Opinion ID: 1179468
Heading Depth: 1
Heading Rank: 3

Heading: determining whether escaped property is includable in the comparison class

Text: The airlines first contend that the true market value of all escaped property, that is, comparison class property that is not assessed because property owners fail to report it to tax assessing authorities, still should be included in the comparison class for the purpose of determining whether the department assessed the airlines' property in a discriminatory fashion. In so contending, the airlines focus upon the definition of other commercial and industrial property set forth in 49 U.S.C. section 1513(d)(2)(D): `commercial and industrial property' means property, other than transportation property and land used primarily for agricultural purposes or timber growing, devoted to a commercial or industrial use and subject to a property tax levy [.] (Emphasis added.) In the airlines' view, escaped property still is  subject to a property tax levy (emphasis added), despite the fact that it escapes taxation due to nonreporting by its owners. It follows, they argue, that the department should add the value of such property to the total true market value of other reported property, in order to determine the assessment ratio for the comparison class. Such an increase in the total true market value of the comparison class property would lower the assessment ratio for that class, supporting the airlines' claim of discrimination under section 1513(d). The department responds that a violation of section 1513(d) requires a state action and that, because the airlines' reading of subsection (d)(2)(D) relies upon the failure of nongovernmental property owners to report their property, that argument must fail. [10] The Tax Court agreed that escaped Property was not includable in the comparison class. 13 OTR at 366-67. The issue before us is one of statutory construction. That is, we must determine whether Congress intended, for the purpose of comparing assessment ratios under 49 U.S.C. section 1513(d), that the phrase property    subject to a property tax levy in subsection (d)(2)(D) should include nonexempt property that is located within the assessment jurisdiction, but that is not taxed because its value is not reported to tax assessing authorities. In interpreting that wording, we examine the statute's text and structure and, if necessary, its legislative history. See Department of Revenue of Ore. v. ACF Industries, Inc., 510 U.S. 332, 339-46, 114 S.Ct. 843, 847-51, 127 L.Ed.2d 165 (1994) (examining the text, structure, and legislative history of a similar federal enactment); Burlington No. R. Co. v. Okla. Tax Comm'n, 481 U.S. 454, 461, 107 S.Ct. 1855, 1860, 95 L.Ed.2d 404 (1987) (Court refused to examine legislative history when the text of a similar federal enactment plainly declare[d] the congressional purpose); see also Shaw v. PACC Health Plan, Inc., 322 Or. 392, 400, 908 P.2d 308 (1995) (court followed United States Supreme Court's methodology when interpreting a federal statute). A textual analysis of the words property    subject to a property tax levy demonstrates the conflicting interpretations advanced by the parties. It is plausible, as the airlines contend, that all escaped property is includable in the comparison class because, although such property is not taxed, it still is subject to taxation in that it is not exempt from taxation. In reality, however, no tax will be levied upon escaped property because that property is not assessed. Under that latter reading of the statute, escaped property is not property    subject to a property tax levy and, therefore, should not be considered as part of the comparison class. The United States Supreme Court has not analyzed the specific provision of section 1513(d) at issue in this case. We note, however, that section 1513(d) is modeled after similar provisions in two other federal enactments: Section 306 of the Railroad Revitalization and Regulatory Reform Act of 1976 (4-R Act), codified as 49 U.S.C. section 11503, and section 31 of the Motor Carriers Act of 1980 (MCA), codified as 49 U.S.C. section 14502. [11] Case law interpreting those provisions and their legislative history therefore are helpful to our construction of section 1513(d). See Western Air Lines v. Board of Equalization, 480 U.S. 123,130-31, 107 S.Ct. 1038, 1042-43, 94 L.Ed.2d 112 (1987) (when interpreting another provision of section 1513(d), Court examined the legislative history of the 4-R Act); ABF Freight System, Inc. v. Tax Div. of Arkansas, 787 F.2d 292, 293 n. 1 (8th Cir.1986) (because the MCA was patterned after and is virtually identical to the 4-R Act, cases construing the 4-R Act and its legislative history are relevant to an analysis of the MCA). The United States Supreme Court has examined the text of the corresponding provision of the 4-R Act, although in a context different from that before us now. In ACF, the issue before the Court was whether exempt property was property    subject to a property tax levy under the 4-R Act. 49 U.S.C. § 11503(a)(4). In examining that text, the Court stated: The statute does not define th[e] phrase [`subject to a property tax levy'], which on its face could bear one of two interpretations: (1) taxed property; or (2) taxable property, a broader category consisting of the general mass of property within the State's jurisdiction and power to tax, including property that enjoys a current exemption. 