Court Opinion

ID: 4712125
Source: CourtListenerOpinion
Date Created: 2021-08-12 00:37:51.944692+00
Date Added: 2024-06-11T08:07:12.215309
License: Public Domain

Sanders, J.
(concurring in part, dissenting in part) — I agree the Department of Licensing erroneously interpreted the phrase “total. . . fleet” to include the total number of all vehicles purchased during the assessment year. However, I disagree with the majority that the highest number of cars available for rent at any point during the preceding year is the proper measure of what constitutes a rental-car company’s total fleet. Rather, the better approach is to measure the total fleet by the average number of cars available for rent in the preceding year.
The majority’s rationale to choose the highest number as the “total. . . fleet” is unpersuasive. While it is true the record shows one other member jurisdiction, North Carolina, and one other rental-car company operating in Washington, Hertz Rent-a-Car, employ the highest-number approach, the majority neglects to acknowledge the same record also evidences most states and most rental-car companies use the average-number approach. Br. of Appellant at 7; Administrative R. (AR) at 418-22, 150, 187, 117-120. In other words, if we are to rely on the administrative record as justification to choose one approach over another, that record provides far greater support to adopt *904the average-number approach than the highest-number approach.
The majority’s use of the highest-number approach also contradicts the well-established canon of statutory construction that ambiguous revenue-generating statutes “are construed most strongly against the government and in favor of the taxpayer.” See Dep’t of Revenue v. Hoppe, 82 Wn.2d 549, 552, 512 P.2d 1094 (1973). Although the majority recognizes this canon of construction, it fails to apply it. See majority at 901.
The International Registration Plan (IRP) is a revenue-generating statute. See, e.g., RCW 46.87.050, .060. It is designed to equitably apportion license revenue among member states based on the extent to which a rental fleet uses each jurisdiction’s roads and highways. See IRP § 102, reprinted in AR at 255. With respect to interstate trucks, for example, this equitable apportionment of license fees is achieved by referring to the detailed mileage records truckers must maintain. See IRP § 300, reprinted in AR at 267.
Due to circumstances of the industry, however, this approach is not feasible for rental cars. See IRP § 1116 cmt., reprinted in AR at 284. Instead, the only feasible method to make the same equitable apportionment of revenue from rental-car registrations is to use the percentage of revenue as a proxy for the wear and tear of a jurisdiction’s roads and highways. See Budget Rent A Car Corp. v. Dep’t of Licensing, 100 Wn. App. 381, 389, 997 P.2d 420, review granted, 142 Wn.2d 1007, 16 P.3d 1263 (2000); IRP § 1116 cmt., reprinted in AR at 284. As the majority sets forth, to determine the number of cars a company must register in a particular state the percentage of revenue generated in that jurisdiction in the preceding year is multiplied by the total fleet size in the preceding year. See majority at 922-23; IRP § 1116, reprinted in AR at 284. Mathematically, the larger the fleet size, the larger the number of cars that must be registered.
Thus, from the standpoint of a member state seeking to generate revenue, the larger the fleet size the better. This is *905because the formula set forth in IRP § 1116 dictates the minimum number of cars a rental company must register in each member jurisdiction where it operates:
To determine the percentage of total fleet vehicles that shall be registered in a jurisdiction, divide the gross revenue received in the preceding year for use of such rental vehicles arising from passenger car rental transactions occurring in the jurisdiction by the total gross revenue received in the preceding year for the use of such rental vehicles arising from passenger car rental transactions occurring in all jurisdictions in which such vehicles are operated. The resulting percentage shall be applied to the total number of passenger cars in the fleet and that figure shall be the number of rental passenger cars that shall be fully registered in the jurisdiction.
AR at 284 (emphasis added). The higher the minimum number of registrations to which a jurisdiction is entitled, the greater the guaranteed revenue for that jurisdiction.
Adherence to the principle that revenue-generating provisions are construed most strongly against the government would lead to the conclusion we should adopt the average-number approach advocated by Budget and used by most jurisdictions and rental-car companies, if not the lowest-number approach.
Furthermore, the majority’s decision to apply the highest-number approach counters the underlying premises of the IRP — to promote uniformity, proportionality, and equitability among member jurisdictions. See Budget, 100 Wn. App. at 387; cf. IRP § 102; IRP Foreword, reprinted in AR at 253, 255. Since the record indicates most jurisdictions rely on the average-number approach, the majority’s decision upsets that quest for uniformity.
It also contradicts the goal to distribute proportionally and equitably revenue among the member jurisdictions. Because Washington will employ the highest-number approach, it will receive a disproportionately greater number of registrations than jurisdictions using the average-number approach. Washington will enjoy this benefit not because the wear and tear on our roads and highways is *906disproportionately greater than that of other members, but simply because Washington uses a more favorable accounting method. The following hypothetical illustrates this disproportionate distribution:
Rental-car company X Corp. operates in four U.S. states which are members of the IRP: State 1, State 2, State 3, and State 4. X Corp.’s revenue percentage in each of the four jurisdictions is 25%. State 1 uses the highest-number approach to approximate X Corp.’s total fleet size, while the other three states use the average-number approach.
At the beginning of the preceding year, X Corp. had an actual fleet size of 800 cars. During the summer high-season, its fleet size went up to 1,000 cars. Then, at the end of the preceding year, X Gorp.’s fleet size was down to 900 cars. Thus, the fleet size using the highest-number approach is 1,000 cars, while it may be only 900 cars under the average-number approach.
In State 1, X Corp. will therefore have to register 250 cars this year (25% of 1,000). In the remaining three jurisdictions, X Corp. need register only 225 cars (25% of 900). Based solely on the number of registered cars, State 1 is receiving a disproportionate share of revenue.
Lastly, the highest-number approach skews the formula in section 1116 away from being an accurate reflection of a rental fleet’s use of a particular jurisdiction’s road network. The apportionment of registration fees is intended to compensate for the cost of road wear a rental fleet causes in the jurisdictions in which it operates. See IRP § 1116 cmt., reprinted in AR at 284. As such, the apportionment to which a jurisdiction is entitled should accurately reflect the amount of use by a rental fleet during the preceding year. The size of a rental fleet fluctuates throughout the year, from season to season. Since the highest-number approach is based on the highest number of cars a rental-car company offered for rent at any point during the preceding year, it does not account for such fluctuations. It therefore overstates a rental fleet’s use of the roads and highways by ignoring the fact that for every point in time other than the peak the actual use is less.
*907The IRP is supposed to “promote and encourage the fullest possible use of the highway system” thereby contributing “to the economic and social development and growth of the jurisdictions.” IRP § 102, reprinted in AR at 255. The majority’s decision to use the highest-number approach stands in contrast to that principle, and construes the IRP against the taxpayer and in favor of the government, exactly the opposite from the applicable rule of law. I therefore dissent.
Alexander, C.J., and Ireland, J., concur with Sanders, J.