United States Court of Appeals for the Federal Circuit

03-5151

FLORIDA POWER & LIGHT COMPANY,

> Plaintiff-Appellant,

v\.

UNITED STATES,

> Defendant-Appellee.

[Alan I. Horowitz]{.underline}, Miller & Chevalier, Chartered, of
Washington, DC, argued for plaintiff-appellant.

[Kenneth L. Greene]{.underline}, Attorney, Appellate Section, Tax
Division, United States Department of Justice, of Washington, DC, argued
for defendant-appellee. With him on the brief were [Eileen J.
O'Connor]{.underline}, Assistant Attorney General, and [Michael J.
Haungs]{.underline}, Attorney.

[Frank S. Swain]{.underline}, Baker & Daniels, of Washington, DC, for
amici curiae Edison Electric Institute, et al.

Appealed from: United States Court of Federal Claims

Senior Judge John P. Wiese

United States Court of Appeals for the Federal Circuit

03-5151

FLORIDA POWER & LIGHT COMPANY,

> Plaintiff-Appellant,

v\.

UNITED STATES,

> Defendant-Appellee.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

DECIDED: July 8, 2004

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Before SCHALL, GAJARSA, and DYK, [Circuit Judges]{.underline}.

DYK, [Circuit Judge]{.underline}.

Between July 1992 and June 1994, appellant Florida Power & Light Company
("FPL") paid the federal excise tax imposed on heavy motor vehicles for
its fleet of utility vehicles. FPL filed suit in the Court of Federal
Claims seeking a partial refund of these excise taxes, alleging that
some of its vehicles fell within the mobile machinery exception to the
tax. The Court of Federal Claims granted the government's motion for
summary judgment, holding that FPL's vehicles did not fall within the
mobile machinery exception. [Fla. Power & Light Co. v. United
States]{.underline}, 56 Fed. Cl. 328 (2003). We affirm.

BACKGROUND

FPL is an electric utility company that uses a fleet of various types of
specially designed vehicles to operate and maintain its power
distribution system. FPL filed Heavy Vehicle Use Tax Returns and paid
excise taxes pursuant to 26 U.S.C. § 4481(a)[^1] on these vehicles for
the annual periods from July 1, 1992, to June 30, 1993, and from July 1,
1993, to June 30, 1994. On June 24, 1995, FPL sought a partial refund of
those payments in the amounts of \$104,091 for the period ending June
30, 1993, and \$100,936 for the period ending June 30, 1994, asserting
that it had paid the excise tax on vehicles that were not subject to the
tax because they fell under the mobile machinery exception to the tax
set forth in 26 C.F.R. § 48.4061(a)-1(d)(2)(i).[^2] This dispute
involves 411 vehicles operated by FPL, including 410 vehicles equipped
with pintle hooks.[^3] These vehicles are used to elevate personnel to
work on poles and power lines, to lift materials, to pull and push
cable, and to dig holes and set poles. The pintle hook is used to attach
a trailer to the vehicles to haul materials such as transformers,
generators, and large coils of wire. The other type of vehicle in
dispute is an insulator washer vehicle that is equipped with a
1,200-gallon capacity water tank and is used to clean energized utility
lines.

On February 26, 1997, the Internal Revenue Service ("IRS") notified FPL
that it intended to disallow the claims, stating that FPL's vehicles did
not satisfy the requirements of part (C) of the regulation because the
pintle hooks allowed the vehicles to "haul a load other than the
permanently mounted machinery or equipment without substantial
modification." (J.A. at 513.)[^4] FPL appealed the proposed
disallowance, and the IRS formally disallowed the claim on August 28,
1998.

On April 27, 1999, FPL filed suit in the Court of Federal Claims seeking
recovery of \$205,027 in claimed overpayments. The government moved for
summary judgment with respect to all but three of the 414 vehicles at
issue. However, the government did not rely on the IRS's determination
that the vehicles did not satisfy the requirements of part (C) of the
regulation. Rather, it argued that the vehicles did not satisfy the
requirements of part (B) because the addition of a pintle hook or water
tank "precludes a finding that the vehicles' chassis have 'been
specially designed to serve [only]{.underline} as a mobile carriage and
mount . . . for the particular machinery or equipment involved.'" [Fla.
Power & Light]{.underline}, 56 Fed. Cl. at 331-32 (quoting 26 C.F.R.
§ 48.4061(a)-1(d)(2)(i)) (emphasis in original).

