B-142528, OCT. 17, 1962

B-142528, OCT. 17, 1962

TO ATTORNEY GENERAL, STATE OF OREGON:

BY LETTER OF SEPTEMBER 4, 1962, AND ENCLOSURES, YOU SET FORTH VARIOUS REASONS AS TO WHY YOU CANNOT CONCUR IN THE CONCLUSIONS REACHED IN OUR DECISION OF JUNE 7, 1960. B-142528, PUBLISHED AT 39 COMP. GEN. 816, WHEREIN WE HELD THAT THE UNITED STATES WAS ENTITLED TO REFUND OF MOTOR VEHICLE FUEL TAXES PAID THE STATE OF OREGON WITH RESPECT TO FUEL USED BY THE UNITED STATES EXCLUSIVELY ON ROADS WITHIN CRATER LAKE NATIONAL PARK.

YOU STATE THAT WHEN YOU CONFERRED WITH MEMBERS OF OUR STAFF LAST WINTER, WE WERE NOT AWARE THAT THE OREGON TAX REFUND STATUTE HAD BEEN REPEALED, THEN LATER REENACTED, ALLOWING FOR THE GAP, AND THAT WE AGREED TO RECONSIDER OUR POSITION. THE MEETING TO WHICH YOU REFER TOOK PLACE IN NOVEMBER OF 1961. BY LETTER OF JANUARY 25, 1962, SIGNED BY MR. ROBERT A. HOLLAND ON YOUR BEHALF, A COPY OF YOUR OPINION 4438 WAS FURNISHED US TOGETHER WITH THE INFORMATION THAT OREGON LAWS OF 1945, CHAPTER 413, SECTION 29, QUOTED IN THE LETTER, HAD BEEN REPEALED. BY LETTER OF FEBRUARY 12, 1962, COPY ENCLOSED, WE ADVISED MR. HOLLAND THAT WE HAD CONSIDERED THE REPEAL OF SECTION 29 IN OUR ORIGINAL OPINION AND THAT WE DID NOT BELIEVE OPINION 4438 CONTAINED ANY BASIS UPON WHICH WE MIGHT ALTER OUR CONCLUSION. SECTION 29 PROVIDED FOR REFUND OF MOTOR VEHICLE FUEL TAXES PAID WITH RESPECT TO FUEL USED IN THE PERFORMANCE OF FEDERAL GOVERNMENT FUNCTIONS GENERALLY. IN OUR OPINION, REPEAL OF THIS GENERAL EXEMPTION FROM FUEL TAXES GRANTED THE FEDERAL GOVERNMENT HAS NO BEARING UPON A PROPER INTERPRETATION OF THE STATUTE CONSIDERED IN OUR DECISION OF JUNE 7, 1960, WHICH COVERED THE SPECIAL CIRCUMSTANCES OF FUEL TAXES PAID WITH RESPECT TO ROADS WHICH ARE NOT MAINTAINED AT STATE OR LOCAL GOVERNMENT EXPENSE. THERE HAS, APPARENTLY, BEEN A MISUNDERSTANDING CONCERNING OUR AWARENESS OF THE REPEAL OF SECTION 29, UNLESS YOU ARE REFERRING TO SOME OTHER STATUTE WHICH HAS BEEN REPEALED.

YOU ALSO STATE THAT NO EQUITY CAN BE READ INTO THE STATUTES INVOLVED IN THE FACE OF THE CLEARLY EXPRESSED INTENTION OF THE LEGISLATURE. OUR CONCLUSION IS NOT BASED UPON EQUITY. IN OUR DECISION, WE MERELY POINTED OUT THAT THE BASIC STATUTE INVOLVED WAS CLEARLY DICTATED BY EQUITABLE CONSIDERATIONS AND THAT, THEREFORE, THE REPEAL OF SECTION 29 WAS OF NO SIGNIFICANCE IN INTERPRETING THE STATUE. OUR CONCLUSION THAT THE UNITED STATES WAS EXEMPT UNDER THE STATUTE STEMS ENTIRELY FROM OUR VIEW THAT IT IS UNREASONABLE TO INTERPRET THE STATUTE AS GRANTING A RIGHT TO REFUND OF TAXES TO PERSONS WHO OBTAIN SUCH RIGHT THROUGH THE UNITED STATES BUT NOT TO THE UNITED STATES ITSELF WHERE THE SUBSTANTIVE CONDITIONS LAID DOWN ARE MET BY THE UNITED STATES.

