PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

CSX TRANSPORTATION, INCORPORATED;

NICHOLAS, FAYETTE AND GREENBRIER

RAILROAD COMPANY,

Plaintiffs-Appellants,

v.

THE BOARD OF PUBLIC WORKS OF THE

STATE OF WEST VIRGINIA; GASTON

CAPERTON, III, Governor; LARRIE

BAILEY, State Treasurer; GLEN B.

GAINER, III, State Auditor; DARRELL V.

MCGRAW, JR., Attorney General; GUS

No. 97-1296

DOUGLASS, Commissioner of

Agriculture; HANK MAROCKIE, State

Superintendent of Schools,

Defendants-Appellees,

UNITED STATES OF AMERICA,

Intervenor.

ASSOCIATION OF AMERICAN RAILROADS;

AMERICAN SHORTLINE RAILROAD

ASSOCIATION; REGIONAL RAILROADS OF

AMERICA; RAILWAY PROGRESS INSTITUTE,

Amici Curiae.

Appeal from the United States District Court

for the Southern District of West Virginia, at Charleston.

Charles H. Haden II, Chief Disrict Judge.

(CA-96-1905-2)

Argued: October 29, 1997

Decided: March 10, 1998
Before MURNAGHAN, NIEMEYER, and HAMILTON,

Circuit Judges.

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Reversed and remanded by published opinion. Judge Murnaghan

wrote the opinion, in which Judge Niemeyer and Hamilton joined.

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COUNSEL

ARGUED: James W. McBride, BAKER, DONELSON, BEARMAN

& CALDWELL, Washington, D.C., for Appellants. Stephanie Robin

Marcus, Appellate Staff, Civil Division, UNITED STATES

DEPARTMENT OF JUSTICE, Washington, D.C., for Intervenor.

Katherine A. Schultz, Senior Deputy Attorney General, OFFICE OF

THE ATTORNEY GENERAL, Charleston, West Virginia, for Appellees. ON BRIEF: Anne M. Stolee, BAKER, DONELSON, BEARMAN & CALDWELL, Washington, D.C., for Appellants. Frank W.

Hunger, Assistant Attorney General, Rebecca Aline Betts, United

States Attorney, Mark B. Stern, Appellate Staff, Civil Division,

UNITED STATES DEPARTMENT OF JUSTICE, Washington,

D.C., for Intervenor. Darrell V. McGraw, Jr., Attorney General,

Stephanie M. Sisson, Assistant Attorney General, OFFICE OF THE

ATTORNEY GENERAL, Charleston, West Virginia, for Appellees.

Kenneth P. Kolson, ASSOCIATION OF AMERICAN RAILROADS,

Washington, D.C.; Betty J. Christian, Shannen W. Coffin, STEPTOE

& JOHNSON, L.L.P., Washington, D.C., for Amicus Curiae Association of American Railroads. Richard A. Malm, DICKINSON,

MACKAMAN, TYLER & HAGEN, P.C., Des Moines, Iowa, for

Amici Curiae American Short Line Railroad Association, et al.

_________________________________________________________________

OPINION

MURNAGHAN, Circuit Judge:

Two railroads alleged that the assessment, levying and collection

of certain West Virginia taxes violated the Railroad Revitalization

 2
and Regulatory Reform Act of 1976. Finding that the Act's purported

abrogation of a state's Eleventh Amendment sovereign immunity was

invalid under Seminole Tribe v. Florida, 116 S. Ct. 1114 (1996), and

that Ex parte Young, 209 U.S. 123 (1908), relief was unavailable, the

district court dismissed the case for lack of subject matter jurisdiction.

We reverse the dismissal of the Ex parte Young claim. Because an

injunction against the future collection of illegal taxes could provide

full relief to the plaintiffs, we do not resolve the question whether the

abrogation of sovereign immunity is valid or invalid.

I.

CSX Transportation, Inc., and Nicholas, Fayette & Greenbrier

Railroad Co. ("Railroads") brought this action against the Board of

Public Works of the State of West Virginia ("Board") and its members to challenge ad valorem taxes imposed for the 1996 tax year. The

Railroads' property was assessed on December 31, 1994. On September 13, 1995, the tentative notices of the assessments were issued to

the Railroads. The Board met in December of 1995 to finalize the

assessments, and when the Railroads failed to protest, the assessments

became final in January of 1996.