The Court of Federal Claims agreed with the government, holding that the
addition of a pintle hook or water tank "precludes the application of
the mobile machinery exception." [Id.]{.underline} at 332. The Court of
Federal Claims also rejected FPL's assertion that, even if its vehicles
were not encompassed by the mobile machinery exemption, it nonetheless
was entitled to recover the excise taxes pursuant to [International
Business Machines Corp. v. United States]{.underline}, 343 F.2d 914 (Ct.
Cl. 1965) ("[IBM]{.underline}"), because the IRS, in private letter
rulings, had exempted from the tax other similarly situated utility
companies with which FPL competes. The court distinguished
[IBM]{.underline}, holding that it did not apply because FPL, unlike the
taxpayer in [IBM]{.underline}, had never requested its own private
letter ruling from the IRS. [Fla. Power & Light]{.underline}, 56 Fed.
Cl. at 335.[^5] Accordingly, the Court of Federal Claims granted summary
judgment for the government with respect to the 411 vehicles at issue.
After the parties stipulated that FPL was entitled to a refund of
\$1,568 for the remaining three vehicles, the court entered judgment on
June 11, 2003. [Fla. Power & Light Co. v. United States]{.underline},
No. 99-258T (Fed. Cl. June 11, 2003).

FPL timely appealed. We have jurisdiction pursuant to 28 U.S.C.
§ 1295(a)(3).[^6]

DISCUSSION

"We review the Court of Federal Claims' grant of summary judgment
without deference." [Agwiak v. United States]{.underline}, 347 F.3d
1375, 1377 (Fed. Cir. 2003).

I

A

The first question is whether the Court of Federal Claims properly held
that the appellant's vehicles were subject to the federal excise tax.
The pertinent statute provides: "A tax is hereby imposed on the use of
any highway motor vehicle which (together with the semitrailers and
trailers customarily used in connection with highway motor vehicles of
the same type as such highway motor vehicle) has a taxable gross weight
of at least 55,000 pounds . . . ." 26 U.S.C. § 4481(a). The IRS
implementing regulation provides an exception for "\[c\]ertain specially
designed mobile machinery for nontransportation functions." 26 C.F.R. §
48.4061(a)-1(d)(2)(i). On appeal, the parties contest the meaning of
subsection (B) of the regulation, which provides:

> A self-propelled vehicle, or trailer or semi-trailer, is not a highway
> vehicle if . . . (B) the chassis has been specially designed to serve
> only as a mobile carriage and mount (and a power source, where
> applicable) for the particular machinery or equipment involved,
> whether or not such machinery or equipment is in operation . . . .

[Id.]{.underline}

Both parties agreed at oral argument that the IRS has not rendered an
interpretation of the regulation that is entitled to deference under the
Supreme Court's decision in [United States v. Cleveland Indians Baseball
Co.]{.underline}, 522 U.S. 200, 220 (2001) (according "substantial
judicial deference" to the IRS's reasonable "longstanding interpretation
of its own regulations"), or our own decision in [American Express Co.
v. United States]{.underline}, 262 F.3d 1376, 1382 (Fed. Cir. 2001).
Earlier decisions of our court have addressed the tax, but not the
precise question before us. [See]{.underline} [N. Ill. Gas Co. v. United
States]{.underline}, 833 F.2d 1582 (Fed. Cir. 1987); [Minn. Power &
Light Co. v. United States]{.underline}, 782 F.2d 167 (Fed. Cir. 1986).
Thus, we must interpret the regulation without the benefit of an agency
or judicial interpretation.

B

Both parties focus on the requirement in subsection (B) that the chassis
be "specially designed to serve only as a mobile carriage and mount . .
. for the particular machinery or equipment involved." 26 C.F.R.
§ 48.4061(a)-1(d)(2)(i)(B). The appellant contends that the word
"chassis" has a well-understood meaning, relying on the Society of
Automotive Engineers ("SAE") definition, which states: "Motor vehicle
chassis means the basic operating motor vehicle including engine, frame,
and other essential structural and mechanical parts, but exclusive of
body and all appurtenances for the accommodation of driver, property, or
passengers, appliances, or equipment related to other than control."
Society of Automotive Engineers, Inc., [SAE Glossary of Automotive
Terms]{.underline} 247 (2d ed. 1992).[^7] The appellant thus argues that
the pintle hook and water tank are not part of the chassis because they
are not part of the "engine, frame, \[or\] other essential structural
and mechanical parts," as is required by the SAE definition, but instead
are "appurtenance\[s\]" attached to the frame.[^8] Even assuming that
the pintle hook and water tank are not part of the chassis, the fact
remains that an attachment need not be part of the chassis, so long as
the chassis is modified to accommodate the attachment.

