A bill for trailer-registration fees totaling more than $10 million has ignited a legal battle between the California Department of Motor Vehicles and Green Bay, Wis.-based Schneider National Inc. In a court filing, Schneider alleges that the California DMV improperly levied trailer-registration fees against it, then increased those fees in retaliation when the truckload carrier contested the assessments. Although Schneider is the sole plaintiff, the outcome of the suit will affect all interstate motor carriers and the future of the International Registration Plan (IRP).

The IRP, approved by Congress, provides a uniform system for registering commercial trucks in the 48 contiguous states and some Canadian provinces. The program allows an interstate motor carrier's "base jurisdiction," or home state, to collect registration fees, issue license plates, distribute fees to other states based on road usage, and resolve assessment disputes between carriers and state registries.

When California joined the IRP in 1984, it did so with an exception that allowed it to collect trailer-registration fees. In 1999, IRP members enacted a "sunset provision" that would phase out all such exceptions. That same year, California's legislative counsel issued an opinion that the IRP superceded state rules and therefore the state could not assess additional trailer fees. When it came time to stop collecting those fees, though, California did not comply.

In March of 2002, the California DMV hit Schneider with a bill for more than $6 million in trailer fees, penalties, and interest. According to Schneider, the truckload carrier remitted that amount to its base jurisdictions of Wisconsin and Illinois, but filed an appeal on the grounds that California's assessment violated IRP rules. An IRP hearing officer in Wisconsin agreed and ordered the California DMV to refund the fees to Schneider. The DMV responded by issuing a $10.75 million tab for the same trailers over the same time period. The state also said Schneider must appeal through California's administrative process rather than through the IRP.

California stands to lose its membership in the IRP by publicly challenging the organization's authority, says James Curtis, a partner at Seyfarth Shaw, the law firm representing Schneider in the case. If California refuses to abide by the program's rules, he believes, that would mean the state refutes its membership and therefore owes refunds to any carrier that paid registration fees through IRP to California after October 2000.

"This case is really about preserving the integrity of the IRP," said Schneider general counsel Thomas E. Vandenberg, in a statement. " ...[I]f California is allowed to disregard the IRP, it will open the floodgates for other jurisdictions to assess whatever registration fees they like, creating a nightmare for the trucking industry in terms of costs and administration. This is precisely the situation that IRP was designed to prevent."

Schneider's suit asks the U.S. District Court of Eastern California to declare that the IRP constitutes a federally enforceable interstate compact that supercedes state law, and therefore California may not issue assessments that are inconsistent with IRP policies. It also seeks a ruling that the state is not entitled to benefit from membership in the IRP since it is "not participating" in the agreement.

The California Department of Motor Vehicles was contacted for this story, but officials declined to comment while the case is pending in court.

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