Source: http://or.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20181214_0001816.DOR.htm/qx
Timestamp: 2020-02-26 18:33:29
Document Index: 277511807

Matched Legal Cases: ['§ 11501', '§ 801', '§ 11501', '§ 11501', '§ 1341', '§ 11501', '§ 308', '§ 308', '§ 308', '§ 307']

FindACase™ | BNSF Railway Company v. Oregon Department of Revenue
BNSF Railway Company v. Oregon Department of Revenue
OREGON DEPARTMENT OF REVENUE and NIA RAY, in her official capacity as Director of the Oregon Department of Revenue, Defendants.
Benjamin J. Horwich, Jessica Reich Baril, and Teresa A. Reed, Munger Tolles & Olson LLP, James T. McDermott, Ball Janik LLP, Of Attorneys for Plaintiff.
Ellen F. Rosenblum, Attorney General; Marilyn J. Harbur, Senior Assistant Attorney General; and Daniel Paul, Assistant Attorney General, Oregon Department of Justice, Of Attorneys for Defendants.
Plaintiff BNSF Railway Company (BNSF) brings this action against the Oregon Department of Revenue and its Director, challenging Oregon's tax on intangible personal property as a discriminatory tax on railroads prohibited by the Railroad Revitalization and Regulatory Reform Act of 1976 (4-R Act). Pub. L. 94-210, 90 Stat. 31. The case comes to the Court on cross-motions for summary judgment. In his Findings and Recommendation (F&R), United States Magistrate Judge John Jelderks recommended granting summary judgment in favor of Defendant. For the reasons that follow, the Court declines to adopt the F&R and instead grants BNSF's motion for summary judgment and denies Defendants' cross-motion.
Subsection (b)(4) of the 4-R Act prohibits states from imposing a tax on railroads “that discriminates against a rail carrier.” 49 U.S.C. § 11501(b)(4). BNSF contends that the State of Oregon has violated this provision. BNSF seeks a permanent injunction, preventing Oregon from taxing BNSF in violation of the 4-R Act, as well as declaratory relief. Defendants argue that Oregon's tax comports fully with subsection (b)(4) of the 4-R Act because a property tax is not “another tax” within the meaning of the 4-R Act and because the United States Supreme Court has determined that Congress did not intend to prohibit states from granting property tax exemptions to non-rail entities while not exempting rail entities. In their briefing, the parties agree that there is no a genuine dispute of material fact and that the issue before the Court is purely a question of law.
BNSF also seeks a permanent injunction to prevent a violation of subsection (b)(4), which it argues would occur if Oregon is permitted to maintain its current tax on intangible property of railroads. The 4-R Act gives a “broad grant of jurisdiction to federal courts to prevent violations of subsection (b).” CSX Transp., Inc. v. Ala. Dep't of Revenue (CSX I), 562 U.S. 277, 281 n.7 (2011). The traditional principles governing equitable relief do not apply where, as here, Congress has expressly authorized the granting of injunctive relief to halt or prevent a violation of federal law. See United States v. Estate Pres. Servs., 202 F.3d 1093, 1098 (9th Cir. 2000); Trailer Train Co. v. State Bd. of Equalization, 697 F.2d 860, 869 (9th Cir. 1983). Accordingly, if BNSF demonstrates that Oregon's taxation of intangible property of railroads violates the 4-R Act, BNSF will have sufficiently demonstrated that a permanent injunction is a necessary and appropriate remedy.
In 1976, Congress enacted the 4-R Act to “restore the financial stability of the railway system of the United States.” Dept. of Revenue of Or. v. ACF Indus., 510 U.S. 332, 336 (1994) (quoting 45 U.S.C. § 801(a)). This legislation was needed, according to Congress, because railroads “‘are easy prey for State and local tax assessors' in that they are nonvoting, often nonresident, targets for local taxation, who cannot easily remove themselves from the locality.” Id. (quoting W. Air Lines, Inc. v. Bd. Of Equalization of S.D., 480 U.S. 123, 131 (1987)). The United States Department of Transportation had documented this problem, noting that “‘state and local governments derive substantial revenues from taxes on property owned by common carriers.' It is this temptation to excessively tax nonvoting, nonresident businesses in order to subsidize general welfare services for state residents that made federal legislation in this area necessary.” W. Air Lines, 480 U.S. at 131 (quoting S. Rep. No. 91-630 at 4 (1969)). To remedy this problem, Congress passed the 4-R Act to “prohibit[] States (and their subdivisions) from enacting certain taxation schemes that discriminate against railroads.” ACF, 510 U.S. at 336.
The provision of the 4-R Act at issue here, 49 U.S.C. § 11501(b), “bars states and localities from engaging in four forms of discriminatory taxation.” CSX I, 562 U.S. at 280. The relevant section of the 4-R Act directs that states and their subdivisions may not:
49 U.S.C. § 11501(b)(1)-(4). In addition, the 4-R Act confers jurisdiction on federal courts to “prevent a violation” of subsection (b) of the Act, notwithstanding the Tax Injunction Act, 28 U.S.C. § 1341, which “ordinarily prohibits federal courts from enjoining the collection of state taxes when a remedy is available in state court.” CSX I, 562 U.S. at 281; see 49 U.S.C. § 11501(c).
In Oregon, railroad companies are taxed through a process known as “central assessment.” Only 14 types of businesses and services are subject to central assessment taxation: (a) railroad transportation; (b) railroad switching and terminal; (c) electric rail transportation; (d) private railcar transportation; (e) air transportation; (f) water transportation upon inland water of the State of Oregon; (g) air or railway express; (h) communication; (i) heating; (j) gas; (k) electricity; (1) pipeline; (m) toll bridge; and (n) private railcars of all companies not otherwise listed in this subsection, if the private railcars are rented, leased or used in railroad transportation for hire. Or. Rev. Stat. § 308.515. In 2017, there were 513 centrally assessed companies in Oregon.
For most taxpayers in Oregon, property is assessed by county officials, who then calculate the tax rate, determine taxpayers' tax liability, and collect payments. For centrally assessed businesses, however, Oregon calculates the value of “the entire property [owned by the business], both within and without the State of Oregon, as a unit.” Or. Rev. Stat. § 308.555. After Oregon has determined the entire value of the business's property, it multiplies the value of that property by a percentage, known as the allocation factor, to determine the portion of that property subject to tax in Oregon. For a railroad, the allocation factor is calculated using the ratio of the single track mileage in Oregon to the total single track mileage, the ratio of miles traveled in Oregon to the total miles traveled, the ratio of Oregon operating revenue to all operating revenue, the ratio of the Oregon property cost to the cost of all property, and the ratio of Oregon revenue freight ton-miles to all revenue freight-ton miles. See Or. Admin. R. 150-308-0605.
Oregon employs two alternative methods for determining property value: Real Market Value (RMV) and Maximum Assessed Value (MAV). Or. Rev. Stat. § 308.146. The RMV is the actual assessed value of the property, while the MAV is limited to no more than 103 percent of the property's assessed value from the prior year or no more than 100 percent of the previous year's MAV, whichever is greater. Id. As between the RMV and the MAV, the lesser of these two values becomes the assessed value of the property, which forms the basis for a taxpayer's liability that year. Id. After the Department of Revenue determines the assessed value of the centrally assessed taxpayer's property, it prepares an assessment roll that county officials can rely on to collect tax payments. Or. Admin. R. 150-308-0670.
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Oregon imposes an ad valorem property tax on all taxpayers in the state but defines property differently for non-centrally assessed taxpayers compared to centrally assessed taxpayers. See Or. Rev. Stat. § 307.030. ...