The Railroads paid one half of their assessed taxes on August 30,

1996, in accordance with West Virginia law. However, in January of

1997, the West Virginia Department of Tax and Revenue released

data concerning the level of assessment of other commercial and

industrial taxpayers in the state for the 1996 tax year. Based on this

data, the Railroads concluded that their assessments violated section

306 of the Railroad Revitalization and Regulatory Reform Act of

1976 ("4-R Act"), Pub. L. No. 94-210, 90 Stat. 54 (1976), now codified at 49 U.S.C. § 11501.1

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1 Section 306 of the 4-R Act has twice been recodified, but neither

recodification was intended to make any substantive change to that section. See Clinchfield R.R. Co. v. Lynch, 700 F.2d 126, 128 n.1 (4th Cir.

1983) (citing H.R. Rep. No. 1395, 95th Cong., 2d Sess. 1 (1978),

reprinted in 1978 U.S.C.C.A.N. 3009, 3009); H.R. Conf. Rep. No. 422,

104th Cong., 1st Sess. 193 (1995), reprinted in 1995 U.S.C.C.A.N. 850,

878. Because both parties in their briefs and this Circuit in prior cases

have done so, we will hereinafter refer to 49 U.S.C.§ 11501 as "section

306 of the 4-R Act."

 3
The Railroads filed a motion for a preliminary injunction seeking

to enjoin the Board and its members from collecting the remaining

taxes assessed against them. The Railroads alleged that the Board had

assessed their property at a ratio of assessed value to true market

value more than five percent greater than the ratio of assessed value

to true market value at which other commercial and industrial property was assessed for the 1996 tax year, in violation of section

306(1)(a) of the 4-R Act, 49 U.S.C. § 11501(b)(1) & (c).2 The Railroads further alleged that the Board and its members were attempting

to collect tax payments from the Railroads in violation of section

306(1)(b), 49 U.S.C. § 11501(b)(2). By Order of February 25, 1997,

the district court denied the motion for a preliminary injunction.

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2 The statute provides, in pertinent part:

(b) The following acts unreasonably burden and discriminate

against interstate commerce, and a State, subdivision of a State,

or authority acting for a State or subdivision of a State may not

do any of them:

 (1) Assess rail transportation property at a value that has a

higher ratio to the true market value of the rail transportation

property than the ratio that the assessed value of other commercial and industrial property in the same assessment jurisdiction

has to the true market value of the other commercial and industrial property.

 (2) Levy or collect a tax on an assessment that may not be

made under paragraph (1) of this subsection.

 (3) Levy or collect an ad valorem property tax on rail transportation property at a tax rate that exceeds the tax rate applicable to commercial and industrial property in the same assessment

jurisdiction.

 (4) Impose another tax that discriminates against a rail carrier

providing transportation subject to the jurisdiction of the Board

under this part.

(c) Notwithstanding section 1341 of title 28 and without regard

to the amount in controversy or citizenship of the parties, a district court of the United States has jurisdiction, concurrent with

other jurisdiction of courts of the United States and the States,

to prevent a violation of subsection (b) of this section.

49 U.S.C. § 11501.

 4
In that Order, the district court found that the purported abrogation

of Eleventh Amendment sovereign immunity found in section 306

was invalid, based on the Supreme Court's recent decision in

Seminole Tribe v. Florida. The court also found that it could not

enjoin the individual members of the Board under Ex parte Young

because the relief requested by the Railroads was retrospective. The

court therefore dismissed the case for lack of jurisdiction.

The Railroads then made their second one-half payment of

assessed taxes on February 28, 1997, but they unilaterally deducted

from that payment the amount they alleged was discriminatory overtaxation. Now the Railroads appeal from the dismissal of their claims.

II.

The sovereign immunity embodied in the Eleventh Amendment

protects an unconsenting state against suit brought by private parties

in federal court. See Seminole Tribe v. Florida , 116 S. Ct. 1114, 1122

(1996). The federal government may abrogate that immunity from

suit, however, by a clear expression of legislative intent to abrogate

enacted pursuant to a valid exercise of power. See id. at 1123-24. It

is uncontested that section 306 of the 4-R Act clearly intended to

abrogate state sovereign immunity. However, after Seminole Tribe,

the only power which the Supreme Court has held may be used to

abrogate a state's sovereign immunity is Section Five of the Fourteenth Amendment. See id. at 1125. The abrogation in section 306 of

the 4-R Act is only effective, therefore, if it is a valid exercise of that

power.

