consistence with the court's admission this morning i'm assuming the court has read our briefs and i'm not going to spend a lot of time going over all of the background that information which there's a walk in this case except to say courts to grant injunctive a mandatory refund because they did that you don't have to make a showing of the four equitable criteria we only have to show there's reasonable cause to believe a violation of the  good i'm going to move quickly too what what what this case is really about from our standpoint hopefully put it in context so the court can understand what the district court ruled and this is new to see transportation fuel equity act and i have a hard time saying equity when i talk about that act applies only to real rooms it imposes  tax only only railroads and it imposes a tax only on railroading activity in imposes a tax on the died diesel fuel that railroads used to run their locomotives it's a complete misunderstanding of how this works and what goes on with respect to the taxpayers in this case it is with that with this it it's a misunderstanding of the way the fuel use is taxes work we have a system that we' over twenty four cents a gallon on that every state in the union has a tax on diesel fuel dedicated to the highway fonde and quite frankly we have a chart in one of the adenomas in our brief that shows w those taxes are and some of them in connecticut as high as fifty cents and here's here's what we don't do that judge her know if we bought clear diesel fuel and we have an affidavit that that's that's in the brief are that's in the record in this case if we were clear diesel fuel we would have to pay all we because when you buy clear diesel fuel you have to pay all in taxes you have to pay all the state taxes and all the federal taxes now the argument is what we can get that back we could get that federal tax back with an affidavit that shows the way the industry works welcome o to polls about forty five hundred gallons of diesel fuel and it goes a long way on that could run fifteen hundred miles maybe on that so we were going to use clear diesel fuel in tennessee to avoid this tax to sort of avoid the stocks would make any difference because we'd be paying the put the full seventeen cents a gallon that we don't s that's right we have to buy clear diesel fuel everywhere the name plaintiff in this case is burlington werther it but it purchases every year one point four billion gallons of diesel fuel the testimony is that if we did that we we we would be out from for federal tax purposes about eighty five million dollars forever because of the the quarterly payments that that would be made and we always be on a wagon and we have to pay twenty four cents a gallon to the federal work and nobody would get in and besides we wouldn't want to do it anyone all the other states would have to pay all the other states some of which we could get back some of which we couldn't texas as a provision that says after you know if you keep buying and clear diesel fuel and claiming you're using it off the highway you can't get that  in really that doesn't solve the problem because we would still pay the seventeen cent a gallon tax and i'm going to talk about why that doesn't work and why we shouldn't be paid all that and all the other motor carious on august and they're not using that these are fuel the trucks that are going on the road they're not using dieties a fuel they're using clear but they are paying the seventeen cent tax and so i'm having difficulty with the whole concept that the railroads are single out and they are being they're being the victims of discrimination because of this act because clearly the railroad is not having a paid some taxes that other motor carriers are having to pay and so i haven't found a comparable class here that that you're arguing about could almost talk about that because i think that's important and that's the crux crux of the case you have to look at the use to which these taxes are being put and congress knew about that why do you have to look at th you know you say you don't use the the railroads don't use the roadway but if taxpayers we don't get to decide i don't decide whether the timothy uses my portion of the tax for road upkeep or whatever so why is that a critical issue for  here's why it's a critical issue and in it we we need to be very clear about this congress for a very long time certainly back is worse than one nine hundred forty s recognized that there was an imbalance in the top state and federal governments tax the various modes of transportation and in the one nine hundred sixty s early one nine hundred sixty s the commerce commission asked the to have a study of national transportation policy done to look at and see the way that the federal government in the state governments impose taxes own the modes of transportation and whether any of those modes of do i understand but but but judge donal says want to make a difference what makes a difference because in terms of national transportation policy the that that that study commission said  the fact that the railroads have to build their own infrastructure they have to pay taxes on their infrastructure puts them at a huge competitive disadvantage is to the trucks because the and the water carriers because  care is paid nothing for their infrastructure to the trucks because the trucks only pack a user charge and that user charge which are the taxes we're talking about the seventeen cents a gallon the federal tax was cognizant of the fact that this was discriminatory and they said look the taxation of the railroad right away is a unique burden that the railroads pay and puts them at a competitive disadvantage to us and they don't and in the least as to the motor carriers the motor carriers a seventeen's the railroads pay seventy your argument is well where that money goes makes all the difference because the money that the  carriers goes goes to the highway fund that this i guess just goes to the general treasury of tennessee when it