case number one seven dash five five five three illinois central railroad company v tennessee department of revenue at all or arguments not to exceed fifteen minutes precisely mr stephan good went for th please the court on steve goodwin attorney for the appellate lawyer central railroad company and i would like to reserve five minutes for this case was remanded back to the district court by this court out of out of alabama have affirmed what's at issue in this case is well it's no longer a matter of discrimination these matt at least these taxes have had have a discriminatory if that there  when you tax the railroads and you're not taxing the motor curious that's been established what hasn't been established and what what this case went back for was the state having the burden to show sufficient justification for th taxation and the sole justification here this case comes down to one justification on that that that is being offered that is being offered in this case that's correct that might be others in some cases but not in this case the so a justification in this case proceedings quote in light blue or court i mean they were in their original opinion judge sharp this might have driven him prime the bench night in your case said said that found it was a r when he did the math and said looks pretty good and in our court said not good enough right that's correct i think there we are back because of the they were so cold rough equivalency was already in the record and but this court sent it back anyway for the two to consider the facts in view of c s sixty two in what he did what the what the district court did was essentially grant summary judgment on affirmative defense which is really what the justification defense is we have a facially discriminatory tax the defense is ever be correct could it ever be correct to grant summary judgment on the permit of defense i suppose it could why is this not correct but it's not correct and let me get to that first right why was summary judgment not correct in this case because if you adopt the state view of the test and we're we're going to get into what we think the test ought to be with a competitor or tax talk to that rather soon but less and less less take their test which is the what a professor has done i think correctly diesel fuel in tennessee which is how the trucks are times rather than a sales tax on fuel purchased in tennessee which is how the railroads are times illinois central would have paid significantly less in taxes on their diesel fuel right so that takes care of their summ judgment but i'd like to to tell you why we were entitle summer just under the correct legal standard get help us with that i mean the remedy there are the the disposition you see today is summary judgment in your favor  if you use the correct legal in the house of so very just a court that we keep wanting you to get to that point here's the correct legal mouses i mean we have it in your brief but if you change that let us know i haven't changed it to the correct legal analysis is the doctrine because like i think of this just good but they're arguing they're arguing that it is easier for the state to defend a facially discriminatory tax against a statutory prescription of discriminatory taxes why congress it's easier for the state to defend that than if this were were congress passed litigation on the constitution with a court struggling with that analogy because it seems to me that what the court sa six to was not you shall use the compensatory tax doctrine in making your evaluation didn't say that at all it had i think either a senate's or two sentences that  that that reference to gray dying and then suggested that and reference the compensatory tax doc doctrine but the court very easily could have said in that case it's the compensatory tax doctrine use it and apply it but the court didn't do that the court said used the phrase roughly equivalent so where is your authority for saying  that the supreme court failed to direct us to use the compensatory tax doctrine used a different linguistic version of it but meant that we were really supposed to use that doctrine well two things just  first you you look at the combination of the three things they did say they said not only look at our camera her dormant congress cause jurisprudence they not only referenced greg dyke company and they not only said more than watch this a roughly equivalent test although these things are the computer story tax doctors they don't always say use the compensatory tax doctrine when they when they are deciding congress close cases what that the  the term they use as professor hellespont points out is roughly equivalent the rough equivalents goes to are these taxes compensatory and that's what the gibbons toward tax doctor look looks at is that even though the term rough equivalent seems to correlate with the the compensatory text doctrine that talks about having exacting comparisons right of same type in mo talking about a facial discriminatory tax if if this court except your argument and grant summary judgment i think is your point is that your reason your best reason for saying we have no choice  we set up that your expert says blair says you would have paid more or less we've got to be less what else well to an expert says it not too fine a point on under under any analysis if you don't want to call it the compensatory tax doctrine you've got to call it something as professor hellespont points out there has to be song some way to determine if these taxes in fact are discriminatory and it 's not a label the supreme court used the term rough equivalent some says the term they used in their compensatory tax doctrine but you have to use some type of the test more than what the district court did here and we submit that the only test out there the only test that comes from the supreme court or any of the court when you're taking two independent taxes