### IN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE January 30, 2001 Session IN THE MATTER OF: ALL ASSESSMENTS, REVIEW OF AD VALOREM ASSESSMENTS OF PUBLIC UTILI

TY COMPANI

ES FOR TAX Y

EAR 1999 IN THE MATTER OF: ALL ASSESSMENTS, REVIEW OF AD VALOREM ASSESSMENTS OF PUBLIC UTILI

TY COMPANI

ES FOR TAX Y

EAR 2000
Appeal from the Te

nnessee State Boar

d of Equalization No. None

Nos. M2000-00399-COA-R12-CV & M2000-03117-COA-R12-CV - Filed Sept ember 14, 2001

In these consolidated cases, a consortium of counties and cities appeals the actions of the Tennessee StateBoard of Equalization in reducing public utilit y assessmen ts by fiftee

n per cent. Acknowledgingthat all sub-constitutional issues involved in the cases have been foreclosed by

the decision of the Tennessee Supreme Court in In Re: All Assessments 1998 , No. M1998-00243- SCR11- CV, 2000 WL 1710174 (Tenn. Nov. 16, 2000), Appellants challenge the constitutiona lit y o f Tennessee Code Annotated section 67-5-903(f) and section 67-5-1302(b)(1). We hold both sections of the Code to be constitutional and affirm the decision of the T ennessee State Board of Equalization. Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Tennessee State Board of Equalization Affirme

d

W ILLI AM B. C AIN , J., delivered the opinion of the court, in which B EN H. C ANTRELL , P.J., M.S. and W ILLI AM C. K OCH , J R ., J., joined.

Jean Dyer Harrison, Nashville, Tennessee, for the appellants, Te nnessee County Government and Tennessee City

Governments. Jeffrey Dean Moseley, F

ranklin, Tennessee, for the appellant, Williamson County, Tennessee.

Robert B. Rolwing and Donnie E. Wil son , Me mph is, Ten nes see, for the app ell ant , Sh elb y Cou nty, Tennessee.-2-

James Charles, Paul D. Krivacka, Jennifer Clinard Surber and Karl Dean, Nashville, Tennessee, for the app ell ant , Me tro pol ita n Go vern men t of Nas hvi lle and Dav ids on C oun ty. Jeffrey De

an Moseley,

Franklin, Tenne

ssee, for the app

ellant, Williamson Cou

nty Governm

ent. Robert B. Rolwing, Memphis, Tenness ee, for the appe

llant, Shelby

County Gover

nment.
Paul Stuart Parker and Kemper Harlan Dodson, III , Nashville, Tennessee, fo r the appellee, ANR Pipeline.

Everett B. Gibson, Memphis, Tennessee, for the appellees, Colonia l Pipeline Co., MCI Telecommunicati ons, MCI Metro Access Transmission Services, Inc., and Norfolk Southern Railway Co.

Thomas Arthur Scott and Suza nne S. Cook, Kingsport, Tennessee, for the appellees, Kingsport Power Co. and Appalachian Power Co. Brigid M. Carpenter, Nashville, Tennessee, James W. McBride, Was hington, D.C., and Stephen Door Goodwin, Memp

his, Tennessee, f

or the appellee,

Coalition of Public U

tilities.

Paul G. Summers, Attorne y General & Reporter; and

Jimmy G. Creec

y, Chief Spec

ial Counsel, Nashville, Tennessee, for the appellee, Tennessee State Board of Equalization. Richard W. Bell, Atlanta, Georgia, for the appellee, BellSouth Corporation.

OPINION

These consolidated cases are “sister” cases to:

1. In the Matter of: All As sessm ents, No. M1998-00243-SC-R11-CV, Review of Ad Valorem Assessments of Public Utility Companies for Tax Year 1998.

2. Williamson County v. Tennessee State Board of Equalization , No. M2000-03178- COA-R3-CV

(review of all commercial and industrial tan giblepersonal proper ty assessments, tax years 1998 and 1999).

Casenumber M19 98-00243- SC-R11-C V, rega rdi ng Ad Valorem Assessments of Publi c Utility Companies for the tax year 1998, has already been decided by the Supreme C o urt of Tennessee on November

16, 2000 in an opinion not yet reported. In Re All Assessments 1998 , No. M1998-00243 -SC-R11-CV, 2000 WL 1710174 (Tenn. Nov. 16, 2000 ). Case number M2000-03178- COA-R3-CV, involving commercial and industrial tangible personal property asse ssments for tax years1998 and 1999, decided by the Chancery Court of Davidson Cou nty, has been briefed and-3-

argued in this Court and is now under advisement. Williamson County v. Tenne ssee State Bd. of Equalization , No. M2000-03178-COA-R3-CV (Tenn. Ct. App. filed Oct. 26, 2000)

While the opinion of this Court relative to public utility assessments for tax year 1998 was reversed by the supreme court in In R e All Assess ments 1998 , the opini on, author ed by Judge Craw ford f

or this Court on August 20, 1999, contains an accurate and useful overview of taxing procedures whic

h is helpful in the c

onsideration of th

ese consolidated

cases. The authority

to tax property

is estab lish ed by Art icle II, Section 28 of the Tennessee Constitution. For purposes of taxation, A rticl e II, Section 28 classifies all property int o thre e cl ass es: real pro pert y, tangible personal proper

ty, and int angi ble pers ona l pr ope rty. 1 As pertinent to the case before us, Article II, Section 28 further provides: Tangible Personal Property

shall be cla

ssifi ed into three (3) subcla

ssifications and a

ssessed as follows : (a) Public Utility P

roperty, to

be assessed

at fifty-five (55%) percent of its value; (b) Industrial and Commercial Property, to b e assessed at thirty (30%) percent of its value; and (c) All other Tangible Personal Pro p erty, to be assessed at five (5%) percent of its value. . . .

* * *

The ratio of assessment to value o f property in each class or subclass shall be equal and uniform throughout

the State, the value and def init ion of property in each class or subclass to be ascertained in such manner as t

he Legi slature shall direct. Each respective tax ing au thority shall apply the same tax rate to all property within its jurisdiction.