would have what would there be no discrimination if the seventeen cents that was taxed against the railroads went to the highway fine with some some funds of state government or slush funds anyway and even though they go into fun they're not use they go to the general fund and if we start going into the funding the purpose the use of these taxes i mean we're going to have litigation forever because the government's often don't use funds with use but discrimination i'm just looking at the amount of money that's hard for me to say if you are taxed the same users get the entire use on the highway system they may skim money out of the highway fun and use it for general fund purposes i don't know that they're in highway they're in highway trust fund ok a lot of trust funds don't use the money for trusts we r seventeen cents not necessarily i can only say and we have some we put some reports in the record the trucking industry is very happy to say increase our taxes as long as it goes to support the  we need we need that goes to mass transit michigan ten percent of it goes to the mass transit the subways everything else that's not necessarily roads and council let me go back to what i what i think you told me in response to my earlier question is you said looking at the comparative class if all of the it's commercial motor carries or whatever those modes you know buses and trucks and all that and you said to me i think that it's discriminatory when it comes to the railroad because the seventeenth cent pay back let's just say the truckers goes to how is it built up keep the roads that trucks rama and then you said to me i think it's discriminatory because the railroads don't use the roads they have to build their own infrastructure and so tennessee doesn't give the railroad anything to keep up the rails and so that makes a discriminatory so the real world is not getting the benefit they're paying that they have to pay the the truckers have an immediate direct benefit because they're paying for these better roads and they're running their trucks some of the roads is that what you tell me ok but let me put let's put some flesh on that bone to that we can do that for a minute and i'm going to rely on the norfolk southern brief because i think that's it's important so you see you get this in something some sort of context remember as as as i said the diesel fuel is the wife lod of railroad go into northern railroad buys one point four billion with a b gallons a year the railroad industry by story point five billion gallons a year so here we here's what we have in tennessee the trucks pay seventeen cents a gallon and for that seventeen cents a gallon they get to drive on all the highways into the city and they get to use those highways here's what the railroads did not fix other in two thousand and thirteen had tracked maintenance experience just in to see truck maintenance expense of over forty five million dollars they had track maintenance capital expenditure ich i shouldn't say many but a number of states do you could impose on the railroad a generally applicable sales tax and not exempt our competitors from the state of new york does than the state  and no no i'm not saying that i'm saying if you can if they want us to pay a tax on diesel q then they can impose a generally applicable sales tax on the only one everybody that it was a case involving that very issue about the application of of of the the arm sales tax on railroads with the exemption one of the things it does say is that that if you impos so very markham are you telling me or supports your position now no i'm not saying it supports my position at that at that at this point at this at this stage of the case i don't think because we didn't come back in and brief that matter with the court the court should be aware of it but i don't think it really has an impact at this stage tate's lives your view of the the district court doesn't need to review that case reconsider its decision in light of the alabama department robbery case i don't think it does now it does but remember there is you're the appellate so you're asking us what you want us to do here i don't think it needs to really review that in the light of that case i think that we think what this court or is remand this case have them put the political injunction and to preserve the status quo and then then we'll try and brief that case of ok final question is i think there was some well i don't know if there was do you agree with me that we review the decision of the lower court on the issue of plummer a junction for abuse of discretion well you do a review on abuse of discretion i think we cover that in our brief we say that d an injunction pin well that we have to order dissolved or what why when we just kind of assume he would do it if we would like it dissolved as quickly as possible but  rules main argument is that state expenditures on highways are subsidies to the trucking industry that's their argument that means you're deciding the case based only on how proceeds are spent now in c s i x went to the supreme court for the second time the issue of the use of proceeds was in the brief to the supreme court remarkably we think alabama can justify its exemption from other carriers by the fuel excise tax placed on motor care so clearly supreme court is not interested in how procedures that there's a world of case law has the same thing the trailer train decision that we've got in our brief a later decision by the minnesota supreme court burlington northern it's  reported at six o six northwest second fifty four interprets trailer trying the same way and we do insist you don't look at the what if procedure spent under the for our act that case that minnesota supreme court case and the dissent in the eleventh circuit case both get it exactly right but that's what the law should be they got it right now i want to talk about highways and i have to be careful about the way i do this because it can almost sound first of all the first three subsections of the four are