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CSX TRANSP., INC. v. TENNESSEE STATE BD. OF EQUALI

July 20, 1992

CSX TRANSPORTATION, INC.
v.
TENNESSEE STATE BOARD OF EQUALIZATION



The opinion of the court was delivered by: THOMAS A. WISEMAN, JR.

MEMORANDUM OPINION

 This is a civil action seeking to restrain and enjoin the defendant, and those acting in concert and participating with it, from assessing, levying or collecting ad valorem personal property taxes from the plaintiff for the 1990 tax year, to the extent that such taxes are discriminatory and unlawful under Section 306 of the Railroad Revitalization and Regulatory Reform Act of 1976, Pub. L. No. 94-210, 90 Stat. 54 (Feb. 5, 1976), codified at 49 U.S.C. § 11503 and referred to herein as "Section 306."

 The language of 49 U.S.C. § 11503 as codified differs from the language of Section 306 as enacted. The codification of 49 U.S.C. § 11503 cannot be construed as making any substantive changes to the meaning of Section 306. See Burlington Northern Railroad Company v. Oklahoma Tax Commission, 481 U.S. 454, 457, 95 L. Ed. 2d 404, 107 S. Ct. 1855, n.1 (1987).

 This Court has jurisdiction pursuant to Section 306 which confers jurisdiction upon the United States district courts to prevent a state, subdivision of the state or any authority acting for a state or subdivision, from imposing discriminatory ad valorem taxes on common carriers by rail. This Court has further jurisdiction based on 28 U.S.C. § 1337 and 28 U.S.C. § 1331.

 The parties have stipulated to the following facts:

 1. Plaintiff, CSX Transportation Inc. ("CSXT"), is engaged in interstate commerce as a common carrier by rail.

 2. Defendant, Tennessee State Board of Equalization ("Board"), is the State agency responsible for the final valuations of ad valorem property taxes on railroads within the State of Tennessee pursuant to T.C.A. § 67-5-1329.

 3. Railroad operating property which is the subject of the contested assessment is transportation property with the meaning of Section 306 and 49 U.S.C. § 11503.

 4. Railroad property was appraised for assessment purposes by the Public Service Commission for the 1990 tax year at 100% of true market value before equalization factors were applied.

 5. For 1990, 36.84% of CSXT's rail transportation property consisted of personal property and 63.16% of CSXT's rail transportation property consisted of real property.

 The Court denied a preliminary injunction in the case which was affirmed on appeal. CSX Transportation, Inc. v. Tenn. State Board of Equalization, 964 F.2d 548 (6th Cir. 1992).

 The case was then tried before the Court without a jury on February 25 through February 28, 1992. CSXT presented testimony from two expert witnesses, Melvin Fineberg and Dick Netzer, Ph.D. CSXT also presented deposition testimony from Camille Noah-Hubbard, the Manager of Personal Property for Shelby County; James Bayne, the Manager of Personal Property for Davidson County; and Rule 31 deposition testimony from the county assessors of 15 other counties.

 The Board presented testimony from Kenneth Morrell, Barry Murphy, Kelsie Jones, Claude Ramsey, Lynda Ruehling, and Park Strader, and the expert testimony of William Fox, Ph.D., Harry Green, Ph.D., and Robert Gloudemans. The Board also presented the deposition testimony of J. P. Ayers.

 In rebuttal, CSXT called Dr. Netzer and Henry H. Fishkind, Ph.D. In surrebuttal testimony, the Board re-called Dr. Green and, via telephone deposition, Dr. Fox.

 At the conclusion of all the testimony, the Court requested proposed findings of fact and conclusions of law as well as written argument from the parties. From a consideration of the entire record in the cause, the Court holds that the plaintiff has failed to demonstrate by a preponderance of the evidence a violation of Section 306.

 Findings of Fact

 In Tennessee most commercial, industrial, residential and farm property is valued locally by county assessors. T.C.A. §§ 67-5-102, 103. Assessments of personal property are made annually primarily on the basis of information supplied by the property owners in schedules filed with the county assessor.

 Assessments of public utility and common carrier property, including the plaintiff's property, are made annually by the Assessment Division of the Tennessee Public Service Commission, primarily upon the basis of information supplied by the property owner in a schedule filed with the Assessment Division. T.C.A. § 67-5-1301. The assessments are reviewed by the State Board of Equalization and equalized on the basis of ...


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