It is contested whether, in addition to exercising its Commerce

Clause power, Congress intended to or could have passed section 306

of the 4-R Act pursuant to its Fourteenth Amendment enforcement

power. Ignoring the wealth of precedent establishing that Congress's

failure to mention that it acted pursuant to Section Five of the Fourteenth Amendment is not dispositive, see, e.g. , EEOC v. Wyoming,

460 U.S. 226, 243 n.18 (1983); Schlossberg v. Maryland (In re Creative Goldsmiths of Washington, D.C., Inc.), 119 F.3d 1140, 1147

(4th Cir. 1997) ("Because there is no evidence that Congress either

passed the Bankruptcy Code under § 5 of the Fourteenth Amendment

or sought to preserve the core values specifically enumerated in that

 5
amendment, we hold that Congress' effort to abrogate the states'

Eleventh Amendment immunity . . . is unconstitutional and ineffective."); Crawford v. Davis, 109 F.3d 1281, 1283 (8th Cir. 1997), the

district court held that because the major purpose of the 4-R Act in

general was to protect interstate commerce, section 306 could not be

supported by the Fourteenth Amendment enforcement power.

Although remedying discriminatory taxation, in general, is an equal

protection concern, the power granted to Congress by Section Five of

the Fourteenth Amendment is limited to the promulgation of remedial

or preventive legislation that enforces the provisions of the Fourteenth

Amendment and does not extend to substantive legislation that

defines the Amendment's restrictions on the states. 3 See City of

Boerne v. Flores, 117 S. Ct. 2157, 2164 (1997). We need not determine whether section 306 is remedial equal protection legislation or

substantive legislation, however, because even assuming that section

306 cannot be justified as an exercise of Section Five of the Fourteenth Amendment and therefore its purported abrogation of state

sovereign immunity is invalid, Ex parte Young authorizes an injunction, without eliminating sovereign immunity, that will provide the

railroads with complete relief. By correcting the district court's erroneous Ex parte Young analysis, we make resolution of the Section

Five issue unnecessary.4 See Ashe v. Styles, 67 F.3d 46, 51 (4th Cir.

1995) ("[A]s is our general practice, we hesitate to adjudicate unde-

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3 Ironically, the Railroads, in a brief filed two months before the City

of Boerne decision, asserted that "Congress may statutorily define federal

equal protection rights and prescribe remedies to enforce them, irrespective of how the courts may have interpreted them. Section 306 is precisely such a statute." Brief of Appellants at 23. The Railroads could not

have known then in April that the Supreme Court would rule this practice

unconstitutional in June. If we accept the Railroads' assertion that section 306 is substantive rather than remedial, we must find that the statute

cannot be a valid exercise of Congress's Equal Protection Clause

enforcement powers.

4 We mention the Fourteenth Amendment Section Five issue nevertheless so as not to run the risk of our total silence being construed as a conclusion that no issue exists or as implicit acceptance of the district court's

analysis. The district court raised a controversial issue, which in some

appropriate future case will need to be resolved.

 6
cided constitutional issues unnecessarily."), cert. denied, 116 S. Ct.

1051 (1996).

III.

An injunction under the Ex parte Young doctrine may provide the

Railroads with complete relief regardless whether the state is immune

from suit under the Eleventh Amendment. The theory of Ex parte

Young is that because an unconstitutional statute is void, it cannot

cloak an official in the state's sovereign immunity. Although the reasoning of Ex parte Young has never been extended to claims for retrospective relief, federal courts may grant prospective injunctive relief

against state officials to prevent ongoing violations of federal law. See

Green v. Mansour, 474 U.S. 64, 68 (1985) (citing Ex parte Young,

209 U.S. 123, 159-60 (1908)); Gray v. Laws, 51 F.3d 426, 430 n.1

(4th Cir. 1995). An injunction against the future collection of the illegal taxes, even those that already have been assessed, is prospective,

and therefore available under the Ex parte Young doctrine.

A.

The district court dismissed the Railroads' claims for Ex parte

Young relief, believing that it was without power to enjoin the levying

or collection of a tax which already had been assessed. The district

court thought that such an injunction would be retrospective, and thus

not permitted under Ex parte Young, because it would require a judgment that the assessment was invalid. See CSX Transportation, Inc.

v. Board of Public Works, No. 2:96-1905, slip op. at 17 (S.D. W.Va.

Feb. 25, 1997). The court also concluded that because the injunction

amounted to "some sort of a refund of the amount collected" or credit

against future tax payments "`measured in terms of a monetary loss

resulting from a past breach of a legal duty on the part of the defendant state officials'" it would be barred by the Eleventh Amendment.