The procedure for

valuing and asse

ss ing pro perty for tax purposes is provided in T.C.A. § 67-5-101 et se q. (1998) . Most commercial , industrial, and residential property is valued and assessedlocally by

county asse

ssors. T.C.A. §§ 67-5-102, 103. Assessments

of personal prop

erty are madeannually primarily on the basis of information supplied by the property

owner in schedules filed withthe assessor. T.C.A. § § 67- 5-902, 903. Under T.C.A. § 67-5- 903(f), fixed rates of allowable depreciation costs are established for valuing the nine categories of locally assessed business and industrial pers ona l pr ope rty. 2-4- With regard to public utility and common carrier

property, the pro perty is centrally assessed annually by the comptroller of th e tre asu ry. T.C.A. § 67-5-1301. 3 The comptroller m u st co mplete the assessments

and se nd notice to the pro perty owne

r by the fir

st Monday in August. T.C.A. § 67-5-1327(a). Thereafter, the property owner or any taxing

authority ma

y file excep

tions to the assessme

nt, andthe assessments will be acted upon by the comptroller

within the time prescribed. T.C.A. § 67-5-1327(b) . By the fir st Monday in September, the co

mptroller must

file the assessments with th e State Board of Equalization. The comptroller is also required to notify any person or entity that filed an exception of the action take n o n the exception. Withinthe time prescribed, such person or en

tity may file further exceptions with the Board. T.C.A. § 67-5-1327(c).

The Board then revi

ews the assessm

en ts as authorized and directed by the provisions of T.C.A. § 67-5-13 2 8. On or before the third Mon day in October, the Board is required to certify to the comptroller

of the treasury “the valuation fixed by it upon ea ch property assessed.” T.C.A. § 67-5-1329. The comptro ll er is then required to certify t

o the counties and

municipalities t

he valu ation from the Board which is the am ount to be taxed in the respective taxing jurisdictions. T.C.A. § 67-5-1331.

_____________________

1 Real property

is div ided into four subclassificatio ns with varying assessment perce n tages. As for intangible property, the legislatureis given the autho rity to estab

lish cla ssi fications and assessment percentages for such.

2 T.C.A. § 67-5-903 is not applicable to public utilities since public utility perso

na l property is valued and assessed by the comptroller of the treasury. T.C.A. §§ 67-5-1301, 1303, 1314.

3 The property

owner is require

d to annually fi

le “under oath, schedu les an d statements giving [information as prescribed in statute] concerning all properties owned or leasedby such owners.” T.C.A. § 67-5-1303. The comptroller make s the assessment a

s provided in T.C.A. § 67-5-1302.
In Re All Assessments 1998 ; No. 01A01-9812-BC-00642, 1999 WL 632824, at * 1-2 (Tenn. Ct. App. Aug. 20, 1999), rev’d , 2000 WL 1710174 (Tenn. Nov. 16, 2000).

These consolidated cases and the two “sister” casesare sointerrelat ed that prop er chronolo gy is essential. The first

of t he ca ses inv olv es P ubl ic U til ity Ad Valorem Assessments for the Tax Year1 The “admi nistr ative pr oceeding” r

eferred t o was a declaratory

proceeding

pursuant

to Title 67 of Tennessee Code Annotated to determine whether or not the depreciation schedules forming a part of Tennesse e Code Annotated section 67-5- 903 resulted in l ocally asse ssed commercial and industrial personal property beingvalued at less than 100% of its full market value . This proc eeding wa s requir ed in a settl ement agreement ent ered into between BellSou th Teleco mmunica tions, Inc., the M etropolitan Govern ment of N ashville and D avidson C ounty , the C ity of Chattanooga, Hamilton County, Shelby

County and Williamson Count y, along wi

th the Comptroll

er of the Trea

sury of Tennessee, the Tennessee Municipal League and the Tennessee County Services Association. This settl ement agreement was enter

ed into i n February

1998.

-5- 1998, which was deci ded by the Court of Appeals on August 20, 1999 with the judgment of the Courtof Appeals being reversed by the Supreme Court on November 16, 2000. S ee In Re A ll Assessments , 2000 WL 1710174. That case involved j udicial review, under Tennessee Code Annotatedsection 4-5-322 and Tennessee Rule of Appellate Procedure 12(I), of an October 15, 1998 order of the Tenne ssee State

Board of Equalization overruling exceptions by the Metropolitan Government

of Nashville and D

avidson County

, Williamson County

and Shelby Co

unty. This

order provided in part:

With regard to equalization, the Board finds that settleme

nts of past claims oblige the Board to grant the 15% personalty equalization adjustment recognized for tax year 1997, to most public utility taxpayers for 1998. The remaining minority of taxpayers,

not directly

party to the

se settlements,

should be extended the same relief for the equitable considerations we cited in 1997. This adjustment is mandated under the settlements so long as there are no legislative amendments

to the local busine

ss personalty

depreciation statute (Tenn. Code Ann. § 67- 5- 903), or judicial or administrative findings regarding the statutes that are inconsis

tent with the ration

ale of the adjus tment. Although a n administrative pr

oceeding is pen

ding which will consider the effects

of § 67-5-90 3, dispos ition is n ot near enou gh to warrant a lengthy delay in ce

rtifying th

e 1998 public utility

assessments. 1

In Re All Assessments 1998 , 1999 WL 632824, at * 3.

The Courtof Appeals, in its August 20, 1999 opinion, In Re All Assessme nts 1998 , reversed the October 15, 1998 Board of Equalization Order allowing a 1 5% reduction in the valuations of public utility prope

rty. The co

urt held in part: “We

simply find no

authorization for t

he Board to reduce the valuation of taxable property below the fair market value of the property absent legislative authorization to do so. We have found no legislative authorization.” Id. at * 9.

In the argument of the consolidated casesat bar on January 30, 2001, all parties agreed that the In Re All Assessments 1998 opinion of the Supreme Court on November 16, 2000 was dispositive of all issues presen

ted in these cases except for questions involving the constitutionality of section 67-5-903 and section 67-5-1302(b) of the Tennessee Code.-6-

It suf fic es t o sa y that the Supreme Court, in In Re All Assessments 1998 , assumed the constitutionality

of both Tennessee Code Annotated sections 67-5-903 and 67-5

- 1302(b) and believedthat

the statutory

scheme evidenc

ed by Title 67

Chapter 5 of the Cod

e provided author

ity to the TennesseeBoard of Equalization to take the action evidenced by its October 15, 1998 order. Said the Supreme

Court: “The Tennessee Board of Equalization is authorized to reduce (or increase) the appraised (and

therefore cor

responding asse

ssed) value of ce

ntrally-as sesse d publ ic utility tangible personal proper

ty as part of the equalization process, the purpose of which is to equalize the ratio of the appraised value to fair market value of public utility property in any particular count

y withthe correspondin

g ratio for indus

trial and comme

rcial p roperty in that county.” In Re All Assessments 1998 , 2000 WL 1710174, at * 7.

