BNSF Railway Co. v. Oregon Department of Revenue, No. 19-35184 (9th Cir. 2020)
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BNSF filed suit under the Railroad Revitalization and Regulatory Reform Act of 1976 (4-R Act), alleging that the tax on its intangible personal property is "another tax that discriminates against a rail carrier" under 49 U.S.C. 11501(b)(4).
The Ninth Circuit joined the Fourth, Seventh, Eighth, and Tenth Circuits and held that challenges to discriminatory property taxes may proceed under 49 U.S.C. 11501(b)(4). The court rejected the Department's claims to the contrary and explained that this is not a challenge to exemption-based discrimination. The panel agreed with the district court that the proper comparison class for BNSF was Oregon's commercial and industrial taxpayers, and that the intangible personal property tax assessment discriminated against BNSF in violation of the 4-R Act.
Court Description: Rail Carriers. The panel affirmed the district court’s grant of summary judgment in favor of BNSF Railway Co., a rail carrier that challenged the Oregon Department of Revenue’s imposition of a tax on its intangible personal property, such as accounting goodwill. Agreeing with other circuits, the panel held that BNSF could challenge the property tax under the Railroad Revitalization and Regulatory Reform Act, known as the 4- R Act, which prohibits taxes that discriminate against rail carriers. The panel rejected the argument that tax was generally applicable and that BNSF’s challenge was no more than a demand for exemptions offered to other taxpayers. The panel held that the proper comparison class for BNSF was Oregon’s commercial and industrial taxpayers, and the intangible personal property tax assessment discriminated against BNSF in violation of the 4-R Act, 49 U.S.C. § 11501(b)(4). Concurring, District Judge Chhabria wrote that he joined the opinion in full. He wrote separately to emphasize the point that the Oregon Department of Revenue failed to argue that the tax was not discriminatory, either by contesting that BNSF RAILWAY V. OREGON DEP’T OF REVENUE 3 locally assessed taxpayers are similarly situated with respect to intangible personal property or by offering a justification for taxing the intangible personal property of one group and not the other.
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