See id. at 17-18 (quoting Edelman v. Jordan , 415 U.S. 651, 668

(1974)). We review the district court's legal determination whether Ex

parte Young relief is available de novo.

1.

The district court erred when it concluded that an injunction barring the future collection of taxes was retrospective, and thus

 7
improper under Ex parte Young, once the amount of the taxes had

been assessed. First, the district court hesitated to grant relief to the

Railroads because to do so "would impact the State treasury in some

form, whether the Railroads were to be given a cash refund for overpaying the first half taxes or a credit against the amount of taxes due

for the second half." Id. at 16. But the Fourth Circuit has explained

that Ex parte Young relief may still be available despite its impact on

the state treasury:

The Supreme Court has also repeatedly recognized that "relief that serves directly to bring an end to a present violation

of federal law is not barred by the Eleventh Amendment

even though accompanied by a substantial ancillary effect

on the state treasury."

Virginia Hosp. Ass'n v. Baliles, 868 F.2d 653, 662 (4th Cir. 1989)

(quoting Papasan v. Allain, 478 U.S. 265, 278 (1986)), aff'd sub nom.

Wilder v. Virginia Hosp. Ass'n, 496 U.S. 498 (1990).5

Second, the court believed that it could not enjoin the collection or

the levying of the future taxes because such actions"are largely ministerial in nature," and the requested injunction would effectively

"h[o]ld invalid and change[ ]" the past assessment, thereby making it

a retrospective order. CSX Transportation, Inc. , No. 2:96-1905, slip

op. at 17. However, in Ex parte Young itself the Supreme Court

explained that it had the power to enjoin ministerial actions of state

officials. See 209 U.S. at 158. Furthermore, our decision in Coakley

v. Welch, 877 F.2d 304 (4th Cir. 1989), illustrates that a future injunction is not made retrospective merely because it recognizes that an

ongoing violation of law is the result of a past wrong.

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5 Furthermore, the district court misunderstood the form of relief

requested here: the Railroads require neither a cash refund nor a credit

against past taxes paid. The Railroads do not question their liability for

the past taxes they have paid. They seek an injunction barring the future

collection of the part of taxes illegally assessed, which portion they have

withheld and refused to pay, although they have paid the balance. See

infra at 10-12.

 8
Coakley alleged that a state official had violated Coakley's due

process rights by firing him without good cause, and sought an

injunction ordering his reinstatement. See id. at 305. The court "recognize[d] that from one point of view" the plaintiff had only alleged

a past violation of his rights and no ongoing violation upon which to

base Ex parte Young relief. Id. at 307 n.2. However, the Fourth Circuit found the view that was more consistent with Supreme Court and

Fourth Circuit precedent was that the past violation"continue[d] to

harm him by preventing him from obtaining the benefits of . . .

employment." Id. An injunction to correct this ongoing harm was permissible despite its implication that his past firing had been improper.

See id. at 306-07.

In support of the district court's opinion, the Board insists that an

injunction against the future collection of taxes is retrospective if the

amount of taxes has already been determined. The Board argues that

the Railroads' tax liability accrued on the valuation date for the property taxes in question, December 31, 1994. Therefore, it asserts, "it is

clear that the relief sought by the Railroads is not prospective because

the liability attached long ago." Brief of Appellees at 32. The argument is without merit.

The Board in effect argues that an injunction against the future collection of illegal taxes is retrospective and unavailable merely

because the state has already decided how much tax to collect, even

though the money is still safely in the taxpayer's pocket. If we were

to accept this argument, no injunction could issue pursuant to Ex

parte Young if the action to be enjoined had already been decided

upon by a state official. But, of course, plaintiffs have no way to

know that they must sue to enjoin an official's action until after the

official has decided to take that action.6 

Misconstruing the Supreme Court's holding in Milliken v. Bradley,

433 U.S. 267 (1977), the Board asserts that "the linchpin for determining whether recovery against State officers is appropriate is a

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6 It is notable that the tentative notice of assessment of the amount of

taxes due was first issued to the Railroads on September 13, 1995 --

nine months too late for a prospective injunction, according to the

Board's argument.

 9
determination of whether liability has accrued. Here, liability has

accrued so no recovery can be had against the State or its officials."

