Source: http://caselaw.findlaw.com/us-supreme-court/520/821.html
Timestamp: 2017-02-22 12:09:44
Document Index: 756838098

Matched Legal Cases: ['§ 1341', '§ 2001', '§2071', '§ 2077', '§2077', '§ 2071', '§1341', '§ 1362', '§ 2071', '§2077', '§ 2283', '§2283', '§2283', '§2283', '§ 632', '§2283', '§ 941', '§ 2279']

ARKANSAS v. FARM CREDIT SERVICES OF CENTRAL ARKANSAS | FindLaw
ARKANSAS v. FARM CREDIT SERVICES OF CENTRAL ARKANSAS ARKANSAS v. FARM CREDIT SERVICES OF CENTRAL ARKANSAS ResetAA
ARKANSAS v. FARM CREDIT SERVICES OF CENTRAL ARKANSAS et al., (1997)
Argued: April 21, 1997 Decided: June 2, 1997
The Tax Injunction Act, 28 U.S.C. § 1341 restricts the power of federal district courts to prevent collection or enforcement of state taxes. It states: "The district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State." The statute, on its face, yields no exception to the jurisdictional bar save where the state remedy is wanting, but at least one other exception is established by our cases: The statute does not constrain the power of federal courts if the United States sues to protect itself or its instrumentalities from state taxation. Department of Employment v. United States, 385 U.S. 355, 358
Production Credit Associations (PCA's) are corporations chartered by the Farm Credit Administration under the Farm Credit Act of 1971, 85 Stat. 583, as amended, 12 U.S.C. § 2001 et seq. A PCA is a corporate financial institution organized by 10 or more farmers and designed in large part to make loans to farmers. §§2071, 2075. PCA's have had differing tax exempt status at different times, depending on whether the United States owned shares of their stock. See, e.g., Farm Credit Act of 1933, 48 Stat. 267. In the period relevant here (when all PCA stock has been in private hands) they have been exempted, by explicit federal statute, from state taxes on their "notes, debentures, and other obligations." 12 U.S.C. § 2077.
Four PCA's, respondents here, brought suit in the United States District Court for the Eastern District of Arkansas claiming a tax exemption going beyond the express statutory language of §2077. They assert immunity not only from the taxes described in the exemption statute we have quoted but also from Arkansas sales and income taxes. They seek a declaratory judgment and an injunction prohibiting the State from levying the taxes against them. The District Court granted the PCA's' motion for summary judgment, and a divided panel of the United States Court of Appeals for the Eighth Circuit affirmed. 76 F. 3d 961 (1996).
Entitlement to the immunity is the underlying substantive issue, were we to reach it. The Tax Injunction Act, however, is an initial obstacle, for by its terms it would bar the relief the PCA's seek absent some exception. Seeking to overcome the bar under the Tax Injunction Act, the PCA's, first in the trial court and now here, contended that they are instrumentalities of the United States and so not subject to the provisions of the Act any more than the United States itself. The first point is correct: PCA's are instrumentalities of theUnited States because the statute which charters them says so. 12 U.S.C. §§ 2071(b)(7), 2077. The PCA's' argument about what follows from the designation, however, is incorrect. Instrumentalities of the United States, by virtue of that designation alone, do not have the same right as does the United States to avoid the prohibitions of the Tax Injunction Act.
(1960)); United States v. Arlington County, 326 F. 2d 929, 931 (CA4 1964); United States v. Bureau of Revenue of N. M., 291 F. 2d 677, 679 (CA10 1961)). See also Dollar Savings Bank v. United States, 19 Wall. 227, 239 (1874). The Court concluded, "in accord with an unbroken line of authority, and convincing evidence of legislative purpose, that §1341 does not act as a restriction upon suits by the United States to protect itself and its instrumentalities from unconstitutional state exactions." 385 U.S., at 358
-472. We went on to find the tribes exempt from the Act only because a second federal statute granted sweeping federal court jurisdiction where an Indian tribe was a party. Id., at 472 (citing 28 U.S.C. § 1362 (1976 ed.)). Moe is instructive here. As in Moe, the PCA's say their own mission is defined and controlled by federal law and that their interests are the same as those of the United States. We conclude here, as we did in Moe, that this argument is insufficient to justify an exception to the Tax Injunction Act.
