Source: http://openjurist.org/656/f2d/398
Timestamp: 2015-08-04 03:53:49
Document Index: 648958708

Matched Legal Cases: ['§ 306', '§ 11503', '§ 306', '§ 26', '§ 11503', '§ 11503']

656 F2d 398 State of Arizona v. Atchison Topeka and Santa Fe Railroad Company | OpenJurist
656 F. 2d 398 - State of Arizona v. Atchison Topeka and Santa Fe Railroad Company Home
656 F2d 398 State of Arizona v. Atchison Topeka and Santa Fe Railroad Company 656 F.2d 398
STATE OF ARIZONA and Arizona Department of Revenue,Plaintiffs-Appellants,v.ATCHISON, TOPEKA AND SANTA FE RAILROAD COMPANY and SouthernPacific Transportation Company, Defendants-Appellees,andUnited States of America, Intervenor/Defendant-Appellee.
No. 79-3183.
Submitted Jan. 14, 1981.Decided June 12, 1981.
The State of Arizona and Arizona Department of Revenue (Arizona) brought this action for a declaratory judgment in the district court against the Atchison, Topeka and Santa Fe Railroad Company and the Southern Pacific Transportation Company (the railroads). Arizona sought a declaration that its scheme of assessing property for the purpose of collecting ad valorem property taxes was consistent with section 306 of the Railroad Revitalization and Regulatory Reform Act of 1976, Pub.L. 94-210 § 306, 90 Stat. 31, 54-55, 94th Cong., 2nd Sess., reprinted in (1976) U.S.Code Cong. & Ad.News, p. 14 (the 4R Act) (current version at 49 U.S.C. § 11503). In the alternative, Arizona contended that section 306 of the 4R Act was unconstitutional. The district judge permitted the United States to intervene as a party defendant. Subsequently, he denied Arizona's motion for summary judgment and granted the railroads' and the United States' motions for summary judgment. Arizona now appeals from this judgment. We affirm.
4R Act, supra, § 306.1 Although the 4R Act became law on February 5, 1976, the effective date of section 306 was set for three years after that date. Id. Section 306 was originally codified at 49 U.S.C. § 26c. Before it went into effect, however, Congress recodified the section as part of its revision of the Interstate Commerce Act. Section 306 is now codified at 49 U.S.C. § 11503. See Pub.L. 95-473 § 11503, 92 Stat. 1445, 95th Cong., 2nd Sess., reprinted in (1978) U.S.Code Cong. & Ad.News, p. 3009. Although there are some differences between the two codifications, we shall simply refer to "section 306" to mean both versions, and cite to the current codification, except when the differences between the two are at issue.
In Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 70 S.Ct. 876, 94 L.Ed. 1194 (1950), the Court held that the Declaratory Judgment Act is procedural only, and does not extend the jurisdiction of the federal courts. Id. at 671, 70 S.Ct. at 878-79. The plaintiff sought a declaration that a contract was still in effect because a condition of the contract that depended on the action of a federal agency pursuant to federal law had been fulfilled. The Court observed that absent the Declaratory Judgment Act the cause of action would have been one for breach of contract, which would not arise under federal law. The federal law in the case could be invoked only as a defense. Because federal question jurisdiction cannot be invoked when the plaintiff's claim does not contain an element of federal law, but merely anticipates that the defendant will raise a defense under the Constitution or federal law, the Court held that there was no federal question jurisdiction over the declaratory judgment action. Id. at 672, 70 S.Ct. at 879. The Supreme Court later observed that
Public Service Comm'n v. Wycoff Co., 344 U.S. 237, 248, 73 S.Ct. 236, 242, 97 L.Ed. 291 (1952) (dictum).
The present lawsuit could arise in two different ways if there were no Declaratory Judgment Act. One would be a suit brought by the state pursuant to state law to collect taxes from the railroads. There would be no federal jurisdiction over this case, because the only issue of federal law would be the defense of section 306 that the railroads would raise. It would not be a ground for federal jurisdiction if the state merely anticipated the federal defense and asserted that the defense was not valid. Louisville & N. R. R. v. Mottley, 211 U.S. 149, 152, 29 S.Ct. 42, 43, 53 L.Ed. 126 (1908).
We do not think the policy behind this divestiture of jurisdiction applies to a case such as this one. Section 1341 was designed to eliminate interference by federal courts in state internal economy and taxation matters. Great Lakes Dredge & Dock Co. v. Huffman, 319 U.S. 293, 298-99, 63 S.Ct. 1070, 1073, 87 L.Ed. 1407 (1943). This policy would not be served by applying the statute to bar a state itself from invoking the jurisdiction of the federal courts. In addition, Congress removed the jurisdictional bar of section 1341 for cases brought under section 306 after its effective date.4 Under these circumstances, the jurisdictional bar of section 1341 cannot apply to this case. Therefore, because there is a federal question raised by the plaintiff in the action that underlies this declaratory judgment action, and the jurisdictional bar of section 1341 does not apply, the federal courts have jurisdiction to hear this case.
Public Service Comm'n v. Wycoff Co., supra, 344 U.S. at 243-44, 73 S.Ct. at 240. The Supreme Court has further observed that "(w)here the inevitability of the operation of a statute against certain individuals is patent, it is irrelevant to the existence of a justiciable controversy that there will be a time delay before the disputed provisions will come into effect." Blanchette v. Connecticut Gen. Ins. Corp., 419 U.S. 102, 143, 95 S.Ct. 335, 358, 42 L.Ed.2d 320 (1974). See also Babbitt v. United Farm Workers, 442 U.S. 289, 298, 99 S.Ct. 2301, 2308-09, 60 L.Ed.2d 895 (1979).
In light of these circumstances, the positions of the parties were sufficiently crystallized by the time of the filing of this lawsuit to create a case or controversy. At that time, it could be realistically concluded that section 306 would come into effect on February 5, 1979, that the Arizona scheme of assessing railroad property would remain the same, and that the railroads would seek to invoke section 306 to invali