as we're doing here not related to independent taxes and you determining are they roughly equivalent  somebody pays is roughly equivalent to the discriminations gas station although as i understand is there a way to know in advance is there a way for the state to know for the roads to know in advance at the beginning of the year whether by the end of the year truckers and rear roads will have paid roughly the same amount given that the price of fuel changes during the course of the year or is it always a system particularly if we're in a volatile volatile period where the costs go up and down where you have to wait until the end of the year and then see how it turned out to find out whether the constitution is violated or not that the front end though do you think that where you think that congress and the supreme court had in mind some sort of a system where you really won't know whether you violated the constitution and tell your at the end of the year that that just logically doesn't it doesn't make sense no no not at all what congress had in mind is is in sweeping terms as justice scalia calls it under under this section of the act prohibits discrimination the supreme court has told us no longer it issue to the user facially discriminatory taxes we know that at the beginning of the year just we know that at the beginning of the year because they are open i don't know whether they will have turned out to be roughly equivalent at the end of the year well that's why you don't that's  only one of the three factors it which is the only one that they are working here and you're right you will not know at the front if you use this contrived right analysis remember contrived because you're converting a tax on purchase as a percentage tax to a cents per gallon tax which is oblivious to the cost of the fuel we want is that one of the reasons that you say that the the test would lead you to where you want to be here is your emphasis on how the proceeds are used but is it doesn't be an ass just completely obliterate that argument our case does not depend solely on how the procedure used because this this  even depend on that in the light of that case law well it can it and this is why while b n to the sea is not applicable here it where you can prepare the answer for that question to remember about yes please year and that's why the approach the judge sharp used was incorrect in this case and what he should have done is at least use the compensatory tax doctrine as a guide that's what i thought he was going to say and i think that's what his brief says so from your perspective on the part of the state you're advocating that sharp was right you just look you just do this mathematical calculation but you can't really do it until the end of the year can you you can in the re or cannot we still can't tell what i can tell what you're saying you can handle the situation so you can make you can know in advance even though you don't know what the cost of the fuel will be during the year whether by the end of the year it will or will not have been roughly equivalent is that what you're saying not exactly not exactly in tax administration there are always critics that can be climbing if somebody pays a little too much in the pants year they can take the credit for it the next year the other point in this case is that the railroads have a direct pay permit even if we were to make this determination on a purchase by purchase basis comparing a seven percent of the purchase price to a seventeen cent per gallon the room and he could easily be even if it were a daily determination of disparity the railroads going to always pay the lesser of seven percent of the purchase price or seventeen cents per gallon but here it's doesn't that have you going right back to what was remanded from this court before and that is simplistic mathematics with no no and out of state interest that benefit the former and at the expense of the latter justice kagan tells us in c s x one that the for our act this concern was disparities between railroads and other actors in c s x two that gets a little refined in the court tells us that you know they're after must be similarly situated so here we have in this for our act case we have similar police situated railroads and trucks because both them purchase and use diesel fuel for freight transportation purposes both travel but i'll just throw this in so you can account for it they both travel in interstate commerce you're going to be traveling through your state and on to the next one that's very correct and none of the statutes any issue here in tennessee or in so yes x make any distinction between insane out of state interests they apply without regard to that so here we have  bought it or where they're going or where they're coming from to what we sort of gotten off of what my question was and i just want to see if we can finish that and then spent then go on to the commerce clause argument you're making something you're right that it's not a commerce clause case assuming the compensatory tax doctrine doesn't apply you think it's just this mathematical calculation right that is we have we have to let me ask the question all right  just want to close the loop on this idea or this concern i have about if it's just a mathematical calculation how does the state of the river know in advance of the year at the beginning of the year whether by the end of the year what they paid is roughly equivalent and i all that i heard you say before we wandered off was that well there are the system of credits available and then you said that one could pay the lesser of the two i don't see anything in the statute that says a railroad can pay the lesser of the two so i don't understand that and two are you then saying that if the railroads do pay more we don't worry about that under the four our act because they can claim a credit next year is that what you're saying this