Both parties agree that the pintle hooks are bolted to the chassis. (Br.
for Appellee at 7; Reply Br. for Appellant at 14 n.5.) The appellant's
design specifications for the vehicles at issue expressly require that
"\[t\]he structure of the \[pintle hook\] assembly . . . be rigidly
affixed to the vehicle frame." ([E.g.]{.underline}, J.A. at 593.) The
pintle hook assemblies are bolted to a beam that is welded to, and
operates as a rear cross-member of, the chassis frame rails. Thus, the
attachment requires a modification to the chassis, albeit a minor one,
to accommodate the bolted connection.[^9] The chassis so modified is not
used to transport only the described "machinery or equipment" but also
to transport materials for use with the machinery or equipment, such as
trailers carrying transformers, generators, or large coils of wire. In
other words, the chassis has been modified to serve also as a towing
device. As such, the chassis has not been "specially designed to serve
[only]{.underline} as a mobile carriage and mount . . . for the
particular machinery or equipment involved." 26 C.F.R.
§ 48.4061(a)-1(d)(2)(i)(B) (emphasis added).

The appellant urges that, if an attachment to the chassis is sufficient
to constitute a chassis modification, bolting anything to the chassis
(that is not a modification designed to transport only the designated
machinery and equipment) would make the exception inapplicable. We
agree, but we think that is exactly the meaning of the regulation. Any
special modification of the chassis to enable transportation of items
other than the designated machinery and equipment negates the exception,
even if the attachment is not part of the chassis itself. This
interpretation of the regulation comports with the statute, which
imposes the tax based on the taxable gross weight of the highway vehicle
"together with the semitrailers and trailers customarily used in
connection with highway motor vehicles of the same type as such highway
motor vehicle," 26 U.S.C. § 4481(a), thus evidencing a concern with both
the load of the vehicle and the load of any attached trailer. Our
interpretation also comports with subsection (A) of the regulation,
which appears to treat "welding, bolting, riveting, or other means" or
attachment of the machinery or equipment itself as involving
modifications to the chassis. [See]{.underline} 26 C.F.R.
§ 48.4061(a)-1(d)(2)(i)(A). Accordingly, we hold that the appellant's
vehicles modified to accommodate a pintle hook do not fall within the
mobile machinery exception to the statute.

The appellant argues that this interpretation would have the perverse
and undesirable effect of causing utilities to use two trucks to do the
same job for which they now use one. However, such policy arguments are
more appropriately addressed to Congress and the Department of the
Treasury. [See, e.g.]{.underline}, [Marsh & McLennan Cos. v. United
States]{.underline}, 302 F.3d 1369, 1381 (Fed. Cir. 2002).

The same result obtains with respect to the water tank. The parties
point to no evidence in the record that indicates whether the insulator
washer's chassis was modified to accommodate the water tank. It is
counterintuitive that the addition of a water tank designed to carry
approximately 10,000 pounds of water would not result in some alteration
to the chassis, at least to attach the tank to the chassis. In any
event, the burden is on the taxpayer in opposing the government's
summary judgment motion to show that its vehicles fall within the
exception. [See]{.underline} [Celotex Corp. v. Catrett]{.underline}, 477
U.S. 317, 325 (1986) ("The moving party is 'entitled to a judgment as a
matter of law' because the nonmoving party has failed to make a
sufficient showing on an essential element of her case with respect to
which she has the burden of proof." (quoting Fed. R. Civ. P. 56(c)));
[see also]{.underline} [Anderson v. Liberty Lobby, Inc.]{.underline},
477 U.S. 242, 250 (1986). The taxpayer has failed to show that the
chassis is not modified to accommodate the water tank.

II

The appellant urges that, under the decision of our predecessor court in
[IBM]{.underline}, it must prevail, at least with respect to the
vehicles with pintle hooks, because other similarly situated taxpayers
were treated more favorably. In [IBM]{.underline}, the IRS issued a
private letter ruling to IBM's competitor, Remington Rand, that
Remington Rand's products were not subject to an excise tax for business
machines. [See]{.underline} 343 F.2d at 916. Shortly thereafter, IBM
sought a similar ruling for its competing product, but the IRS did not
act on IBM's request "for well over two years." [Id.]{.underline} The
IRS ultimately ruled that both IBM's and Remington Rand's machines were
subject to the excise tax. [See]{.underline} [id.]{.underline} at
916-17. Accordingly, it revoked Remington Rand's favorable ruling, but
it did so only prospectively. [See]{.underline} [id.]{.underline} at
916. The court held that, as a result of the disparate treatment of IBM
and Remington Rand, IBM was entitled to a refund of the taxes it paid
while Remington Rand's products were not subject to the tax.
[Id.]{.underline} at 923. The appellant in this case asserts that it was
subject to similar disparate treatment, citing several IRS private
letter rulings to other companies, including one ruling involving
vehicles that it asserts are "apparently indistinguishable" from the
vehicles at issue in this case, ruling that the attachment of a pintle
hook does not disqualify a vehicle from satisfying the mobile machinery
exemption. (Opening Br. for Appellant at 36.)