In the wake of this ba

ckground, we a

ddress t he constitutional issues presented in the consolidated cases at bar.

Interv ening between the October 15, 1998 order of the Board of Equalization,whic h providedthe basis for the a ppeal of the 1998 Pu

blic Utility A

ssessments resulti

ng in the Supreme Court’s In Re All Assessments 1998 decision, and the order of the Board of Equalizationof February 10, 2000 was th e November 3 , 1999 Initia l Order of Ad ministrat ive Law Judge William B. Hubbard issued in the “administrative proceeding” pending at the time of the October 15, 1998 order of the Board of Equalization in the tax year 1998 Public Utility Assessment case. Judge Hubbard’s order provided in part:

This is a declaratory proceeding convene d by the Board of Equalization ( B oard) for the purpose o f determining wh

ether the applic

ation of certain depreciationschedules found in T.C.A. § 67-5-903 results in undervaluing property for the purpose of ad valorem taxes. The schedules addressed in this proceeding are Group 1, Furniture, Fi

xtures, General E

quipment and All Oth

er Property

Not Listed in Another Group; and Group 5, Manufacturing Machinery . The statute provides for these two Groups to be de

preciated over

eight y ears with a residual of 20% of original cost.

. . . . “Value” is defined as “. . . the evidences of its sound, intrinsi c and immediate value, for p urposes of sale between a willing seller and a willing buye r without consideration of speculative values. . . .” T.C.A. § 67-5-601(a).

Tennessee appraises property on a mass appraisal basis. The general ly accepted methodology for a mass appraisal is to obtain the original cost; apply a trend factor to the original cost, thus arriving at “current cost new;” and then depreciate the current cost new by a factor which embrace s all forms of normal obsolescence.

. . . .2 While the 1998 Public Utility Assessment’s case was before t he Supreme Court, the counties and cities sought, pursuant to Tennessee Rule of Appellate Procedure 14, to have the Supreme Court consider the November 3, 1999 initia

l order of Judge Hubbard aspost-judgment f acts. By order of

December 27, 1999, the Supreme Court re fused to do so ho lding:

The only i ssue cons

idered by t

he Court of

Appeals was

whether the Tenness

ee State Board o f Equalizat

ion erred and /or exceed ed its authority wh en it granted a 15% reduction in the assessed value of certain centra lly-assessed pu blic utility tangible personal p roperty. T he only issue b efore this Court is whether the C ourt of Ap peals erred in determining the State Boar d of Equ alization exc eeded its authority.

. . . Although the Court of Appeals mentioned the then on-going adminis trative hearing, the Court of Appeals did not base its decis

ion on the heari

ng. The Initial Order does not affect the positions o f the parties or su bject matter of the dispute currently befo re this Court. In Re All Assessment

s 1998 , No. M1998-00243-SC-R11-CV (Tenn. Dec. 27,1999) (Order denying moti on to consider post-judgm ent facts.)
-7-

De termining value by mas s appraisal produ ces an inexact re

sult. This i s particularly

exacerbated where, as in Tennessee, prop erty ha ving wide variances between their useful lives are grouped together.

. . . . The admini strative j udge finds that the application of the Tennessee st

atute results in the under valuation of Group 1 and Group 5 properties. Grou p 1 should have a dep recia

tion schedule of 10 years and Group 5 should have a depreciation schedule of 11 years. Group 1 is undervalued by 11.6% and Group 5 is undervalued by 16.6%. 2

In Re All Assessments 1998 , (Tenn. State Bd. of Equ. Nov. 3, 1999) (Initial Order). Following final review of assessments pursuant to Tennessee Code Annotated section 67-5- 1328 for the ta

x year 1999, the Tennessee State Board of Equalization issued its “Order on Objections to Tangible Pers onal Property

Equalization.” This

order, entered on

February 10, 2000, is the order

from whichdirect appeal was taken to this Court pursuant to Tennessee Code Annotated section 4-5-322 and Tenn essee Rule

of Appel late Procedure 12(I). This February 10, 2000 order provided:

In this matter the Board is reviewing objections filed by Tennessee counties to certain equalization actions proposed with respect to 1999 assessments of public utility companies. These

are the same actions taken by the Board for tax y ears 1997
a nd 1998, to wit, a 15% reduction in the tangible personal property portion of t h e utility assessmen ts, to equalize those assessments to the p

erceived level

of locally assessed commercial and

industrial tangible personal property. The latter prope rty is valued by a mass appraisal method that employs stand ard u seful lives for depreciationset forth in Tenn. Code A nn. § 67-5-903, and it is a lleged that this met hod ten ds t o un derv alu e lo cal ly as ses sed pers ona lty.-8- The Board initially

postponed equaliza

tion of utility

p ersonalty for 1999 pending a decision by its administrative judge in declaratory proceeding s intende d to measure the eff

ects of § 67-5-90

3. After length

y hearing s, the judge concluded the statute un dervalues local personalty in reportable Groups 1 and 5 by 11.1% a n d 16.6% respectively, and we have concurred in hi s findings by separate order. The affected counties have re

newed their obje

ctions, and asser

t the Board should appropriately

increase local assessments rather than reduce theutility asses sments, under the authority of various Tennessee statutes and Carroll v. Alsup , 107 T enn. 257, 64 S.W. 193 (1901).
Carroll v. Alsup involved a taxpayer who conceded his property was assessed at less than its marke

t value but who none

theless sought a reduct

ion to the levels of assessment

demonstrated for

other properties or classes of property. The Tennessee Supreme Court r ejected this arg ument, noting the t

axpayer co

uld properly

seek to have othe r as sessments raised but had no right to be underappraised to the level of others. Carroll v. Alsup remains the law o f this state, but exceptions have been recognized. First, federal courts hav e rec ognized a constitutional equal protection claim by public util

ity companies that loc

al assessment pra

ctices which disc

riminate against them in taxation can b e redressed by

reducing the utility as sessments. Further, th e le gislature has since Carroll v. Alsup authorized equalization adjustments

to mitigate the effects of

different methods of

assessment applic

able to centrally assessed public

utilities versus loc

ally assessed property (Tenn. Code Ann. § 67-5-1302) or real property versus tangible persona l property (Tenn. Code Ann. § 67-5-1509). The statutes cited by the counties, on the ot h er hand, refer

to specific
a uthorization to the Board to change individual assessments to conform to the fu l l value standard.