act which you know what property taxes rose can't stay declining under the first three subsections by alleging that the state spends every penny of property taxes paid by roads on highways they can stay decline here's the part i want to be careful with the very idea of a civil society without a government maintained system a public one is unknown and incompeten there's not a person in the courtroom who could get home tonight without trespassing on private property if we didn't have a system a public way we would have a road maintained by the government where the trucks of drove on them of the way this this tax on this huge fuel consumption thing is that they that they use and i want to ask you in the in the states argument to whom do we compare the railroads when we are examining whether or not the impact i guess this is the impact on application of this for ag is discriminatory when it comes to the railroad what would we do we compared to what the analysis that we use this is and i know we're not and i know we're not deciding the the merits here i understand that we did see a six to the most recent i important in this way also because it tells us what the comparative class is when the allegation is that we have a class that targets railroads to reach them different from ordinary businesses in the community and it's a compare it's the commercial industrial plant as well their biggest competitor in that class is trucks and it does exempt the water carriers but we also know from c s six to that we compare non tax related or non comping sort compensatory tax related justification for a difference in treatment for water carriers so we know we're going to make that comparison they sense that back to the eleventh circuit  decide that issue that hasn't been worked out yet and castell but have i answered your question i think i think you get me because i also want you to ultimately get to the point that counsel made about the and i know this gets back to use but that the state collects money and upkeep for the roads that the trucks use but the railroad has to maintain its tracks of its infrastructure and so they are not getting the benefit to part answer why it's perfectly appropriate to use the taxes paid by the trucks on the road because they do a lot of damage to the roads and they are essential public you thank you i've read too many cases the for our act was never intended to correct through a system of state taxation inherent in equities but between three transportation modes that do business in an entirely different ways the boats are on the river the upside is they don't have to keep the rivers the state doesn't either united states corps of engineers does that their own side of course is they don't go very fast and i can only go where the river goes another justification of their difference in treatment is sometimes they really don't know what state they were and although i don't know g p s my cure that answer to we know from the bulk of the case law that it's irrelevant how we spend the proceeds we're just judge griffin you're absolutely right we couldn't build enough court houses to litigate that if we were going to get into tax benefits and that's what those cases say this tax is not targeted at railroads it is targeted at the consumption of salute a fuel they say we're the only ones that have to pay a tax on fuel used in locomotive seeing a difference in treatment between similarly situated persons without sufficient just ok if they're not similarly situated with anyone we don't agree with that they're just a user of fuel that's what they really are but if they're not similarly situated then the four are i have to really doesn't do them any good all they've got is equal protection in substantive due process the other case i would like to bring to your attention is this court's attention in direct t v versus to reach the coast where they're headed judge sharp knows the history of this case he decided the illinois central case it went up to the to this court that case has now been remanded in light of the new supreme court case but what he know we expect him to change his position on it but anyway what we know is in this case and what's pointed out justice sharp is the transportation fuel equity act was not passed in a vacuum judge sharply against  illinois central he relied on the eleventh circuit opinion which is now been reversed we didn't agree we took appeal under under the rules but the legislature said we've got to figure out how a way how to do this so we didn't want to take the railroads off of the sales tax they said were discriminated against because you treat the trucks differently and now we study ok fine we'll treat you the same way we treat trucks i mean the fuel equity act precisely says expressly says all these will fuel either cleared or died used for transportation purposes with an exception for the boat is taxed under the diesel tax the highway use or fuel tax that they referred to is not a tax at all it tells how you calculate the amount of the tax to seventeen cents per gallon going to space totally on consumption based on miles traveled in the state because if to the international fuel tax agreement which the st for our and congress said no you can tax property but you can't tax it more than five percent more than you tax commercial industrial property and all of the money paid by the railroads is used on railroads it's used on track and bridge rehabilitation for the state short line railroad program it is true that all the money paid by trucks forms the  budget for the department of transportation judge griffin you're also correct in there substantial evidence of this in the record that we made in illinois central and also we found additional authority in the trunk or it's not in this court but our expert testified that you just can't in a matter of government finance you just can't get into how tax revenue use are spent because that's exactly right you can call the find anything you want in that may have a budgeting purpose it may have an