RSPA helps haz-mat haulers; multi-employer plans hit multiple hurdles
Three recent rulings illustrate the importance of staying abreast of any type of legal decision affecting your business. Last month, hazardous-materials carriers posted a big win when DOT's Research and Special Programs Administration (RSPA) ruled that Tennessee could not require fleets to get a permit before picking up or delivering hazardous waste in that state.
To obtain a permit, carriers would have had to pay an annual $650 fee, regardless of the number of movements or miles. RSPA said the fee was pre-empted by the Hazardous Materials Transportation Act (HMTA) and cited numerous grounds for rejecting the fee. The total revenue collected ($177,000 in 1996) was much greater than the amount spent ($4,300). The fee was used for a range of purposes other than those related to transporting hazardous materials, as required under HMTA regulations.
Although the Tennessee fee was limited to hazardous-waste hauling under HMTA, if the fee had stood, a decade and a half of motor carrier wins against state flat taxes of all kinds might have been called into question.
The same day that RSPA delivered a bouquet, another group of carriers received a blow - in a case that didn't even involve them directly. The Supreme Court rejected an appeal from American Stores Inc. to review an adverse ruling from the Ninth Circuit Court of Appeals. That ruling had supported an IRS claim that American Stores deducted certain contributions to its multi-employer pension plan a year earlier than it was entitled to. The facts closely fit those of several unionized motor- and air-freight carriers. As a result, the carriers will also face varying amounts of back taxes, interest, and possibly penalties.
Some of the affected companies have been trying to interest Congress in providing legislative relief. They argue that the IRS had once blessed the deduction in a private-letter ruling issued to one of the carriers. But private-letter rulings are not allowed as precedent for other taxpayers and, in fact, can be overturned by court rulings or later IRS actions. A narrow bill has little chance of getting through Congress, and a broad tax bill, such as the one President Clinton vetoed in September, is even less likely to be signed into law. Thus, even decisions affecting another industry, as in this case, can be important for carriers if the facts fit them.
Earlier this year the Seventh Circuit upheld another court ruling against a motor carrier in a multi-employer pension plan dispute. In that case the Central States pension fund assessed a large withdrawal liability against Midwest Motor Express for withdrawing from the plan in 1990. Midwest argued that the Multi-employer Pension Plan Amendments Act of 1980 (MPPAA) had unconstitutionally imposed retroactive liability on it to make up for under-funding by other carriers. The district and circuit courts agreed with earlier rulings that MPPAA is constitutional and that Midwest therefore owed the fund.
Although this case doesn't break new ground, it serves notice once more that carriers are unlikely to escape liability under MPPAA.
The bottom line: Carriers must stay tuned in to a variety of courts and regulatory agencies. Each of the decisions cited above may seem to have reached an expected result or to apply to a narrow set of circumstances. But each could have produced important precedents that could influence many other states, agencies, courts, and even Congress. Moreover, every initial ruling has the possibility of being appealed. Carriers must stay informed and be prepared to adapt their business plans to take advantage of new opportunities or minimize the damage from negative rulings.