The valuation of

locally assessed personal property has been established by the legislature. The State Board cannot unilaterally defy a lawfully enacted statute. To the contrar

y, it must “effect the assessment of property in accordance with the constitution of Tennessee and the laws of this state.” Tenn. Code Ann. § 67-5

- 1509(a). The law specific ally requires adjustme

nt of public

utility assessments to the level of property

in each jurisdiction, recognizing that periodic revaluationsof nonutility property may not alway

s result in the full value assessments required by law. Tenn. Code Ann. § 67-5-1302(b).

In his ruling rega

rdin g the ef

fects of § 67-5-903 on locally assessed pers ona lty, Judge Hubbard made specific findings only for Groups 1 and 5. The le vel of underassessment for the largest cat egor y, man ufacturing equipment (Group 5), was found to be 16.6%, but the average f or Groups 1 and 5 would be less since the
sm aller Group 1 was undervalued by only 11.1% . The average may or may not be affected by other g

roups, but in any

event these

findings clearly afford a basis for equalization o f the public ut ility persona lty assessme

nts at a level comme

nsurate with-9-

our actions in 1997 and 1998. The utility taxpayers have sought no greater reduction, andwe have no basis to

grant less. It is therefore ORDERED, that the objections of the counties and cities are overruled, and the public ut ility assessments will be equalized by a reduction of 15% in the tangible personal property portion of any nonforced assessments.

In Re All Assessments 1999 (Tenn. State Bd. of Equ. F eb. 10, 2000) (Or

der on Objections

to Tangible Personal Property Equalization).

The con sortiu m of counties and c ities, having pro

perly appe

aled the 1999 Public

Utility Assessments

in number M2000-00399-COA-R12-CV, briefed, argued and submitted the case to this Courton January 30, 2001. During the course of these proceeding s, the Tennesse e Board of Equalization entered an order in all respects conforming to the February 10, 2000 order, wi

th such order reflecting pub

lic utility ass

essments for the ta

x year 2000. T

his c ase, upon appeal, was assigned number M2000-03117-COA-R12-CV. On April 5, 2001, the

following order

was entered by

this Court, to-wit: Upon the motions of the Te nnessee Sta

te Boardof Equalization and the consortiumof counties and c ities and pursuant

to Tenn. R. App. P. 16(

b), this appeal is hereby consolidated with App. No. M2000-00399-COA-R 12 -CV. The consolidatedappeal shall be decided upon the briefs and argument already presented. Should any appellee

deem it necessary to present additional argument related to the 2000 tax year ca

se , the y may f ile a su ppl eme nta l br iefwit hin thi rty ( 30) days following the entry of this order.

In Re All Assessments 2000 , No. M2000 -03117-COA-R12-CV (Tenn. Ct. App. April 5, 2001) (consolidation order).

THE PROBLEM

These cases involve centrally assessed public utility tang ible p ersonal propert

y. Assessme

nts of real property are not involved.

The pro ble m ha s de ep ro ots in T enn ess ee hi sto ry.
Prior to the 1973 amendme

nts thereto, Artic

le II, Section 28 of the Constitution of Tennessee provided: “All pr operty sh all be taxed according to its value, that value to be ascertained in such
manner as the Legislature shall direct, so that taxesshall be equal and uniform throughout the State. No one species of property from which a tax may be collected shall be taxed higher than any other species of property of the same value, ....” Louisville and Nashville R.R. Co. v. Public Serv. Comm’n of Tenn. , 249 F.Supp. 894, 904-05 (M.D. Tenn. 1966), aff’d, 389 F.2d 247 (6th C ir. 19 68) (“ L & N I”).3 Public Act s of 1995 Chap. 305, Sec. 124.

-10- His tor ica lly, publi c utility properties were centrally assessed by the Public Service Commission. (Upon the abolition of the Public Service Commi

ssion, this duty

to assess was vested in the comptroller of

the treasury). 3 All other propert y, including

commercial and in

dustrial tangible personal property, was assessed by c ounty assessors and local officials. The co unt y tax rate in a givenjurisdiction would be applied t o all properties assessed either by the Public Service Commission or by the loc al assessors. I

f both the Public Ser

vic e Com mission and the coun ty assessor followed the constitutional provision in effect prior t o the 19 73 amendments and the statutes implementing it, no problem would exist, as all properties would be assessed at 100% of actual cash value and the uniform tax rate would be applied to all property. Historically , however, as late as 1966, county and local assessors refused to assess local property at any thing approaching its actual cash value. In fact, on an average, such proper t ies were assessed at approximately 20% of actual cash value. L & N I

, 249 F.Supp. at 898.

At the same time, ther

e was serious que

stion about wheth

er or not the Public Service Commission valuedutility properties at 100% of actual cash value. It was, however, clea r in 1966 that the equalized Public

Se rvice Com mission assessments were at least 55- 65% of actual ca sh value. Id. at 898. Thus, when t he fixed tax rate

was applied to the assessed values, it was also clear that public utilities wer

e paying t

h ree times th

e amount in taxes as was being paid by taxpayers locally assessed on an average 20% of ac tual cash value.

Tennessee law provided no reme dy to the public utilities t

o equalize this dispa

rity becau se of the decision of the Tennessee Supreme Court in Carroll v. Alsup. That case held that no taxpayer could challenge the

existing assessm

ents scheme

unless that plaintiff could prove that his own individual property was assessed at greater than 1 00% of actual ca sh value. Thus, pub

lic utilities,
as sessedat 55-65% of actu al cash value, c

ould not be heard t

o complain about loc

all y assesse

d properties being valued at an average of 20% of actual cash value

since such utilities could not prove that the assessments of their own property exceeded 100% of actual cash va lue.
Thus, stymied in state court, L & N Railroad filed suit in the United States District Court for the Middle District of Tennessee asserting successfully that the long standing policy of the Public Servic e Commissi on assessi ng railroad p roperty withi n the State of Tennesse e at a much hi gh e r percentage of actual cash value than local assessors wer e a ssessing local property resulted in a violation of the Equal Protection C lause of the Fourteenth Amendment to the Constitution of the United States. In a very scholarly opinion, United States District Judge William E. Miller sustained the equal protection claim of L & N Railroad. At the conclusion of the opinion, Judge Mille

r states: “Realizing the possibility that a ruling in

its favor could have serious disruptive effects throughout the state, the plaintiff, in ope n court, o ffered to accept the assessment of $74,865,850.00, as determinedby

the State Board of Equalization, less a reduction of 15%, for the current tax bie

nnium, withoutprejudice to its ri ghts as to future

tax years, a

nd without prejudic

e to its insistence that the discrimination against it is represented by a much higher perc entage.” L & N I

, 294 F.Supp. at 904.-11-

The decision of

Judge Miller was affirmed by the Sixth Circuit Court of Ap peals, 389 F.2d 24

7 (6th Cir. 1968).

