August 25, 1995
Subject: International Fuel Tax Agreement
Written by: Ross T. Carter
Requested by: Don C. Kelly
Syllabus: Because the fuel tax established in KRS 138.6601 conflicts with the International Fuel Tax Agreement, the tax is preempted by federal law after September 30, 1996
OAGs cited: None
Statutes construed: KRS 138.6601
Opinion of theAttorney General
We have been asked whether 49 USC � 31705 preempts KRS 138.6601. It does.
The federal statute says:
� 31705. Fuel use tax
(a) Reporting requirements.After September 30, 1996, a State may establish, maintain, or enforce a law or regulation that has a fuel use tax reporting requirement (including any tax reporting form) only if the requirement conforms with the International Fuel Tax Agreement.
(b) Payment.After September 30, 1996, a State may establish, maintain, or enforce a law or regulation that provides for the payment of a fuel use tax only if the law or regulation conforms with the International Fuel Tax Agreement as it applies to the collection of a fuel use tax by a single base State and proportional sharing of fuel use taxes charged among the States where a commercial motor vehicle is operated.
The International Fuel Tax Agreement is defined in 49 USC � 31701(3) as the interstate agreement on collecting and distributing fuel use taxes paid by motor carriers, developed under the auspices of the National Governors' Association.
IFTA is managed by International Fuel Tax Association, Inc. States and provinces may become members of the association and participate in the cooperative administration of fuel use tax laws. IFTA eases the administrative burden of governments that collect tax from multistate operators, and it allows operators to deal with a single taxing jurisdiction. Obviously, such a cooperative undertaking can operate efficiently only if all participating states and provinces impose fuel use taxes that operate in substantially the same way. Therefore IFTA imposes various requirements on its members in order to maintain a consistent set of tax procedures throughout all taxing jurisdictions.
Membership and administration are governed by the association's Articles of Agreement and the Procedures Manual. In general, members may impose fuel use taxes only on qualified motor vehicles. Section II.K. of the Articles of Agreement says:
Qualified motor vehicle means a motor vehicle used, designed, or maintained for transportation of persons and property and:
1. Having two axles and a gross vehicle weight or registered gross vehicle weight exceeding 26,000 pounds or 11,797 kilograms; or
2. Having three or more axles regardless of weight; or
3. Is used in combination, when the weight of such combination exceeds 26,000 pounds or 11,797 kilograms gross vehicle or registered gross vehicle weight. Qualified motor vehicle does not include recreational vehicles.
Various other provisions of the Articles of Agreement make it clear that the fuel use tax reporting and collection system operated under IFTA applies only to qualified motor vehicles. A classification of motor vehicles on any basis other than the three criteria set out above does not comport with the agreement, and a tax based on such a classification would not be collectible through IFTA.
KRS 138.6601(1) says:
In addition to any other taxes, every motor carrier operating a motor vehicle in this state with a combined license weight in excess of fifty-nine thousand nine hundred ninety-nine (59,999) pounds, shall pay two cents (2�) per gallon on the amount of gasoline or special fuels used in its operation on the public highways of this state.
This statute imposes a fuel use tax on a classification of vehicles other than the classification of qualified motor vehicles designated under IFTA. This tax could not be administered by other member states because other states do not have a separate classification for vehicles that weigh more than 59,999 pounds. The tax is therefore not in conformity with IFTA.
[S]ince the Federal Constitution is the supreme law of the land, a Federal enactment authorized by that instrument prevails over a state statute and suspends the operation of the latter when its enforcement would necessitate or sanction the performance of an act prohibited by the former. Straight Creek Bus v Saylor, 299 Ky 309, 185 SW2d 253 (1945). Preemption of a state law occurs when Congress expresses a clear intent to preempt state law. Commonwealth ex rel Cowan v Telcom Directories, Ky, 806 SW2d 638, 640 (1991). We believe that Congress expressed a clear intent to preempt state law by providing that a state may impose fuel tax reporting and collection requirements only if the requirements are in conformity with IFTA. A state law that is not in conformity with IFTA is preempted.
The federal statute quoted above does not require any state to join IFTA, but it does forbid any state to enforce a fuel use tax that does not conform with IFTA. Because KRS 138.6601 does not conform with the IFTA definition of qualified motor vehicle, the Kentucky statute is preempted and Kentucky may not enforce the statute or any of the statute's reporting requirements after September 30, 1996.
Ross T. Carter
Division of Civil and Environmental Law
Manager of the Opinions Branch