Beaver Excavating Co. v. Testa
134 Ohio St. 3d 565
Ohio2012Background
- Beaver Excavating Co. et al. challenge the CAT as applied to motor-vehicle-fuel sales and the allocation under R.C. 5751.20.
- Section 5a restricts the use of motor-vehicle-related revenues to highway and related purposes.
- CAT revenue from motor-fuel excise is allocated to nonhighway funds, allegedly contravening Section 5a.
- Appellants sue in declaratory-judgment action; trial court granted the Commissioner’s summary judgment; appellate court affirmed.
- Court holds the CAT revenues from motor-fuel sales must be treated as “related to” fuels used for propelling vehicles on highways, making the allocation unconstitutional and remanding for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CAT revenues from motor-vehicle-fuel sales are ‘related to’ highway fuels under Section 5a | Beaver argues revenues relate to motor fuels and are misallocated | Testa contends Grocers controls, allocation permissible | Yes; revenues are ‘related to’ motor fuels and misallocation violates 5a |
| Whether appellants have standing to challenge expenditures | Taxpayers suffer direct injury from CAT and misallocation | Standing lacks because relief sought is not to stop collection | Appellants have standing to challenge expenditures |
| Whether the phrase ‘relating to’ should be interpreted broadly or narrowly | Broad interpretation supports challenge | Narrow interpretation limits reach | Broad interpretation; CAT revenues relate to motor-vehicle fuels under 5a |
| Remedy: retroactive vs prospective application of decision | Retroactive relief not requested; seek prospective relief | Court should limit effect to prospective enforcement | Decision applies prospectively; allocation must comply with 5a going forward |
Key Cases Cited
- Ohio Grocers Assn. v. Levin, 123 Ohio St.3d 303 (2009) (CAT is not a transactional tax; may be an excise taxed as a privilege)
- United States v. Butler, 297 U.S. 1 (1936) (challenge to tax exaction irrespective of expenditures permitted)
- Hickok Oil Corp. v. Evatt, 141 Ohio St. 644 (1943) (characterizes motor-fuel taxes as privilege taxes)
- Ohio Trucking Assn. v. Charles, 134 Ohio St.3d 502 (2012) (fees not ‘related to’ vehicle registration/use; distinguished from 5a context)
- Cuyahoga Cty. Bd. of Commrs. v. State, 112 Ohio St.3d 59 (2006) (standing and injury in fact principles applied)