Sometimes a businessman has a great idea, and sometimes government regulations keep that idea from becoming a reality, forcing the business owner to sue to overcome the regulatory obstacle that blocks the path to a successful business venture. The saga of Truck.net’s quest to sell tax-exempt diesel to trucks crossing the border into Mexico, under the same law allowing sale of duty-free merchandise to departing airport passengers, is just such a story.
Truck.net operates a large and successful truck stop at the Otay Mesa border crossing into Mexico, east of San Diego. The bulk of Truck.net’s business is servicing diesel trucks headed to or returning from Mexico. Under existing law, Truck.net is required to collect federal and state highway fuel taxes on all diesel sales—even on fuel destined for use on Mexican highways. But the owner concluded he should not be charging customers this tax on fuel to be used exclusively in Mexico, which is not legally due, if he could get an export license from Customs and Border Patrol under the same regulations that allow sales of goods to departing airport passengers in the multi-million-dollar duty-free business.
So, in 2017 he applied for a license, detailing how he would isolate the tax-free pumps with Jersey barriers that would direct the trucks one way toward the border. Operation of the pumps would require special credit cards issued only to trucking companies registered to receive the service, and Truck.net employees would monitor the path of each truck leaving the station using the GPS devices already required by federal mandate on all long-haul trucks. Plus, a station employee would watch the truck leave the station to make sure it took the direct path to the border crossing and did not turn left at the corner, the last exit before the border. Any deviation would be immediately reported to the Border Patrol with severe penalties available.
When the Border Patrol denied his permit application arguing that it was physically possible for a truck, after fueling at the truck stop, to turn back into the United States (loaded with tax-free fuel), Truck.net sued in the Court of International Trade, and detailed why the Government’s hypothetical scenario was practically impossible.
With the able assistance of Larry Friedman, Barnes/Richardson, a colleague and fellow member of the International Network of Boutique Law Firms, the Court held an initial hearing on Truck.net’s claims. Following that hearing, the Border Patrol requested a voluntary remand of the application for further consideration—and granted the license and Trunk.net’s lawsuit was dismissed.