We need not decide whether the appellant would be entitled to relief
under [IBM]{.underline}, however, because the decision in
[IBM]{.underline} was effectively limited to its facts by subsequent
decisions of the Court of Claims in [Knetsch v. United
States]{.underline}, 348 F.2d 932 (Ct. Cl. 1965) ("[Knetsch
II]{.underline}"), and [Bornstein v. United States]{.underline}, 345
F.2d 558 (Ct. Cl. 1965).[^10] [Knetsch II]{.underline} and
[Bornstein]{.underline} were both [en]{.underline} [banc]{.underline}
decisions of the Court of Claims. "When the Court of Claims sat
[en]{.underline} [banc]{.underline}, . . . we are obligated to follow
the court's most recent decision because an [en]{.underline}
[banc]{.underline} court may modify or effectively overrule its earlier
decisions." [Doe v. United States]{.underline}, \_\_\_ F.3d \_\_\_, No.
03-5075, slip op. at 12 (Fed. Cir. June 23, 2004); [see
also]{.underline} [George E. Warren Corp. v. United States]{.underline},
341 F.3d 1348, 1351-52 (Fed. Cir. 2003). In this case, the most recent
decision of the Court of Claims is [Knetsch II]{.underline}.

In [Knetsch II]{.underline}, the taxpayers entered into a "tax savings
scheme\[ \]" whereby they claimed that the interest payments from a
particular annuity contract were tax-deductible. 348 F.2d at 934. After
the Supreme Court held that the payments were not deductible because the
transaction was a "sham" in [Knetsch v. United States]{.underline}, 364
U.S. 361, 366 (1960) ("[Knetsch I]{.underline}"), the taxpayers asserted
that "the doctrine of equality of treatment" required that their
deductions be allowed because other taxpayers who had obtained private
letter rulings were able to deduct their interest payments, [Knetsch
II]{.underline}, 348 F.2d at 940.[^11] The court disagreed, stating that
the decision in [IBM]{.underline} "was based on the court's evaluation
of the particular circumstances in that case" and holding:

> Insofar as the taxpayers' contention is that there is prejudicial
> discrimination because of a difference in treatment in favor of those
> who received and relied upon private rulings issued to them as against
> the instant taxpayers who neither applied for, nor received, a ruling
> of their own but relied solely on the private ruling issued to other
> taxpayers, we think there is no merit to such a contention.

[Id.]{.underline} at 940 & n.14; [see also]{.underline}
[Bornstein]{.underline}, 345 F.2d at 564 n.2 ("There are also
controlling factual differences between these cases and
\[[IBM]{.underline}\] . . . . In these cases, none of the taxpayers nor
the corporations in which they are shareholders asked for rulings.").
Indeed, the court in [IBM]{.underline} specifically noted that it rested
its decision "on the . . . basis that IBM, [having taken the pains to
ask promptly for its own ruling]{.underline}, was entitled to have the
\[IRS's\] ruling, in response to that request, controlled by the
standard of equality and fairness incorporated in \[26 U.S.C. §\]
7805(b)." 343 F.2d at 924 (emphasis added). Because the taxpayer here,
like the taxpayers in [Knetsch II]{.underline} and
[Bornstein]{.underline}, and unlike the taxpayer in [IBM]{.underline},
never sought a private letter ruling from the IRS, it is not entitled to
claim treatment equal to those who did obtain private letter
rulings.[^12] Accordingly, [IBM]{.underline} does not entitle the
appellant to a refund.[^13]

CONCLUSION

For the foregoing reasons, we affirm the decision of the Court of
Federal Claims.

## AFFIRMED

COSTS

No costs.

[^1]: That statute provides: "A tax is hereby imposed on the use of any
    highway motor vehicle which (together with the semitrailers and
    trailers customarily used in connection with highway motor vehicles
    of the same type as such highway motor vehicle) has a taxable gross
    weight of at least 55,000 pounds . . . ." 26 U.S.C. § 4481(a)
    (2000).