In the wake of L & N I

, Article II, Section

28 of the Constitution of Tennessee was amended effective January 1, 1973 to provide, as the Tennessee Supreme Court rec ently observed:

In accordance w

ith the following p

rovisions, all p roperty re al, personal or mixed shall be subject to taxation, . . .

The ratio of assessment t

o value of property in each class or subclass shall be equal and uniform throughou t the State, the value and definition of proper

ty in each class or sub

class to be ascerta

ined in such manner

as the Legislature shall direct . Each respective taxing author ity shall apply t

he same tax rate to a

ll property

within it s jurisdiction. (emphasis added).

This amendment to Artic le II, § 28 also div ided prope rty “for purposes of taxation,” into “real property, tangible personal property and intangible personal property.”Tangible perso nal property

was further divid

ed intosubclassifications as follows:

Ta ngible Personal Property shall be divided into three (3) subclassificatio

ns and assessed a

s follows: (a) Public Utility Property, to be assessed at fifty -five (55%) percent of its value; (b) Indu str ial and Com mer cia l Pr ope rty, to be assessed at thirty (30%) percent of its value; and (c) All other Tangib

le Personal Property, to be assessed at five (5%) percent of its value; provided, however , that the Legisla ture shall exemptSeven Thousand Five Hundred ( $7 ,500) Dollars worth of such Tangible Person

al Property

which sh all cover personal household

goods and furnishings, wearing apparel and other such tangible property in the hands of a taxpay er.
In Re All Assessme

nts 1998 , 2000 WL 1710174, at * 2-3.

In construing the 1973 amendments to Article II, Section 28 of the Tennessee Constitution shortly after they beca

me effective, the Tennessee Supreme Court said: The history o

f real property

taxation in this state, and the amendment itself, leaves no doubt wha tever as to the purpose and objective of Article II , Section 28. As shown by the proof

in Louisville & Nashville R.R. v. Public Service Commission , D.C., 249 F.Supp. 894 (1966), Affirm’d 389 F.2d 247 (6 th Cir. 1968), the railroad’s-12-

property was being assessed in the counties of Tennessee in which it operated at not less than 55% Of (sic) actual cash value, while other real property was being assessed at a statewide ave

rage of not more

than 30%. In f

act, according to

proof in that case, properties other than utilities were being assessed in some counties as low as 7%, and in 22 counties the ass

essment was belo

w 15%. The District Court a nd the Sixth Circuit held that practice to be in violation of theequal protection clause of the 14 th Amendment.

In S outhern Railway Company v. Clement , 57 Tenn. App. 54, 415 S.W.2 d 146 (1967), the Chancellor and t he Court of Appeals made it clear that in its preamendment

status Article II, Section 28 provided no basis for the assessment of any species of property

at less than its act

ual cash value. This Court

denied certiora

ri in May, 1967. It is a matter of common knowledge that these two cases and the report of the Tax Study Commission created by legislative act in 1966 precipitated the amendment

of Article II, Section 28, which was accomplished by the

process known as Question 3.

The purpose and objective of the Q uestio n 3 amendment is to tax incomeproducing property at a higher rate than owner

-occupied resid

ences and farms

. That such classification is constitutiona lly per missible is beyond question. The constitutional and statutory scheme that has resulted from the Question 3 amendment has b rough t about a state of u niformity an

d equality of

assessment of re

al property in Tennessee that while not perfect can conservatively be described as vastly superior to its predeces s or system in a pproaching the

objective of equa

lity and unif

ormity throughout

the state within the

classifications p

rovided. Perfec

tion in the taxation of real property is neither required nor attainable. Snow v. City of Memp

his , 527 S.W.2d 55, 65-66 (Tenn. 1975). Despi te the 1975 optimism of the Tennessee Supreme Court, the problem of une qua l assessments

was not resolved by the 1973 amen dments to Article II, Section 28 of the Tennessee Constitution.

In 1978, L & N Rai

lroad Co mpany, along with five other railroads, filed suit again in the United States District Court for the Middle District of Tennessee on equal protection allegations relative to 1977 asses sments. Again, th e District Court fo

und such a dispari

ty between

locally assessedproperties and utility properties that the utilities were entitled to have thei r assess ments reduced in order to more nearly conform those assessments to local asse ssments.
Honorable

William R. Snodgrass, the Comptroller of the Treasury of Tennessee from 1955 until his retirement in 1998, described the practical problems inherent in trying to g et counties to do what the law required

them to do noting that counties, which do not attempt to comply with the law,-13-

benefit because the low levelof appraisal re quires higher ta

x rates applicable

to utility valu

es. Said the comptroller:

Somehow we’ve got to do something that makes it desirable for counties to do what the law requires of them to do.

. . . In the past those who don’t make the effort gain. Those who do make the effort are penalized, because what they do by having

a low level of assessment, they have a high tax rate, and that appl ies to utility valu

es. Those that make the change and try to upda te voluntarily automatically lose in the situation as it rela

tes to local taxpay

ers as it relates

to the utilities.

That being the case, we have been continuing a situation that mak

es it politically

difficult for the

local officials a

nd in fact it makes i

t evidently a

lmost impossible.
Louisville and Nashville R.R. Co. v. Public Serv. Comm’n of Ten n. , 493 F .Supp. 162, 167 (M.D. Tenn. 1978) aff’d ., 631 F.2d 426 (6th Cir. 1980), cert. d enied , 450 U.S . 959 (1981) (“L & N II ”). Once again, the decision of the United States District Court for the Middle District of Tennessee was affirmed by the Sixth Circuit Court of Appeals.
Thus, the core problem predating the 1973 amendment s to Arti cle II, Section 28 of the Constitution of Tennessee continued unabated thereafter, with the equal pro tection violation observed by Judge William E. Miller still in place.

