United States District Court, D. Oregon
Benjamin J. Horwich, Jessica Reich Baril, and Teresa A. Reed,
Munger Tolles & Olson LLP, James T. McDermott, Ball Janik
LLP, Of Attorneys for Plaintiff.
F. Rosenblum, Attorney General; Marilyn J. Harbur, Senior
Assistant Attorney General; and Daniel Paul, Assistant
Attorney General, Oregon Department of Justice, Of Attorneys
OPINION AND ORDER
MICHAEL H. SIMON, UNITED STATES DISTRICT JUDGE
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.
(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
is entitled to summary judgment if the “movant shows
that there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). The moving party has the burden of
establishing the absence of a genuine dispute of material
fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323
(1986). The court must view the evidence in the light most
favorable to the non-movant and draw all reasonable
inferences in the non-movant's favor. Clicks
Billiards Inc. v. Sixshooters Inc., 251 F.3d 1252, 1257
(9th Cir. 2001). Although “[c]redibility
determinations, the weighing of the evidence, and the drawing
of legitimate inferences from the facts are jury functions,
not those of a judge . . . ruling on a motion for summary
judgment, ” the “mere existence of a scintilla of
evidence in support of the plaintiff's position [is]
insufficient . . . .” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 252, 255 (1986). “Where the
record taken as a whole could not lead a rational trier of
fact to find for the non-moving party, there is no genuine
issue for trial.” Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citation
and quotation marks omitted).
parties file cross-motions for summary judgment, the court
“evaluate[s] each motion separately, giving the
non-moving party in each instance the benefit of all
reasonable inferences.” A.C.L.U. of Nev. v. City of
Las Vegas, 466 F.3d 784, 790-91 (9th Cir. 2006)
(quotation marks and citation omitted); see also Pintos
v. Pac. Creditors Ass'n, 605 F.3d 665, 674 (9th Cir.
2010) (“Cross-motions for summary judgment are
evaluated separately under [the] same standard.”). In
evaluating the motions, “the court must consider each
party's evidence, regardless under which motion the
evidence is offered.” Las Vegas Sands, LLC v.
Nehme, 632 F.3d 526, 532 (9th Cir. 2011). “Where
the non-moving party bears the burden of proof at trial, the
moving party need only prove that there is an absence of
evidence to support the non-moving party's case.”
In re Oracle Corp. Sec. Litig., 627 F.3d 376, 387
(9th Cir. 2010). Thereafter, the non-moving party bears the
burden of designating “specific facts demonstrating the
existence of genuine issues for trial.” Id.
“This burden is not a light one.” Id.
The Supreme Court has directed that in such a situation, the
non-moving party must do more than raise a
“metaphysical doubt” as to the material facts at
issue. Matsushita, 475 U.S. at 586.
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.
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.
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:
(1) Assess rail transportation property at a value that has a
higher ratio to the true market value of the rail
transportation property than the ratio that the assessed
value of other commercial and industrial property in the same
assessment jurisdiction has to the true market value of the
other commercial and industrial property.
(2) Levy or collect a tax on an assessment that may not be
made under paragraph (1) of this subsection.
(3) Levy or collect an ad valorem property tax on rail
transportation property at a tax rate that exceeds the tax
rate applicable to commercial and industrial property in the
same assessment jurisdiction.
(4) Impose another tax that discriminates against a rail
carrier providing transportation subject to the jurisdiction
of the Board under this part.
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).
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.
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.
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.
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. ...