one w being implemented at the period in question that it was handled that meant that if one paid more by the end of the year that's no harm no foul not that i know of in that well how can you be defending a tax that no longer exists in its current form because you remember the statute in two thousand and fourteen how can you be defending it from this period in question of two thousand and seven to two thousand and fourteen by said by a sort of woulda coulda should of something that could have been done that wasn't done during the period i don't understand that if you look at it over the whole period of time they want this declaratory judgment to apply all the way back to two thousand and five that it's what their refund cases are in state court and that's how the declar judgment will be used here so the question is what is discrimination and there has to be some reasonable period of time over which that is determined we know when it ends in our case which may be unique to us but it ends on june thirtieth two thousand and fourteen so we know all those facts we don't have to worry about it in the future it would be unreasonable to say if the price of fuel cause of societal stacks right to to exceed seventeen cents per gallon on any particular day that fuel is purchased that that means that the whole tax regime is discriminatory under the for our act it is and has to be looked at over a period of time it's a dynamic it's a dynamic situation but if you look at it over a reasonable period of time which is what judge short did he said there's simply no discrimination here there been times here so what are you what in the ant tells you what time frame  it let me just give you a little back that ran from my concern seems to me that we need some sort of a coherent test that we would either employ here or direct the district court to employ and there are a lot of moving parts you got the impact of the time trying itself is one moving factor whether there's a de minimus exception at all is one use of the proceeds of the tax they argue i want to thank be n s f suggests otherwise  use in the state consumption in the state as opposed to use sales in the state as opposed to consumption or use aren't those all moving factors and if they are what is it what how do you employ a test that accounts for all of us and how do you use those various factors first of all use and consumption are the same thing railroads however pay when they buy in tennessee at the pump so they pay the sales tax on everything they bought if they buy fuel elsewhere and burn it in tennessee they owe use tax for what they burn in tennessee unless they paid a sales tax in earlier and then i think just barely your answer is telling me that there are these moving parts and i agree with that because something because you have a different law governing how motor carrier because you have the agreement with the other states and in america but what test in light of all those moving factors what test do you propose if it's not  if it's not the compensatory tax test the test has been worked out that would have to be worked out what a period of time here is over which you look at the overall charges if the court goes there i believe that has to go back to the district court you agrees not need you agree i'm sorry you agree mr talmage that this is a facially discriminatory tennesseean act of the tax and it's only on seven percent on railroad and then you're you have the burden to just show the justification for that they're ok but the test hasn't been worked out the test that's tough precisely in this case we don't need to work it now because we know when the tax regime any reasonable period of time you just want to be long enough that it comes up with the way you wanted to come up let's say a reasonable period of time is two thousand and seven in two thousand and seven to two thousand and fourteen to six up as a hypothetical that is a reasonable period of time all right you lose right during that period we don't know seven nine and ten we know as a matter of fact that it was lower on the railroads and it was in trucks two thousand and eight the first year since  forty seven when the railroads paid more than the trucks did it went for sixty one years with the trucks paying more than railroad site and let me have times and let me change hypothetical let's assume that that if you look at each year you don't average this over more than one year you don't look at it by day you don't look at it by month but you do look at it by discrete year several years you lose right over the years there is an excessive burden on the railroads and that is why the room of the section in my brief can be important because you don't throw out the whole tax regime because of a simple disparity in a rate burden if it says it in one section and doesn't say it in yours then you don't get it the issue is what is screaming nation and the only thing that is discrimination is an excessive burden on the party claiming to be discriminated against that's what i'm talking about if there's an excessive burden the court could say if there's an excessive burden over a defined period of time then to that to the extent of the excess that is discriminatory that could be  isn't that generally what in these situations is don is that the remedy is tie lurd to the problem as opposed to saying the entire tax is unconstitutional were done what they say is in those areas in which discrimination would concede that that's what should be done here i don't concede it because we know where the end of it is and i think you should look at it over more of a longer period of time but that's a possible remedy and certainly be limited to the ex i'm still hung up on how under your theory we affirm the district court here when you seem to freely admit the act doesn't say and we don't know what the proper period of time is or what the test is to apply within that proper time