Since the Fourteenth A

mendment clearly

prohibits unequal t

reatment within

a class, the substantially

and systematically higher a ssessment percentages for railroad and utility property, a

s opposed to other p

roperties,is a violation of the equal protection clause of the Fourteen

th Amendment,

and entitles the plaintiff

to relief. Sioux City Bridge Co. v. Dakota County , 260 U.S. 44 1, 44 6, 43 S.Ct. 190, 192, 67 L.Ed. 340 (1923):

This court holds that the right of the taxpayer whose property alone is taxed at 100 per cent. of

its true va lue is to ha ve his asses sment redu ced to the pe rcentage of that value at which others are taxed even though this is a departure from the requirement

of the statute. The conclusionis based on the principle that where it is imposs ible to secure both the standard of the true value, and the uniformity and equality required by

law, the latter r

equirement is to be

preferred as t

he just a nd ultimate purpose of the law.

In Sunday Lake Iron Co

. v. Township

of Wakefield

, 247 U.S. 350, 352-353, 38 S.Ct. 495, 62 L.Ed. 1154 (1918), the Court ruled:

The purpose of

the equal protectionclause of the Fo urteenth Amendme

nt is to secure every

person within the state’s jurisdiction against intentional and arbitrary-14-

discrimination, whether

occasioned by express terms of a statute or by its improper execution though duly

constituted age

nts. And it must be re

garded as se

ttled that intentional systematic undervaluation by state officia ls of other

taxable property

in the same class contravenes the constitutional right of one taxed upon the full value of h is p rop ert y.
L & N I , 249 F.Supp. at 902-903.

THE CONSTITUTIONALI TY OF TENNESSEE CODE ANNOTATED SECTION 67-5-903(f).

The attack onthe constitutionali ty of the app

lication of the spe

cificdepreciation schedules containedin Tennessee Code An notated section 67-5-903(f) to locally assessed tangible personal property must stand or fal l on the assertion by Appellants that Article II , Section 28 of the Constitution of

Tennessee, as it now reads subsequent to the 1973 amendments thereto, still requires that all property be assessed at 100% of its market value.

The statements by

Judge Miller in L & N I

that the TennesseeConstitution pre-1973 required all property to be assessed at 100% of actual value was corr ect, t hough unnecessary to the determination of the Fourteenth Am endment e qual protection issue which was the only issue that
was before the C ourt. T he observations by Judge Morton to the effect that the post-1973 amendm ents to Artic le II, Section 28 of the Tennessee Constitution still required property to be valued at 100% of

actual value we

re also unnecessary

to the determination of the equal protection issue, which was again the only issue before the feder al court in L & N II

. This truth is made clear by the opinion of Judge Harry Phillips on the appeal of Jud g e Morton’s 1978 opinion.

The term “value” in Article 2 § 28 prior to the amendment was defined by T.C.A. § 67-605, since re pealed, as a

c tual cash value. F

or the purposes of

post amendment defini

tion, T.C.A. s 67-606

provides:

67-606. Basis of valuation.- T he value of all property shall be ascertained

from the evidenc

es of its sound, intr

insic and immediate value, for purpose s of sale bet ween a willi ng seller a nd a willing buyer witho ut consideration of speculative values, and when appropriate

subject t o the p rovision of the Agricultural, Forest, and Open Space Land Act of 1976, codified in §§ 67-650-67-658.

The willing buyer/willing seller concept, if corr

ectly appli

ed, would result in valuation at full market val ue or fair marke

t value, in theory

an appraisal fig ure of 100 per cent of the property’s “sound, intrinsic and immediate value.”-15- However, for the purposes of an equal protectionattack, whether all property is appraised

at 100 per cent or 50 per cent of the full worth is not material. The issue on this appeal is quality of the standard of assessment among the properties

. As amended in 19 72, Art. 2 § 28 classifies properties for assessment purposes. In all cases,

the assessment fo

r each classific

ation/subclassifi

cation is a percentage of “its value.” Tennessee has chosen to classify properties for assessment purposes, not valu

ation purposes.

L& N Railroad Co. v. Public Service Comm’n , 631 F.2d 426, 429 (6th Cir. 1980) (emphasis added).

In L & N I , jurisdiction was asserted by the plaintiffs under both diversity of citizenship and the Equal Protection Clause of the Fourteenth Amendment. The federal court accepted jurisdiction under the Equal Protection Clause but, as to the diversity of citizenship allegation, observed: [I]t is not necessary to determine whether or not relief

could be grante

d if diversity
were the sole basis of

jurisdiction. The Court notes, however, that such relief might wellbe barred by the holding in Erie R. Co. v. Tompkins , 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 ( 1938) and subsequ ent cases.

. . . . Cases like * * * are obsole te insofar as the

y are base d on a view of diver

sity jurisdiction which came to an end with Erie Railroad Co. v. Tompkins , 304 U.S. 64 (58 S.Ct. 817). That decision drastically limited the power of federal district courts to entertain suits

in diversity cases that

could not be broug

ht in the respectiv

e State courts or were barre

d by defens

es controlling in

the State courts. (pp. 191-192, 67 S.Ct. p. 662).

. . . It is admitted that

if the plaintiff br

ought suit in a Ten

nessee state cou

rt, relief would be barred by the Tennessee rule that a taxpay

er cannot sue to h

ave his
own taxes reduced; he may sue only to have the taxes of his neighbors increased, and then, onl y if he can f

irst show that his pr

operty is as sessed in excess of actual cash value. Se e e.g., Carrol l v. Alsup , 107 Tenn. 257, 284, 64 S.W. 193, 200 (1901); McCord v. Nas hvil le.Chattanooga & St. L. Ry. , 187 Tenn. 277, 213 S.W.2d 196 (1948); Mayor and Aldermen of the Town of Morristown v. Burke , 20 7 Tenn. 180, 338 S.W.2d 593 (1960); and Biltmore Hotel Court v. City of Berry Hil

l, Tenn. , 390 S.W.2d 223 (1965). A citizen of Tenne ssee, then, could

not win this action in

a state court under existing sta

te law, and he could not, because of lack of diversity, bring the action in a

federal court. No sufficient reason appears why a non-citizen of th

is state should be able to invoke diversity jurisdiction in a federal court to reach a resul

t on a state question which state citizens could not reach.
L & N I, 249 F.Supp. at 896.-16-

L& N II asserted feder

al jurisdiction only

on the basis of the E

qual Protection Cla

use of the Fourteenth

Amendment to the Constitution of the United State s. The holding in this

case that articl

e II, sectio n 28, post 1 973 amendments, still requires property to be valued, under the Tennessee Constitution, at 100% of market value is reduced

to obiter dicta by

the holding of the

Sixth Circuit Courtof Appeals that “for the purposes of equal protection attack, whether all property is appraised at 100 per cent or 50

per cent of the f

ull worth is not mater

ial. The issue on this ap

peal is quality of the standard of assessment among the properties .” L & N II , 631 F.2d at 429 (emphasis added).

