Opinion ID: 405083
Heading Depth: 1
Heading Rank: 2

Heading: Discriminatory Tax Treatment

Text: 5 The car companies sought injunctive relief against the Commission, alleging that such an assessment violates 49 U.S.C. § 11503, enacted by Congress in 1978 to prohibit tax discrimination against rail transportation property. Section 11503(b)(1) specifically declares that state action to assess rail transportation property at a value that has a higher ratio to the true market value than the ratio of assessed value of other commercial and industrial property, unreasonably burdens interstate commerce. Section 11503(c) allows injunctive relief to owners of rail transportation property in the following instance: 6 (When) the ratio of assessed value to true market value of rail transportation property exceeds by at least 5%, the ratio of assessed value to true market value of other commercial and industrial property in the same assessment jurisdiction. 7 Section 11503(a)(3) broadly defines this class of property: 8 (3) rail transportation property means property, as defined by the Interstate Commerce Commission, owned or used by a rail carrier providing transportation subject to the jurisdiction of the Commission under subchapter I of Chapter 105 of this Title. 9 The Commission concedes the following: (1) railroad rolling stock owned by the railroads is rail transportation property protected against discriminatory tax assessment rates by section 11503; (2) railroad rolling stock owned by private car companies but leased directly to the railroads in pooling arrangements is also rail transportation property protected by the Act. 3 The Commission, however, alleges that the district court erred in treating the rolling stock of private car companies under leasing arrangements as rail transportation property. 10 The only issue before the Court is whether privately owned specialty cars are equipment owned or used by rail carriers regulated by the ICC. The phrase owned or used implies an expansive scope of coverage. The plain meaning of use is to put into action or service or to avail oneself of. Pursuant to section 11503(a)(3), the ICC has also defined rail transportation property broadly: 11 Rail transportation property is all property and other assets, irrespective of ownership that comprise the entire operating unit devoted to rail transportation service. 12 49 C.F.R. § 1201(2i)(33). 13 The rolling stock of private car companies is clearly an integral and necessary part of the entire operating unit devoted to rail transportation services. Under 49 U.S.C. § 11122, the ICC is authorized to regulate the lease arrangements between the private companies and the shippers. The ICC also regulates the tariffs that shippers pay to railroads and that the railroads pay to the private car companies. Without a leasing arrangement for specialty cars, rail carriers would be unable to meet their obligations under 49 U.S.C. § 11121. 14 The legislative purpose of the Act is to prevent a state from unfairly burdening interstate carriers regulated by the ICC. 4 In view of this comprehensive regulatory scheme, it makes little sense to deny private car companies the same protection against discriminatory taxation already provided to other railroad transportation property. Accordingly, the judgment of the district court, 511 F.Supp. 610, is affirmed. 15 AFFIRMED.