so if that's if those are givens unless i misunderstood you how do we affirm it it has to be a test that determines a specific period of time rather than just looking at the overall average ported it does have to go back to work out those particulars with instructions that the room and he be limited to the actual excess burden during those periods of time that the district court finds discrimination well let me throw this out to this type of the time period the judge sharp looked at went back what seventy one years or something like that he didn't actually say what the time period was but he looked at  yes so assuming for a second that that's what he did when this act that we're talking about that made discrimination unconstitutional didn't even come along for another what thirty or forty years to fix so so how how could we possibly use a period of time when whatever the state did it didn't it wasn't apparently unconstitutional why would why would you use that period of time to then justify meaning in this case offset the higher burden for the railroad after the statute it simply has to be a reasonable period of time and so to so defend for me very succinctly if you would the use of the period of time at a minimum prior to the enactment of the for our act so if sharp did that we should send it back i think it's reasonable to look at only sense that you act was enacted and if sharp did go back before that we have to remember right what period of time are you advocating and what is the and what's the rationale for that shorter period of time you're advocating i'm out of time but i know i have to answer your question you know have to do anything but we would during ordinary circumstances clothes who are already back in a situation where the trucks pay more than the rose even if that's the same regime were were in force it has to be a several year period of time because if the state has remit the excess when the railroad burden exceeds seventeen cents per gallon surely there should be some balance when the railroads are paying far less than seventeen cents per gallon so you don't know passed a statute that prohibits discrimination and sweeping terms but make it harder make it harder for a railroad to defeat it faces a tax under congress's own act than under the constitution we it would you would you would go through that to see if it bali's the constitution this is a statutory prescription and he wants to make it easier on the state we know that can't be right and what that in a way that begs the question because what we're trying to proceeds appears to me under our law not to matter at all so what what timeframe and what test do you propose is it just simply the compensatory tax doctrine time frame gets to judge mckeague question you're right you don't look you can't guess what the rate is at the beginning but if you use the compensatory tax document a factor too is that is that the touched under the under the analogy to this case the tax on the railroads could never exceed can never exceed the the the tax on the on the motor carriers and we know it can't because of mr blair's affidavit that for some of these years when you did the contrived rate because the tax can't exceed and the this record shows that in fact it does so if i get this right what you seem to be saying is that because you can't predict in advance whether the tax have ended up being higher on there are the that's the state's problem it's not your problem so they simply can't have a system designed that way because you can't figure it out in advance and so if they do it they run the risk of every year you being able to challenge it because by the end of the year you say you paid more that basically the bottom line in yes and what a ridiculous so if i'm right about that and now this it does not affect this case i'd be just curious stet you got change in two thousand and fourteen i don't think anybody has told us the manner in which it got changed because presumably doesn't matter to the outcome of this case but is there still the same type of regime after two thousand and fourteen or did they about did they abandon this method per gallon tax but your challenge and i want to well yes but for on a different ground ok this end and the result so i do your theory then unless you just set up the sales tax at some really really low number compared to the per gallon tax the state will always run the risk of violating the act under the old regime because we know the rate can the the exceed on the railroads based on the price of fuel and then we're back and then we're back to the remedy though is your you're not arguing that the tax is completely come via light is and all of the money should be across the entire time of its existence well we're only talking about the past you years anyway and going forward why wouldn't you get back what you paid that exceeded what the truckers because they're not the same taxes just hadn't had time to  explain that they're not the same taxes they're taxes on different events they're taxes based on an on on a on a totally different premise the purchase price vs the way the trucks are taxed not on what buy into the sea but what they what they use in tennessee they're just completely different taxes and if i could can answer just trances question about this because i have one more about to be in tennessee and be in tennessee because it wasn't a sales injunction hearing without any record and the court said the panel said well now we're talking about the same time and if we're talking about the same tax we're not going to look at how the proceeds respond they were not doing a roughly equivalent  analysis then a reason to talk about that they cite c s sixty two but only for the proposition of the comparison class which is not an issue here so judge stretch that case that that analysis doesn't apply here because the court we think  we'll move on the farm thank you i thank the pan