[^2]: That regulation provides:

    > A self-propelled vehicle, or trailer or semi-trailer, is not a
    > highway vehicle if it (A) consists of a chassis to which there has
    > been permanently mounted (by welding, bolting, riveting, or other
    > means) machinery or equipment to perform a construction,
    > manufacturing, processing, farming, mining, drilling, timbering,
    > or operation similar to any one of the foregoing enumerated
    > operations if the operation of the machinery or equipment or
    > equipment \[sic\] is unrelated to transportation on or off the
    > public highways, (B) the chassis has been specially designed to
    > serve only as a mobile carriage and mount (and a power source,
    > where applicable) for the particular machinery or equipment
    > involved, whether or not such machinery or equipment is in
    > operation, and (C) by reason of such special design, such chassis
    > could not, without substantial structural modification, be used as
    > a component of a vehicle designed to perform a function of
    > transporting any load other than that particular machinery or
    > equipment or similar machinery or equipment requiring such a
    > specially designed chassis.

    26 C.F.R. § 48.4061(a)-1(d)(2)(i) (2003).

[^3]: A pintle hook is a "hook . . . on the rear of a towing vehicle for
    attaching a . . . trailer." [American Heritage Dictionary of the
    English Language]{.underline} 1335 (4th ed. 2000).

[^4]: The IRS erroneously stated that "all FPL's vehicles have pintle
    hooks." (J.A. at 513.)

[^5]: The Court of Federal Claims also rejected other arguments raised
    by FPL, which FPL has not renewed on appeal.

[^6]: [Amici curiae]{.underline} Edison Electric Institute, Mobile
    Machinery Coalition, National Rural Electric Cooperative
    Association, and American Gas Association filed a brief in support
    of reversal.

[^7]: Dictionary definitions are similar to the SAE definition. [See,
    e.g.]{.underline}, III [Oxford English Dictionary]{.underline} 55
    (2d ed. 2004) ("The base frame of a motor car, with its mechanism,
    as distinguished from the body or upper part . . . ."); [Webster's
    Third New International Dictionary]{.underline} 379 (2002) ("\[T\]he
    frame and working parts as opposed to the body (as of an automobile)
    . . . .").

[^8]: The government relies on a separate part of the regulation at
    issue, which provides that "equipment or machinery installed on a
    taxable chassis or body is considered to be an integral part of the
    taxable chassis or body if the machinery or equipment contributes
    toward the highway transportation function of the chassis or body."
    26 C.F.R. § 48.4061(a)-1(a)(3). We need not decide whether this
    definition of chassis applies under the regulation because we hold
    that the appellant cannot prevail under the SAE definition.

[^9]: Although the appellant has submitted affidavits stating that a
    pintle hook is not part of the chassis, none of these affidavits
    suggests that the modifications necessary to permit the bolted
    connection between the pintle hook and the chassis are not
    modifications to the chassis.

[^10]: Nor do we need to decide whether [IBM]{.underline} was
    effectively overruled by the Supreme Court in [Dickman v.
    Commissioner]{.underline}, 465 U.S. 330 (1984), which held that "it
    is well established that the Commissioner may change an earlier
    interpretation of the law, even if such a change is made retroactive
    in effect," [id.]{.underline} at 343. [See also]{.underline}
    [Hanover Bank v. Comm'r]{.underline}, 369 U.S. 672, 686 (1962)
    (holding that taxpayers "are not entitled to rely upon unpublished
    private rulings which were not issued specifically to them").

[^11]: The Supreme Court had expressly declined to reach this issue in
    [Knetsch I]{.underline}, where it was raised by an
    [amicus]{.underline} [curiae]{.underline}, because the "argument has
    never been advanced by petitioners in this case." 364 U.S. at 370.

[^12]: In addition, in this case, unlike in [IBM]{.underline}, there is
    no contention that the taxpayers were adversely affected by the
    IRS's delay in issuing a ruling. [See]{.underline}
    [IBM]{.underline}, 343 F.2d at 922.

[^13]: The appellant also relies on [Oshkosh Truck Corp. v. United
    States]{.underline}, 123 F.3d 1477 (Fed. Cir. 1997), for the
    proposition that [IBM]{.underline} should apply to it because,
    "unless there is a rational reason for different treatment,
    similarly-situated taxpayers should be treated similarly."
    [Id.]{.underline} at 1481. However, unlike [Oshkosh]{.underline},
    this is not a case in which the IRS is drawing an arbitrary
    distinction between similarly-situated taxpayers; rather, this case
    involves the different situation where only the taxpayer who
    obtained a private letter ruling that the IRS now concedes was
    erroneous can benefit from the IRS's erroneous advice.