510 U.S. at 341, 114 S.Ct. at 848-49. The court concluded, after examining the context and structure of the 4-R Act, that the words `property subject to a property tax levy' must mean `taxed property.' Id. at 342, 114 S.Ct. at 849 (emphasis added). Consequently, because exempt property is, by definition, not taxed property, the Court further concluded that exempt property was not includable in the comparison class. Ibid. At first glance, escaped property should fall within the latter category described in ACF, that is, it is not taxed property but, rather, is property within the state's jurisdiction and power to tax. Under that reading of ACF, because the Supreme Court held that only taxed property is includable in the comparison class, the airlines' argument fails. Escaped property, however, is not the same as exempt property. In American Airlines v. County of San Mateo, 12 Cal.4th 1110, 51 Cal.Rptr.2d 251, 912 P.2d 1198 (1996), the California Supreme Court was faced with an issue similar to that before us here. In rejecting the argument that, under ACF, escaped property should be treated the same as exempt property, that court explained: Here, the Counties assert that `[l]ike exempt property, personal property that inadvertently escapes taxation (notwithstanding the good faith efforts of the assessor) is not taxed property and therefore should not be included as part of the comparison class.' This is not entirely correct. Escaped property, unlike exempt property, is by definition taxable; however, that tax has not been assessed or paid. 12 Cal.4th at 1133, 51 Cal.Rptr.2d at 266, 912 P.2d at 1214 (emphasis added). We agree that escaped property should not necessarily be treated the same as exempt property under the reasoning set forth in ACF. Instead, escaped property logically could be viewed as property that is subject to a property tax levy. However, another provision of section 1513(d) supports the department's interpretation. Subsection (d)(2)(A) provides that, for the purpose of section 1513(d), ` [a]ssessment' means valuation for a property tax levied by a taxing district. (Emphasis added.) That definition suggests that an assessment is part of the procedure that results in the taxation of property. The root word assess is used in subsection (d)(1)(A), which prohibits assessing airline property at a higher ratio than the ratio that the assessed value of other commercial and industrial property    has to the true market value of the other commercial and industrial property. (Emphasis added.) When viewed in conjunction with the definition of assessment in subsection (d)(2)(A), the words assessed value in subsection (d)(1)(A) refer to the value that will be used to impose taxes upon other commercial and industrial property. Under that reading, the phrase other commercial and industrial property, that is, other such property subject to a property tax levy, includes only nonexempt property that eventually will be taxed, i.e., property that has been reported to assessing authorities. As part of our textual and structural analysis, we also note that, unlike section 1513(d)(2)(A), section 306 of the 4-R Act originally defined commercial and industrial property as all property    which is devoted to a commercial or industrial use and which is subject to a property tax levy. Pub.L. 94-210, § 306, 90 Stat. 55 (1976) (emphasis added). That section also prohibited states from assessing railroad property at a higher ratio to true market value than the ratio which the assessed value of all other commercial and industrial property in the same assessment jurisdiction bears to the true market value of all such other commercial and industrial property. Pub.L. 94-210, § 306, 90 Stat. 54 (1976) (emphasis added). In light of that original wording, the omission of the word all in section 1513(d) suggests that Congress intended the definition of the comparison class in that provision to be read less broadly than the corresponding provision in the 4-R Act. As explained below, however, the context of the 4-R Act does not support that conclusion. Section 306 of the 4-R Act was recodified in 1978, as part of a comprehensive revision to the Interstate Commerce Act. See 325 Or. at 539 n. 11, 943 P.2d at 180 n. 11 (discussing and citing that revision). At that time, Congress deleted the word all from section 306, as quoted in the preceding paragraph. Pub.L. 95-473, § 11503, 92 Stat. 1445-46 (1978). In passing the recodification, Congress specifically noted that it ma[de] no substantive change in the law. H.Rep. No. 1395, 95th Cong., 2d Sess., reprinted in 1978 U.S.Code Cong. & Ad.News 3009, 3018. See also Burlington No. R. Co., 481 U.S. at 457 n. 1, 107 S.Ct. at 1858 n. 1 (the recodification may not be construed as making a substantive change in the laws replaced (internal quotation marks omitted)); Burlington Northern R. Co. v. James, 911 F.2d 1297, 1298-99 (8th Cir.1990) (citing the original version of section 306 because the recodification made no substantive changes). Consequently, the deletion of the word all from section 306 and the subsequent adoption of the revised wording in section 1513(d) cannot be significant in our interpretation of that provision. See State of Ariz. v. Atchison, T. & S.F.R. Co., 656 F.2d 398, 404 (9th Cir.1981) (rejecting a different argument that also relied upon the word all in the original 4-R Act). [12] We conclude that, for the purpose of comparing assessment ratios, the text and structure of section 1513(d) do not clearly reveal whether escaped property is includable in the comparison class. We now turn to the legislative history to determine whether Congress spoke to that question. Congress enacted section 1513(d) in 1982 as part of the Airport and Airway Improvement Act (AAIA), [13] which was part of a series of congressional actions dedicated to improving the Nation's air transportation system. Western Air Lines, 480 U.S. at 124, 107 S.Ct. at 1039. The AAIA made certain