No federal questions other than equal protection were involved in either the L & N I or L & N II. Such being the case, Tennessee courts are not bound by the obiter dicta of these federal cases. A state court is not bound to follow any federal court’s decision construing the state constitution. Glenn v. Field Packing Co. , 290 U.S. 177 (1933) ; Quality Oil Co. v. E.I. Du Pont Nemours & Co. , 322 P.2d 731 (Kan. 1958).

The vitality of th

is b edr ock of federalism was reaffirmed by a unanimous United States Supreme Court in 1997.

We can e asi ly d isp ense with petitione rs’ first content

ion that Idaho

must follow the federalconstruction of a “final decision.” Even if the Idaho and federal statutes contained identical language – and they do not – the interpretation of the Id a ho statute by th

e Idaho Supre

me Court would be bin

ding on federa

l courts. Neither this Court nor any other federal tribunal has any authority to place a construction on a state statute different from t

he one rendere

d by the hig

hest court of th e State. See, e.g., New York v. Ferber , 458 US 747, 767, 102 S Ct 3348, 3359

- 3360, 73 L.Ed.2d 1113

(1982); Exxon Corp. v. Department of Revenue of Wis ., 447 US 207, 226, n. 9, 100 S Ct 2109, 2121, n. 9, 65 L.Ed.2d 66 (19 80); Commissioner
v. Estate of Bosch , 387 US 456, 465, 87 S Ct. 1776, 17 82-1783, 18 L.Ed.2d 886 (1967). This proposition, fundamental to our system of federalism, is

applicable

to proceduralas well as substantive rules. See Wardius v. Oregon , 412 US 470, 477, 93 S Ct 2208, 2213, 37 L.Ed.2d 82 (1973).

Th e de finition of the term “final decision” that we adopted in Mitchell was an application of the “collateral order” doctrine first recognized in C ohen v. Beneficial

Industrial Loan Corp. , 337 US 541, 69 S Ct 1221, 93 L.Ed. 1528 (1949). In that case, as in a ll of our cases following it, we were construing the federal statutory language of 2

8 USC § 1291. While some States have adopted a similar “collateral order” exception whe n co nstruing their jurisdictional statutes, we have
never suggested that federal law compel led them to do so. Indeed, a number of States employ colla

tera l order doctrines that reject the limitations this Court has placed on § 1291. Idaho could, of c ourse, plac e the same constr uction on its Appellate Rule 11 (a)(1) as we have placed on § 1291. But that is clearly a choice for that court to make, not one that we have any authority to command.4 This last observati on is t he same observation made by Judge Harry Phillips for the Sixth Circuit Court of Appeals in L & N II . Said Judge Phi llips: “As amended in 1972, Art. 2, s 28 classifi es properties for assessment purposes: In all case s, the assessment for eac h classif ication/s ubclassif ication is a percentage of ‘ its value .’ Tennessee has chosen to cl

assify pr operties for assessment pur poses, not val

uation purposes. ” L & N II , 631 F.2d at 429.
-17- Johnson v. Fankell , 520 U.S. 911, 916, 117 S.Ct. 1800, 1803-04 (1997). A parallel rule holds that
no state court is bound, even in the interpretation of the United States Constitution, by the decisions of federal district and circuit courts.

While these decisions are persuasive authority, only the decisions of the United States Supreme Court on issues of federal law are bound to be followed. State v. McKay , 680 S.W.2d 447, 450 (Tenn. 1984); State v. Carruthers, 35 S.W.3d 516, 561 (T enn. 2000). Thus, we look to the appellate decisions of

the Tennessee courts to determine the meaning of Article II, Section 28 of the Constitution of Tennessee an d, more particularly, to determine whether or not the “full market value” constitutional requirement was abrogated by the 1973 amendments to article I I, se ction 28. The answer is in the affirmative.
First, in Marion County v. State Board of Eq uali zation , 710 S.W.2d 521 (Tenn. Ct. App. 1986), this Court he

ld:
[T]here are many different definitions of value. The constitution does not give any clue as to how value is to be determined; instead it leaves the method of determining value to the legislature. Article 2, § 28, Constitution of Tennessee. In T.C.A. 67-5- 601, the legislature said: (a) The value of all p

roperty shallbe ascertained from the evidence of its sound, intrinsic

and immediate value, for purposes of sale between
a willing seller and a willing buyer with out consideration of speculative values, and when appropriate subj ect tothe provisions of the Agricultural, Forest, and Open Space Land

Act of 1976, codified in Part 10 of this chapter.

. . . The State

in its brief in this

case contends that the definition in T.C.A. § 67-5-601 is of

‘fair market value.’ We are of the opinion that the correct name for this value which the legislature has described is irrelevant; what is important is the
samestandards be used in all cases in arriving at the value to be used for assessment purposes. Marion County , 710 S.W.2d at 523. 4

In 1987, the Supreme Court of Tennessee upheld, against constitutional attack, Chapter 337 of the Public Acts

of 1977 finding c

orrect the actio

n of the General

Assembly in de

claring that al

l-18-

tangible personal property, other than tangible property ownedby public utilities and industrial and commercial prop

erty, had n

o value for the pu

rposes of taxation.

Said the supreme c

ourt:
The Chancellor c oncluded that the General Assembly had acted within the authority granted to it in Art. 2, § 28, “. . . the value an

d definition of pro

perty in each class or s

ubclass to be ascertained in such manner as the Legislature shall direc t.”

We are of the opinion that this conclusion was correct. The G enera l Assembly concluded that no

appreciable re

venue could be ob

tained by an

attempt to tax household goods and chat tel s or oth er no nbu sin ess tan gibl e per son al p rop ert y. Such property often does not generate reven ue while industrial and commercial business property does so.

Given the fact that th

e 1972 a mendment exempted the entire amount of indi vidual “personal or family c hecking or savi ngs accounts” a

nd substantial amou

nts of tangible personal property, the attempt to l evy ad valo

rem taxes upon priva

te assets of in di viduals not used in commerce or industry proved futile and selfdefeating. In our opinion t he General Asse

mbly was not c

onstitutionally

required to att empt to administer and ma

intain an impracti

cal system o

f taxation, and it

wa s givenvery broa

d discretion with

respect to

determining the value and definition of property in each of the authorized classifications or subclassifications.

