CSX TRANSPORTATION, INC. V. GEORGIA STATE
BOARD OF EQUALIZATION ET. AL.
On appeal from the Eleventh Circuit Court of Appeals.
Who was arguing in the Supreme Court this time?
CSX Transportation Inc. (the big railroad company) and Georgia had a little tax dispute.
Georgia’s appraised CSX’s property 46% more in 2002 than 2001.
How did they make it to the Supreme Court?
CSX sued GA in federal district court, and lost. CSX appealed to the 11
th Circuit and lost. The
Supreme Court took CSX’s appeal.
Who won?
CSX lost in federal district court and in the federal court of appeals. Naturally, CSX
won the case in front of the Supreme Court: 9-0.
How did CSX beat the Georgia taxman/taxwoman?
In 2001, Georgia levied $4.6 million in property taxes on CSX's property. The next year,
the property tax jumped to $6.5 million, because Georgia estimated that CSX
was worth 47% more in 2002 than 2001. CSX wasn’t pleased at the big tax hike, and so it sued
Georgia in federal court.
You may be asking yourself, “How can I do that?” Unless you happen to be a railroad, you can’t. As with many businesses, railroads have a special law. Congress passed this law so that states
wouldn’t tax the railroads at a higher rate than other commercial
properties. The law prevents states from discriminating against railroads by taxing them more
than other commercial property:
“[States can not] [a]ssess 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.”
49 U.S.C. §11501(b)(1)
That could be rewritten: “When taxing railroads, states can’t value railroad property for
more than they value other commercial properties.”
CSX and Georgia were fighting over Georgia’s method to value CSX’s property. CSX thought
Georgia used a bad method. When the parties met in court, CSX had its expert
assessor explain why Georgia’s expert assessor got it wrong.
The district court decided that the law didn’t allow the district court to examine the
method. Georgia didn’t use a different method for other companies, so that was good enough for
the district court. It was not good enough for the Supreme Court.
Federal district courts have to figure the railroad property’s true market value to decide if the state overvalued the railroad's property. If district courts adopt the
states’ method to determine the true market value (without considering
the railroads’ conflicting method), then states would almost always win. The true market value would always match the amount that the state taxed the property.
The Supreme Court believed the statute allowed the district courts to consider the state’s appraisal method, because practical result of the district court's rule would be inconsistent with finding true market value.
What life lesson does this teach us?
If you are a railroad that is worried about discriminatory taxes, get Congress to write a law that
lets you attack the method your state uses to appraise your property. Then, if the state actually
does discriminate, you can claim a right that no other tax payer has: the right to challenge your
state’s property tax appraisal in federal court.
What’s the quotable quote?
“Congress clearly permitted courts to question state valuation methodologies when it banned
discriminatory assessment ratios and made true market value a question to be litigated in federal
court.”
What’s the longest word the Supreme Court wrote?
Appears to be a tie -
approximations or
doublechecking. Clarinet Esq. was rooting for
methodologies - a big word that suggests that the Court is allowing CSX not just to attack the
appraisal method, but the theory the appraisal method derives from.
Third runner-up is assessed-to-true-market. It lost because it had an unfair hyphenation advantage.
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