Brief of Appellees at 36. In Milliken the Supreme Court noted that the

plaintiff's claim did not involve a "raid on the state treasury for an

accrued monetary liability." Milliken, 433 U.S. at 290 n.22. The "accrued monetary liability" to which the Supreme Court was referring

was one accrued against the state, that is, money the state owed the

plaintiff. Milliken explained that a plaintiff could not use an injunction to force the state to pay him money it owed him. Here, the Board

is arguing that because a monetary liability already has accrued

against the Railroads, that is, because the state claims that the Railroads owe it money, Milliken bars relief. The Railroads do not overstate when they claim that the Board's "nonsensical argument

illustrates the paucity of actual case law supporting the district court's

ruling that enjoining the future collection of tax payments would actually be retroactive relief." Reply Brief of Appellants at 15.

2.

The district court further erred in holding that the injunction was

retrospective because it sought a refund or credit for "a monetary

loss." CSX Transportation, Inc., No. 2:96-1905, slip op. at 18. The

Railroads seek nothing of the kind. The Railroads have not lost any

money: the money allegedly illegally assessed is still safely in their

pockets.

The district court claimed that the relief sought by the Railroads

was "directly analogous to a portion of the prohibited relief sought in

Edelman which was `measured in terms of a monetary loss resulting

from a past breach of a legal duty on the part of the defendant state

officials.'" CSX Transportation, Inc., No. 2:96-1905, slip op. at 18

(quoting Edelman, 415 U.S. at 668). However, the award disallowed

in Edelman which was "measured in terms of a monetary loss," was

an award of equitable restitution, "in practical effect indistinguishable

in many aspects from an award of damages against the State."

Edelman, 415 U.S. at 668. In the instant case, no award of any money

need be made from the state treasury. Instead, money which state officials would otherwise collect from the Railroads, in violation of federal law, will be protected from collection.

 10
It is of no import that the state officials have already decided how

much money they want illegally to collect, nor that they have already

decided how they want to spend the money they intend in the future

illegally to collect, nor that the state will have to expend its own funds

to make up for the funds it was not allowed illegally to collect. The

point is that the future collection is illegal. 7 Section 306 not only prohibits discriminatory tax assessments, but specifically prohibits the

collection of any tax based upon such an assessment. See 49 U.S.C.

§ 11501(b)(2). Injunctive relief is available under Ex parte Young to

prevent such a future violation of federal law.

Echoing the district court's mistake, the Board argues that because

the Railroads have already paid half of the taxes assessed, they may

not recoup the allegedly discriminatory overassessment from their

first one-half payment because such recoupment would come out of

the state treasury and be retrospective relief. The Board's mistake is

in its premise: the Railroads need not seek to "recoup" anything here.

They need only to enjoin the future collection of the amount of taxes

that was assessed illegally to be provided full relief.

An example will illustrate the unnecessary complication required

to create a retrospective injunction in this case. Assume that the

amount of taxes assessed was $10.00, but the lawful amount was only

$8.00, and the Railroads had already paid one half of the assessment,

$5.00. We could enjoin the collection in the future of the $2.00 of

unlawful discriminatory over-taxation, and permit only the collection

of the remaining $3.00. That would only be prospective relief. Were

we to fashion an injunction ordering the Railroads to pay only an

additional $4.00 as a second half-payment and also ordering the state

to refund $1.00 from the first half-payment, that refund would be

retrospective relief.8 But why we would order such an unnecessarily

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7 We have assumed that the Railroads would prevail on the merits for

the limited purpose of evaluating the district court's dismissal for lack of

subject matter jurisdiction. Upon remand, the Railroads will still have to

prove that the amount of taxes they have withheld was assessed in violation of section 306 of the 4-R Act. We make no judgment regarding the

merits of this contention.

8 The injunction prohibiting the state from collecting more than the

lawful $4.00 of the second one-half payment would be prospective, however. Even according to its own misunderstanding of the required relief,

therefore, the district court was incorrect to dismiss the Railroads' action

in its entirety.

 11
complex and invalid injunction when a simple, valid remedy is available is difficult to understand.

B.

Regardless of when the state defendants completed the tax assessment, the action that the Railroads seek to enjoin-- the collection of

illegal taxes -- has not yet occurred. The injunction that the Railroads

seek is thus precisely the type of relief contemplated by Ex parte

Young. The district court's order dismissing the complaint pursuant to

Rule 12(b)(1) of the Federal Rules of Civil Procedure is therefore

reversed, and the case is remanded to the district court for further proceedings not inconsistent with this opinion.

REVERSED AND REMANDED

 12