the regulations inconsistent with the construction of the statute presently advanced by the government. Nor does the majority help itself by giving the regulations a contrary interpretation; the plain language of the statute stands as a compelling indication that such a contrary interpretation is wrong.

I cannot seriously dispute the majority’s conclusion that Congress, in enacting § 6421(b), sought to provide relief for mass transportation systems. This is undoubtedly true. Nevertheless, the question before the court is whether Greyhound provides transportation service of the type and degree which, under the statute, entitles it to the allowance. The legislative history of the statute leaves little doubt that Greyhound does not provide such service.6

(1) Derived passenger fare revenue from the operation of scheduled common carrier public passenger land transportation service along regular routes, and
(2) At least 60 percent of the total passenger fare revenue was commuter fare L revenue.”

*874Moreover, nothing in the legislative history sustains the proposition that all operators of transit systems providing some commuter service are entitled to the allowance. The very mode of enactment mandates the other conclusion. If Congress had intended that all systems providing some commuter service receive the allowance, it could easily have done so. Instead, it created the “60 percent” limitation.

In holding that the provider of any service from which “commuter fare revenue [is] derived” is entitled to make its claim on behalf of a segment of its transportation operations almost identical to that from which the “commuter fare revenue [is] derived,” the majority rewrites the statute and substantially destroys the significance of the “60 percent” test. In so holding, it reads Greyhound’s own company distinction between “local” and “mainline” operations into the statute and imposes the burden of that distinction on other potential claimants which may be organized differently from Greyhound.'7

I am compelled to conclude that Greyhound, a transportation corporation which concededly derives over 95 percent of its substantial passenger fare revenue from intercity, interstate, and transcontinental operations, is not one of the “persons” which Congress sought to aid in enacting §§ 6416(b)(2)(H) and 6421(b). I would therefore reverse the judgments of the district court and remand the causes with directions that judgments be entered in favor of the government. Because the government should prevail, I express no view on the issue of interest.

S.Rep.No.2054, 84th Cong., 2d Sess., 1956-2 Cum.Bull. 1311.

. 26 U.S.C. § 6416(b)(2)(H) refers to “a liquid in respect of which tax was paid under section 4041,” while § 6421(b) (1) refers to “gasoline.”

. Greyhound’s claim for a diesel fuel tax refund is made under § 6416(b) (2) (H) and is allowable, under that section, “only if the 60 percent passenger fare revenue test set forth in section 6421(b) (2) is met.”

. 26 U.S.O. § 7701 provides in pertinent part:

. 26 U.S.C. § 4483 provides in pertinent part:

Ҥ 4483. Exemptions
* * * * *
(c) Certain transit-type buses. — Under regulations prescribed by the Secretary or his delegate, no tax shall be imposed by section 4481 on the use of any bus which is of the transit type (rather than of the intercity type) by a person who, for the last 3 months of the preceding year (or for such other period as the Secretary or *873his delegate may by regulations prescribe for purposes of this subsection), met the 60-percent passenger fare revenue test set forth in section 6421(b) (2) as applied to the period prescribed for purposes of this subsection.”

. 26 C.F.E.. § 48.6421 (b)-l(b) provides in pertinent part:

. The following excerpts from the legislative history of the statute serve to highlight Congressional intent:

“Under the bill, refunds are available with respect to motor fuel used in vehicles while such vehicles are engaged in furnishing scheduled common carrier public passenger land transportation service along *874regular routes. However, the refund is to he available only if at least 60 percent of the total passenger-fare revenue (exclusive of any transportation of persons tax) of the carrier was attributable to fares which presently are exempt from the excise tax on the transportation of persons on the grounds that they do not exceed 35 cents or that they constitute commutation fares.” H.R.Rep. No. 2022, 84th Cong., 2d Sess., 1956-2 Cum.Bull. 1289.
“For example, a transit company is authorized to serve the city of A and the nearby communities of B, C, D, and E. Its total passenger-fare revenue from all of its scheduled service along regular routes for the period prescribed by the Secretary or his delegate is $100,000. . . . Of this total passenger-fare revenue for the period, $72,000 is attributable to fares which are exempt from the tax on transportation of persons by virtue of the provisions of section 4262(b) of the 1954 Code.
“The company would qualify for relief . . ., since 72 percent of its revenues during the prescribed period was from fares exempt from tax.” Id. at 1305.
“Under the House Bill special relief was provided in the case of the gasoline, diesel fuel, and special motor fuel taxes for fuel used in the operation of local transportation systems. The relief was granted through the form of a refund . . . where the fuel was used in vehicles engaged in furnishing scheduled common carrier, public passenger, land transportation service along regular routes. In such cases the refund was to be available only if 60 percent or more of the total passenger fare revenue of the carrier was attributable to fares exempt from the excise tax on the transportation of persons (on the grounds that they do not exceed 35 cents or that they constitute commutation fares).”

. Nothing in the legislative history of the statutes remotely suggests that in enacting the legislation Congress was cognizant of the internal organization of a transportation company such as Greyhound which may have distinguished between “local” and “mainline” operations.