Department of Revenue of Ore. v. Acf Industries, Inc.
| Decision Date | 24 January 1994 |
| Docket Number | No. 92-74.,92-74. |
| Citation | 510 U.S. 332 |
| Parties | DEPARTMENT OF REVENUE OF OREGON <I>v.</I> ACF INDUSTRIES, INC., ET AL. |
| Court | U.S. Supreme Court |
The Railroad Revitalization and Regulatory Reform Act of 1976, in relevant part, forbids States to impose (1) higher property tax rates and assessment ratios upon "rail transportation property" than upon "other commercial and industrial property," 49 U. S. C. §§ 11503(b)(1)-(3), and (2) "another tax that discriminates against a rail carrier providing transportation," § 11503(b)(4). Oregon exempts from its ad valorem property tax various classes of business personal property, but not railroad cars owned by respondent companies. They filed suit in the District Court, alleging that the tax violates § 11503(b)(4) because it exempts certain classes of commercial property from taxation while taxing railroad cars in full. Both the District Court and the Court of Appeals agreed that discriminatory property tax exemptions may be challenged under subsection (b)(4). However, the Court of Appeals reversed the lower court's finding that Oregon's tax complied with the provision, holding instead that respondents were entitled to the same exemption enjoyed by preferred property owners.
Held: Section 11503 does not limit the States' discretion to exempt non-railroad property, but not railroad property, from generally applicable ad valorem property taxes. Pp. 338-348.
(a) Respondents' position that "another tax that discriminates against a rail carrier" is a residual category designed to reach any discriminatory state tax, including property taxes, not covered by subsections (b)(1)-(3) is plausible only if subsection (b)(4) is read in isolation. However, the structure of § 11503 as a whole supports the view that subsection (b)(4) does not speak to property tax exemptions. "[C]ommercial and industrial property," which serves as the comparison class for measuring property tax discrimination under subsections (b)(1)-(3), is defined in subsection (a)(4) as "property, other than transportation property and land used primarily for agricultural purposes or timber growing, devoted to commercial or industrial use and subject to a property tax levy." The interplay between subsections (b)(1)-(3) and this definition is central to subsection (b)(4)'s interpretation. For example, Congress' exclusion of agricultural land from the definition demonstrates its intent to permit the States to tax railroad property at a higher rate than agricultural land, notwithstanding subsection (b)(3)'s general prohibition of rate discrimination. To consider such a tax "another tax" under subsection (b)(4) would subvert the statutory plan by reading subsection (b)(4) to prohibit what subsection (b)(3), in conjunction with subsection (a)(4),was designed to allow. The result would contravene the elementary canon of construction that a statute should be interpreted so as not to render one part inoperative. Pp. 338-341.
(b) The phrase "subject to a property tax levy" further qualifies the subsection (a)(4) definition. When used elsewhere in § 11503, that phrase means property that is taxed; and since identical words used in different parts of the same Act are intended to have the same meaning, the phrase must carry the same meaning in subsection (a)(4), Sorenson v. Secretary of Treasury, 475 U. S. 851, 860. Thus, exempt property is not part of the comparison class. It would be illogical to conclude that Congress, having allowed States to grant property tax exemptions in subsections (b)(1)-(3), would turn around and nullify its own choice in subsection (b)(4). Pp. 341-343.
(c) Other considerations reinforce the foregoing construction of the statute. Section 11503's silence on the subject of tax exemptions—in light of the explicit prohibition of tax rate and assessment ratio discrimination —reflects a determination to permit the States to leave their exemptions in place. Principles of federalism compel this view, for a statute is interpreted to pre-empt traditional state powers only if that result is the clear and manifest purpose of Congress. The statute's legislative history casts no doubt upon this interpretation. Nor does the interpretation lead to an anomalous result. Since railroads are not the only commercial entities subject to Oregon's tax, it need not be decided whether subsection (b)(4) would prohibit a tax that did single out railroad property. And since it is within Congress' sound discretion to weigh the benefit of preserving some exemptions against the benefit of protecting rail carriers from every tax scheme that favors some nonrailroad property, the result reached here is not so bizarre that Congress could not have intended it. See Demarest v. Manspeaker, 498 U. S. 184, 191. Pp. 343-348.