True, important consequences flow from the congressional decision to designate a PCA formed pursuant to statute as "an instrumentality of the United States." 12 U.S.C. § 2071(b)(7). The tax immunity a PCA has under §2077 is a permitted consequence of its status as a federal instrumentality. An instrumentality of the United States can enjoy the benefits and immunities conferred by explicit statutes, however, without the further inference that the instrumentality has all of the rights and privileges of the National Government.
(1971), is applicable here and supports their cause. Nash Finch involved not the Tax Injunction Act, but the Anti Injunction Act, the statute which restricts the authority of federal courts to enjoin proceedings in state courts. 28 U.S.C. § 2283. The Anti Injunction Act provides: "A court of the United States may not grant an injunction to stay proceedings in a State court except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments." Just as the Tax Injunction Act is inapplicable where the United States is a party, a parallel rule prevails under §2283. Leiter Minerals, Inc. v. United States, 352 U.S. 220, 225
-226 (1957) (The restrictions of §2283 are inapplicable in a suit brought by the National Government.) The question in Nash Finch was whether the National Labor Relations Board (NLRB) came within the United States' exception to §2283. We held it did. In so ruling, we observed the NLRB's regulatory power "pre empts the field." Nash Finch, 404 U.S., at 144
As to the Tax Injunction Act itself, the courts of appeals have adopted different standards over time for deciding whether a federal instrumentality may sue in federal court to enjoin state taxation where the United States is not a co plaintiff. Under the most restrictive approach, there is no exception to the Tax Injunction Act for federal instrumentalities unless the United States sues as a co plaintiff. See, e.g., United States v. State Tax Commission, 481 F. 2d 963, 975 (CA1 1973) ("It is reasonable, as a prerequisite to by passing normal state tax collection and litigation channels, that [the instrumentalities] persuade the Attorney General of the United States . . . to join in their claim"); Housing Authority of Seattle v. State of Washington, Dept. of Revenue, 629 F. 2d 1307, 1311 (CA9 1980) (agreeing with the First Circuit in State Tax Commission "that such joinder [with the United States as co plaintiff] is necessary before a federal instrumentality can overcome the restrictions" of the Tax Injunction Act). After its decision in State Tax Commission, the Court of Appeals for the First Circuit modified what had seemed to be a bright line rule to produce a different test: "[E]ach instrumentality must be examined in light of its governmental role and the wishes of Congress as expressed in relevant legislation." Federal Reserve Bank of Boston v. Commissioner of Corporations and Taxation of Mass., 499 F. 2d 60, 64 (1974). Federal Reserve banks, the Court of Appeals noted, are not analogous to private corporations, but rather are "plainly and predominantly fiscal arms of the federal government" with interests "indistinguishable from those of the sovereign." Id., at 62. The court also pointed to a federal statute giving a Federal Reserve bank "unrestricted access to the district courts," id., at 63 (referring to 12 U.S.C. § 632); and to the Federal Reserve System's unusual position "outside the executive chain of command," 499 F. 2d, at 463. See also Bank of New England Old Colony v. Clark, 986F. 2d 600, 602-603 (CA1 1993) (describing Federal Reserve bank standard as a "flexible test").
Under any of the tests we have described, PCA's would not be exempt from the restrictions of the Tax Injunction Act. The United States has not joined as a co plaintiff and indeed opposes the District Court's exercise of jurisdiction. We need not inquire whether the holding of Nash Finch--to the effect that an agency with broad regulatory power is exempt from §2283 when it sues in its own name and not through the Attorney General or in the name of the United States--is applicable as well to the Tax Injunction Act. Whatever may be the rule under the Tax Injunction Act where a federal agency or body with substantial regulatory authority brings suit, PCA's are not entities of that description. PCA's are not granted the right to exercise government regulatory authority but rather serve specific commercial and economic purposes long associated with various corporations chartered by the United States. Other examples include the Atlantic and Pacific Railroad Company (chartered under an Act of 1866 to construct and maintain a railroad and telegraph line from Springfield, Missouri, to the Pacific Ocean, see Smith v. Reeves, 178 U.S. 436, 436
-437 (1900)); the Rural Telephone Bank (7 U.S.C. § 941); the United States Enrichment Corporation (42 U.S.C. § 2279a (1994 ed.), repealed effective on date of privatization, Pub. L. 104-134, 110 Stat. 1321). Indeed, in Smith v. Reeves, we treated the federally chartered corporation as a private citizen, not as an arm of the United States, and held it to be subject to the Eleventh Amendment bar on suits against States. 178 U.S., at 446
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