As p revi ously stated, the earlier constitutional mandate that all property be taxed was repealed

by this amend

ment. Instead

all property

was made subject

to the taxing power, but the amendmen t did not compel or mandate that the General Assembly exhaust thatpower. It gave general directions conce rning classifications andas sess ment ratios, and if the General Assembly exercised its taxing power through the use of

these classifications, the ratios of assessment to value were required to be used. The method of valuation and the determination of whether there
was any p ract ica l va lue for tax pur pos es w ere l eft to t he G ener al A sse mbl y. Sherwood Co. v. Clary

, 734 S.W.2d 318, 321-22 (Tenn. 1987).

Under Sherwood

and Marion County , section 67-5-903(f) of the Code and the depreciation schedules forming a part

thereof survi ve con stit utio nal at tack. Under the pr ovisi ons of Artic le II, Section 28 of the Constitution of Tennessee, the value and definition of property is “to be ascertained in such manner as the legislature shall direct.”

All part ies at ba r agree that all sub-constitutional issues as to section 67-5-903 have been foreclosed

by the opinion

of the Supreme

Court of Tennessee in the In Re All Assessments 1998 case.

THE CONSTITUTIONALI TY OF T.C.A. 67-5-1302(b)(1).5 The irony of this situat ion cannot escape even the casual observer. The refusal of counties and ci ties for more than a

century pre-1973 amendme

nts to a rticl e II, se ction 28 to base local assessments on just such a premise is the alpha and omega of all ensuing problems. Had this c onstit utional ly mandat

ed basis of

evaluat ion been appl

ied by local governm ents there would never have been an L & N I or an L & N II. The 19 73 constitutio nal amend ments wou ld not have been necessary, and the elaborate

provisions f

or equalizati

on provided in Titl

e 67, Chapter

5 of Tenness ee Code Annotated would hav e been of v ery limited ap plicability.
-19- Tennessee Code A

nnotated section 6

7-5-1302(b)(1)

provides: (b)(1) The assessments of public utility property, as set by the comptroller of the treasury in accordance with subsection (a), sha ll b e adj ust ed, whe n ne cess ary, on the basis of app r opriate ratios, as are determined by the board of equalization for purposes of equalizing the values of public utility property to the prevailing leve l of value of property in each jurisdiction.

Tenn. Code Ann. § 67-5-1302(b) (1)(S upp. 2000). Once again the counties and cities urge that Article II, Section

28 of the Tennessee

Constitution, post 1973 , still requires pr operty asse

ssments basedupon 100% o f

fair market value. 5 However, under Marion County and Sherwood , the fair market value basis is not c

onstitutionally

mandated, and the

legislatu re is free to determine the method and means of valuing property. We are dealing, in this ca se, with personal property as opposed to real property, and practical problems of assessment result in a considerably less than perfect sy stem. “Appraisal ratios” or “appr aisal ratio studie

s” are required to be conducted by the division of property assessments under Tennessee Code Annotated section 67-5-1604, 1605. The purpose of these appraisal

ratio studies is “to assist the board through the division of property a

ssessments to effect the assessment of all property throughout the state in acc ordancewith the constitution and laws of Tennessee,” and to “carry out the rea ppraisal and equalization programs in each county of the state.” Tennessee Code Annotated § 67-5-1604(b), (c) (1998). Pursuant to this authority the real property ratios for each county are determined.

A sales ratio study for

real property is simplified by recor ded deeds indicating the value or consideration f

or a transfer of property. For personal pr operty, howeve r, accompli shing a satisfactory

sales ratio study

is mu ch more diffi cult. In discu ssing sales ratio

studies, the court

in Clinchfield

R.R. Co. v. Lynch , 527 F.Supp. 784, 787 (E.D. N.C. 1981), aff’d 700 F.2d 126 (4th Cir. 1983), observed:
[T]he recognized means of conducting such a study is to incl ude onl y l ocal lyassessedreal estate. Suc

h a study is re

liable because

it calculates fr

om arms-length market transactions which are matters of public records. Real estate transactions may be sampled and analy

zed objectively

and expediti ously. In contrast, there is no objective method for

determining the level of assessment of personal property. The property would have to be appraised piece by piece since there is no public record of arms-length transactions which could be sampled and analyzed.-20-

Courts in oth er jurisdictions have applied the real property ratio study to personal property. See Clinchfield R.R. Co. v. Lynch , 527 F.Supp. 784; Clinchfield R.R. Co. v. Lynch , 784 F.2d 545, 551 (4th Cir. 1986); Southern Ry. Co. v. State Bd. of Equalization , 712 F.Supp. 1557, 1568 (N. D. Ga. 1988).

Useof such sales ratios may provide the least unsatisfactory method of appraising tangible personal property, but such is a legislative deci sion unshackled by constitutional prohibition. Section 67-5-1509(a) of the Code mandat es that lo cally assessed industria l and commercial p

ersonal propert

y be adj ust ed b y t he sa les ratio in each county. It necessar ily follows that, to achieve equalization, public utility

personal proper

ty must likewise be adjusted under section 67-5-1302(b)(1). It is not the prerogative o

f this Court, or of th

e State Board of

Equalization, to

question the reasonablenes s of a statute or se

cond guess the policy judgments of the legislature. BellSouth Telecomm., Inc. v. Greer , 972 S.W.2d 663, 673 (Tenn. Ct. App. 1997).

In the final analy

sis, it is the legislature tha t is authorized to ac

t in the matter of a

ssessments of personal property and equalization of such assessments, with “the value and definition of property in each class or sub-class to be ascertained in such manner as the legislature sha ll dir ect.” Tenn. Const. art. II, § 28 (amended 1973).

The constitutional

challenge to se

ction 67-5-1302(

b)(1) of the Ten

nessee Code must f

ail.

Once again, all parties agree that all sub-constitut i onal questions relative to section 67-5- 1302(b)(1) are foreclosed by the November 16, 2000 de cision of the Supreme Court of Tennessee relative to ad valorem assessments of public utilities company for the tax year 1998. See In Re All Assessments 1998 , 2000 WL 1710174.

The February 10,2000 order of the Tennessee State Board of Equalization relative to the tax year 1999 and the final

order of the Ten

nessee State

Board of Equalization as to assessments for the tax year 2000 are in all respects affirmed.

Costs of this cause a

re assessed ag

ainst Appellants.

___________________________________ WILLIA M B. CAIN, JUDGE