accounting purpose it may or even have a political purpose but it has very little if any influence on behavior because state legislatures can tax any other particular now the rulers are going to point out there's there they're going to argue there's a split of authority at least on whether you consider the use of proceeds if there's a split of authority i don't see abused its discretion because we're not here today to decide the merits and neither was he judge sharp looked at this he had been through the young north central case and he saw what the rowers were trying to do they were trying to be the only entity in the state to paid no tax on fuel the only non governmental entity in the state so yes x one tells us very clearly that they are not entitled to most favored taxpayer status and if they're the only ones in state that doesn't pay any tax on fuel they are most favored tax payers that's what judge sharp's conclusion was based on he said no you can't be most favored tax payers and i don't see how you shown any sort of discrimination here now is with sex too we know the comparison kalash we know you have to show actual discrimination and we know you have to consider you have to compare taxes without consideration of how the procedure spent because that's what you're talking about the motor fuel tax and just how it's spent what we get the same tax and now we want to compare how procedure spent and the only central case they didn't he did not apply the wrong legal standard he used the correct comparison class which was commercial and industrial taxpayers for case they say is targeted at railroads but it is not it's a tax on the use of few it is not targeted at robert it applies to railroads and trucks their main competitors people who buy diesel fuel pump who are big enough to fall under the other parts of the motor fuel act don't have enough but this is this is an attempt to overcome the discrimination adana fought by the district court complained about by the railroads an illinois central this tax can't be used in a vacuum we're trying to comply with the ruling  district court in illinois central and now they come in the day before the new tax takes effect to july one two thousand and fourteen on june thirtieth they sue is again no that's not good enough either well they're not entitled to most favored taxpayer status and he certainly did not abuse his discretion by ruling that they were in time to that i'll be brief and an hour of follow through which we think this is a targeted tax and as a targeted tax sort of implicitly commercial and industrial tax payers or are those are the class that you would look at so want to be sure we understand how this tax works there there is a set of motor fuel taxes in tennessee that everybody who uses the highway paints  and those people buy clear diesel fuel everybody who doesn't use the highway uses died diesel fuel and they don't pay the motor fuel tax but under this new act that's called the tax equity railroads are now taken and put into that group of highway users and we say you can't put us in to a group of people who only use the highway and make us the only non highway user that pays this highway use tax which goes to on the highways now i don't think there's a split of authorities on the on the question of whether whether you look at the use to which these forms are put that does this is a huge deal that the state of tennessee is now saying look mr six circuit we need to be able to make the railroad subject to the highway use tax and if that's true we could be subject to the how can use tax in fifty states the states tried this thirty years ago in iowa and on the trucks and the court in that case didn't look at it is a singling out case that's the santa fe bear case that it will get out of as a singling out case they said we're going to compare them to their competitors and they say and it's interesting superficially superficially it looks like the it's the trucks that are getting discriminated against because they're paying a fifteen and a half  are only paying an eight but they said there's another piece to this puzzle that we've got to look at and the other piece to this puzzle is that when the trucks pay that fifteen and a half since they get their highways and they get their roads the railroads pay eight cents and they don't get their own ways and there is that a c that's difference and that is discriminatory almost exactly like this case was exactly like this case minnesota made the railroad subject to the seventeen cents a gallon tax in the triplet case that we cite and it's in  brain in that case that the argument of the of the department of revenue of minnesota is exactly the same as the argument being made here and they said not a big deal everybody pays the seventeen cents a gallon who uses few in the district judge and triplett said i'm going to follow the i would supreme court case and the rationale there because the trucks get their highways paid for and extent the railroad has has the license vehicles that it uses on the highway and it has a lot of it pays the diesel fuel tax to the extent it uses other diesel fuel off highway that it doesn't use for locomotive pennies significant sales and use tax like other businesses so that this funding that somehow or another we were not paying any tax on diesel fuel that's just roll out and quite frankly we rough equivalent to i were paying the tax that they were paying the under the transportation tax equity fuel tax but it is under the highway fuel user provision it's a it's under the it's all the other taxes that are under that practice history it's it's two fold and we said our brief we say number one you fail to even look at or address the targeting issue and then there are two erroneous findings that he had with respect to just the last point i made that we didn't pay any tax we do pay a tax i think it's also clearly erroneous an analysis that he made it is not an analysis of these taxes to say well you should be subject to a seventeen cent a gallon tax because