WHILE WE DID NOT BASE OUR OPINION UPON THE RATIONALE APPLIED IN PHILLIPS CHEMICAL CO. V. DUMAS INDEPENDENT SCHOOL DISTRICT, 1960, 361 U.S. 376, REFERRED TO IN AN ENCLOSURE IN YOUR LETTER, WE CANNOT AGREE THAT THE CASE IS ALTOGETHER NOT IN POINT. AS WE INTERPRET THE PHILLIPS CASE, IT COVERS THE PROPOSITION THAT A STATE MAY NOT DISCRIMINATE AGAINST THE FEDERAL GOVERNMENT WHERE IT FALLS WITHIN THE CLASS OF THOSE TO WHOM A TAX EXEMPTION IS GRANTED. UNDER THE STATUTE AND CIRCUMSTANCES IN QUESTION THE EXEMPTION FROM FUEL TAXES IS GRANTED TO THOSE WHO OPERATE VEHICLES OVER OTHER THAN STATE OR COUNTY ROADS WHICH THEY HAVE CONSTRUCTED OR MAINTAINED AT THEIR OWN EXPENSES UNDER AGREEMENT WITH THE UNITED STATES. IN OUR OPINION, FAILURE TO GRANT AN EXEMPTION FROM FUEL TAXES WHERE THE UNITED STATES ITSELF MEETS THESE CONDITIONS IS DISCRIMINATORY UNDER THE RULE REITERATED IN THE PHILLIPS CASE. SEE UNITED STATES OF AMERICA AND OLIN MATHIESON CHEMICAL CORPORATION V. DEPARTMENT OF REVENUE OF THE STATE OF ILLINOIS, 1961, 191 F.SUPP. 723, 202 ID. 757.

NOR CAN WE AGREE WITH THE CONTENTION THAT THE CASES OF CITY OF PORTLAND V. KOZER, 1923, 217 P. 833, AND ANTHONY ET AL. V. KOZER, 1926, 11 F.2D 641, ALSO REFERRED TO IN THE ENCLOSURE, AS CONTROLLING. THOSE CASES HELD THAT THE FUEL TAX IS A PRIVILEGE TAX UPON THE DEALER. FROM THIS HOLDING YOU CONCLUDE THAT SINCE ALL DEALERS ARE TAXED ALIKE THERE CANNOT BE INVOLVED A QUESTION OF DISCRIMINATION AGAINST THE FEDERAL GOVERNMENT. BUT WE ARE NOT DEALING WITH THE QUESTION OF DISCRIMINATION IN THE TAX LEVIED BY THE STATE. THE QUESTION AT ISSUE CONCERNS ENTITLEMENT TO REFUND BY THOSE WHO USE FUEL UPON WHICH THE TAX HAS BEEN PAID. IF NO ONE WERE ENTITLED TO SUCH REFUND THERE WOULD NOT BE ANY QUESTION OF DISCRIMINATION. IT IS ONLY BECAUSE THE CONDITIONS UNDER WHICH REFUND WILL BE GRANTED DO NOT APPLY TO THE UNITED STATES UNDER YOUR INTERPRETATION OF THE STATUTE THAT THE QUESTION ARISES.

IN SHORT, WE DID NOT CONSTRUE THE INTENTION OF THE OREGON LEGISLATURE AS HAVING BEEN TO DENY REFUND TO THE UNITED STATES UNDER THE CIRCUMSTANCES CONSIDERED IN OUR DECISION; BUT IF SUCH WERE, IN FACT, THE LEGISLATIVE INTENT, WE MUST CONCLUDE THAT THE STATUTE WAS DISCRIMINATORY AGAINST THE UNITED STATES AND COULD NOT PROPERLY BE APPLIED IN ACCORD WITH THAT INTENT.

OTHER REASONS FOR DISAGREEING WITH OUT CONCLUSION CITED IN YOUR LETTER--- THAT THE ROADS OVER WHICH THE FUEL WAS USED WERE NOT IN "PRIVATE OWNERSHIP" AND THAT THE UNITED STATES COULD NOT BE CONSIDERED TO HAVE MADE AN AGREEMENT WITH ITSELF FOR THE USE OF THE PROPERTY--- WERE COVERED IN THE ORIGINAL DECISION AND DO NOT APPEAR TO REQUIRE FURTHER DISCUSSION.

YOU CONCLUDE WITH THE REQUEST THAT IF WE BELIEVE OUR POSITION RESTS UPON FIRM FOUNDATION, THAT YOUR OFFICE WOULD PREFER THAT AN ACTION BE INSTITUTED TO RECOVER FUNDS DUE RATHER THAN TO RESORT TO WITHHOLDING FUNDS FROM STATE AGENCIES CRITICALLY IN NEED OF THEM AND NOT IN POSITION TO REPLENISH THE LOSSES FROM ANY OTHER SOURCE. SINCE IT APPEARS FINAL SETOFF ACTION HAS BEEN EFFECTED WITH RESPECT TO ALL OF THE KNOWN FUNDS CONSIDERED TO BE DUE, THERE IS NO BASIS UPON WHICH WE COULD PROPERLY RESTORE THEM TO THE STATE OF OREGON. ACCORDINGLY, WHILE WE APPRECIATE THE PREDICAMENT OF THE STATE AGENCIES INVOLVED, ANY COURT ACTION TO SETTLE THE CONTROVERSY WILL HAVE TO BE INITIATED BY THE STATE.