changes to an earlier federal enactment, the Airport Development Acceleration Act of 1973. One change was to prohibit states from imposing discriminatory taxes upon airline property. Id. at 125, 107 S.Ct. at 1039-40. As noted, section 1513(d) was patterned after similar provisions relating to railroads and motor carriers, set forth in the 4-R Act and the MCA. Most of the relevant legislative history was developed during the 15 years before Congress enacted the 4-R Act in 1976. [14] The significant history begins in 1961, with a Senate-sponsored study conducted by the Special Study Group on Transportation Policies in the United States (the Doyle Report). The Doyle Report analyzed many aspects of national transportation policy, including the practice and effect of discriminatory state taxation of interstate carriers, and recommended curative legislation. S.Rep. No. 445, 87th Cong., 1st Sess. (1961), 451-91. Following publication of that report, legislators introduced several bills over the next six legislative sessions, containing provisions substantially similar to those eventually included in the 4-R Act, the MCA, and the AAIA, that would have amended the Interstate Commerce Act to prohibit discriminatory state taxation of interstate carriers. [15] As have other courts, we look to that collective legislative history to assist our statutory analysis. See Western Air Lines, 480 U.S. at 130-31, 107 S.Ct. at 1042-43 (examining that history when interpreting another provision of section 1513(d)); Atchison, T. & S.F.R. Co., 656 at 404 n. 6 (because the earlier bills are nearly identical to section 306 [of the 4-R Act] as it was enacted, the legislative history of those bills is helpful in interpreting section 306). We begin with a general overview of the purpose of section 1513(d) and its counterparts in the 4-R Act and the MCA. In Western Air Lines, the Supreme Court observed: The legislative history of the antidiscrimination provision in the 4-R Act demonstrates Congress' awareness that interstate carriers `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. S.Rep. No. 91-630, p. 3 (1969). The Department of Transportation had observed that `State and local governments derive substantial revenues from taxes on property owned by common carriers.' Id., at 4. 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. 480 U.S. at 131, 107 S.Ct. at 1043. Congress intended the legislation to prohibit discriminatory state assessment practices, as well as the imposition of higher tax rates upon interstate carriers' property. See S.Rep. No. 630, 91st Cong., 1st Sess. (1969), 21 (the purpose of the legislation is to require states to treat interstate carriers' property in the same fashion as other such property); S.Rep. No. 1483, 90th Cong., 2d Sess. (1968), 3 (discrimination can arise in the form of higher assessments and tax rates). Further, the legislation prohibits both de jure and de facto discrimination. See Louisville & Nashville R. Co. v. Dept. of Rev., Etc., 736 F.2d 1495, 1498 (11th Cir.1984) (so stating). De facto discrimination occurs when a single rate of tax is applied to full true market value for [interstate transportation] property but to something less than true market value for non-[interstate transportation] property. Ibid. Moreover, discriminatory intent is not required for a violation to occur. Rather, the statutes prohibit any act that results in discriminatory assessment or taxation. See Burlington No. R. Co., 481 U.S. at 463-64, 107 S.Ct. at 1861 (4-R Act does not require a showing of discriminatory intent). After reviewing the legislative history, we conclude that Congress did not specifically address the issue before us, that is, whether the comparison class should include the value of all escaped property. The legislative history does, however, provide some assistance in making that determination. First, it is clear that discriminatory assessment practices, a form of de facto discrimination, were of great concern to Congress when it drafted the legislation. See S.Rep. No. 1085, 92d Cong., 2d Sess. (1972), 4 (one cause of state discrimination lies in long-established procedures for assessing property); S.Rep. No. 445, 87th Cong., 1st Sess. (1961), 485 (discrimination can result from the lack of prescribed standards for assessing property). Local assessment practices particularly were scrutinized. See S.Rep. No. 1483, 90th Cong., 2d Sess. (1968), 3 (local assessment can permit considerable variation in the valuation of comparison class property). The legislative history further reveals that the spirit of the legislation was to eradicate all forms of discriminatory assessment against interstate carriers. See 116 Cong. Rec. S2023 (January 30, 1970) (statement of Senator Clifford Hansen) (the legislation will encourage fair and equitable taxation in those few instances where localities either overtly or covertly tax transportation property at a higher    assessed valuation than for other segments of the community). Because the airlines contend here that they are subject to discriminatory assessment practices, it appears that Congress would have intended section 1513(d) to protect them from such practices. Further, the legislative history provides some indication that Congress intended the comparison class to include all non-exempt property located within an assessment jurisdiction, possibly including all escaped property. For example, the Doyle report gave the following description of comparison class property that is subject to taxation:  All tangible property    is subject to ad valorem property taxation in most States, three characteristics of which are: (a) The tax is legally applicable to all property not specifically exempt;