961 F. 2d 813, reversed and remanded.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT.
Virginia L. Linder, Solicitor General of Oregon, argued the cause for petitioner. With her on the briefs were Theodore R. Kulongoski, Attorney General, Thomas A. Balmer, Deputy Attorney General, and Robert M. Atkinson, Assistant Attorney General.
Kent L. Jones argued the cause for the United States as amicus curiae urging reversal. With him on the brief were Solicitor General Days, Acting Assistant Attorney General Paup, Deputy Solicitor General Wallace, Gary R. Allen, Paul M. Geier, Dale C. Andrews, S. Mark Lindsey, and G. Joseph King.
Carter G. Phillips argued the cause for respondents. With him on the brief was James W. McBride.*
The power of state and local governments to impose ad valorem property taxes upon railroads and other interstate carriers has been the source of recurrent litigation under the Commerce Clause and the Due Process Clause. See, e. g., Central R. Co. of Pa. v. Pennsylvania, 370 U. S. 607 (1962); Braniff Airways, Inc. v. Nebraska Bd. of Equalization and Assessment, 347 U. S. 590 (1954); Morgan v. Parham, 16 Wall. 471 (1873). In the case before us, a state property tax is challenged under a federal statute, the Railroad Revitalization and Regulatory Reform Act of 1976 (4-R Act). Pub. L. 94-210, 90 Stat. 31.
The question presented is whether the State of Oregon violated the statute by imposing an ad valorem tax upon railroad property while exempting various other, but not all, classes of commercial and industrial property. We hold that a State may grant exemptions from a generally applicable ad valorem property tax without subjecting the taxation of railroad property to challenge under the relevant provision of the 4-R Act, § 306(1)(d), 49 U. S. C. § 11503(b)(4).
Oregon imposes an ad valorem tax upon all real and personal property within its jurisdiction, except property granted an express exemption. Ore. Rev. Stat. § 307.030 (1991). Various classes of business personal property are exempt, including agricultural machinery and equipment; nonfarm business inventories; livestock; poultry; bees; furbearing animals; and agricultural products in the possession of farmers. §§ 307.325, 307.400. Standing timber is also exempt, but is subject to a severance tax when harvested. § 321.272. Oregon, like many other States, exempts motor vehicles as well, instead levying upon them a modest annual registration fee. §§ 803.585, 803.420(1).
Respondents, called the "Carlines" in this litigation, are eight companies that lease railroad cars to railroads and shippers. The railroad cars are considered "tangible personal property" under Oregon law, § 307.030, and are not exempt from taxation. The Carlines brought suit in United States District Court under § 306(1)(d) of the 4-R Act, seeking declaratory and injunctive relief against the assessment, levy, and collection of the State's property tax upon their railroad cars.
Congress enacted the 4-R Act in part to "restore the financial stability of the railway system of the United States." § 101(a), 90 Stat. 33. When drafting the legislation, Congress was aware that the 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." Western Air Lines, Inc. v. Board of Equalization of S. D., 480 U. S. 123, 131 (1987) (quoting S. Rep. No. 91-630, p. 3 (1969)). Section 306 of the 4-R Act, now codified at 49 U. S. C. § 11503, addresses this concern by prohibiting the States (and their subdivisions) from enacting certain taxation schemes that discriminate against railroads. See Burlington Northern R. Co. v. Oklahoma Tax Comm'n, 481 U. S. 454, 457 (1987).
The relevant provisions of § 11503 are contained in subsection (b), which states:
The reach of subsections (b)(1)-(3) is straightforward: These provisions...
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