*1 DEPARTMENT OF REVENUE OF OREGON

v. ACF INDUSTRIES, INC., et al. Argued 8,1993 No. 92-74. 24, 1994 November January Decided *2 J., Kennedy, opinion Court, delivered the Rehnquist, in which J., Blackmun, O’Connor, C. and Scalia, Souter, Thomas, and Gins- burg, JJ., joined. Stevens, J., filed a dissenting opinion, post, p. 348.

Virginia L. Linder, Solicitor General of Oregon, argued the cause for petitioner. With her on the briefs were Theo- Kulongoski, dore R. Balmer, Thomas A. Attorney General, Atkinson, Robert M. General, Assist- Attorney Deputy ant General. Attorney

Kent L. Jones for the United States as cause argued amicus curiae him the brief were With on urging reversal. Attorney Days, Acting Assistant General

Solicitor General Gary Paup, Deputy Wallace, Allen, R. Solicitor General Lindsey, Geier, Andrews, Paul Dale Mark G. M. C. S. Joseph King. Phillips

Carter G. the cause for argued respondents. him on the brief was James McBride.* W. With Kennedy delivered the of the Court. opinion Justice *3 The of and local state ad power governments impose valorem taxes railroads and other interstate property upon urging

*Briefs of amici curiae filed for the reversal were State of Iowa by General, Daw; Campbell, Attorney J. A Bonnie and C. for the State of Washington by Gregoire, Attorney Washing- et al. Christine O. General of ton, by Attorneys respective and General for their States as follows: Arizona, Lungren California, of E. Grant Woods Daniel of Robert A But- Florida, Larry Idaho, of terworth EchoHawk of Chris of Gorman Ken- tucky, Minnesota, Humphrey Hubert H. III of Mississippi, Mike Moore of (Jay) Missouri, Joseph Montana, Jeremiah W. Nixon of P. Mazurek of Don Nebraska, Stenberg Mexico, of Tom Udall of New Robert Abrams of New York, Easley Carolina, Michael F. of Heitkamp North Heidi of North Da- kota, Ohio, Oklahoma, Lee Fisher of Loving Susan B. of T. Travis Medlock Carolina, of Tennessee, South Charles W Utah, Burson of Jan Graham of Jeffrey Amestoy Vermont, L. of Stephen Virginia, D. Rosenthal of James Doyle Wisconsin, E. Joseph Meyer of and Wyoming; B. of and for the National Legislatures Conference of State by et al. Richard Ruda and Richard G. Taranto. Richard A Malm and Thomas W. a Railway Andrews filed brief for the

Progress Institute et al. as amici urging curiae affirmance. Briefs of amici curiae were filed for the State of California Daniel Lungren, E. Attorney General, Laddish, Timothy G. Attorney Assistant General, Finn, Richard F. Supervising Deputy Attorney General, and Murphy Robert E. Marguerite Stricklin, and C. Deputy Attorneys Gen- eral; for the Association of by Betty Christian, American Railroads Jo Timothy Walsh, Howe, M. Jr., Jerald Blanchette, S. Robert W. and Ken- Kolson; neth P. and for by Jay Martin, Interstate Air Carriers R. Peter Davis, W. and John E. Carne.

335 carriers has been the source of recurrent under litigation e.g., See, Clause and the Due Process Commerce Clause. Pennsylvania, R. Co. Pa. Central (1962); 607 v. U. S. of Airways, Equalization Inc. Bd. v. Nebraska Braniff Morgan Assessment, Parham, (1954); 347 U. S. 590 us, In the a Wall. case before state property statute, a challenged under federal the Railroad Revital- (4-R Act). ization and Act Reform Pub. Regulatory 94-210, L. 90 Stat. 31. is whether question presented Oregon State

violated statute an ad valorem tax rail- by imposing upon other, all, road while various exempting classes commercial and industrial We hold that property. a State may grant generally applicable ad valorem tax without the taxation subjecting under the relevant challenge provision 11503(b)(4). Act, of the 4-R §306(l)(d), U. S. C. I an ad valorem

Oregon imposes all real and per- sonal within its jurisdiction, except property an §307.030 granted express exemption. Ore. Rev. Stat. (1991). Various classes of are business personal property exempt, including agricultural machinery equipment; *4 nonfarm business inventories; livestock; bees; fur- poultry; bearing animals; and agricultural products possession of farmers. §§307.325,307.400. ex- timber is also Standing empt, to a severance tax when harvested. §321.272. like Oregon, many States, other motor exempts as well, vehicles instead levying them a modest upon annual 803.420(1). §§ registration 803.585, fee. called

Respondents, “Carlines” this are litigation, eight companies lease railroad cars to railroads and ship- The pers. railroad cars are considered “tangible personal property” under Oregon law, §307.030, and are not exempt from taxation. Carlines suit in brought United States §306(l)(d) District Court under Act, the 4-R de- seeking claratory injunctive against levy, relief the assessment, and collection of the State’s their rail- road cars.. part enacted the 4-R Act in to “restore the fi- stability railway system

nancial of the of the United States.” §101(a), drafting legislation, 90 Stat. 33. When Con- “ gress easy prey was aware that the railroads ‘are for State they and local tax ‘nonvoting, assessors’ in that are often targets nonresident, easily for local taxation,’ who cannot re- locality.” move themselves from the Western Air Lines, Equalization Inc. v. Board D., S. 480 U. S. 123, 131 (1987) (1969)). (quoting Rep. p. S. No. 91-630, 3 Section 306 of the Act, 4-R now codified at 49 U. S. C. 11503,addresses (and by prohibiting this concern sions) the States their subdivi- enacting certain taxation schemes that discrimi- against Burlington nate railroads. See Northern R. Co. v. Oklahoma Tax Comm’n, 481 U. S. provisions

The relevant of 11503are contained in subsec- (b), tion which states: following unreasonably

“The acts burden and discrimi- nate interstate commerce, a State, subdivi- authority acting sion of a State, or for a State or subdivi- may any sion of a State not do of them: “(1) transportation assess rail at a value higher that has a ratio to the true market value of transportation than the ratio that the as- sessed value of other commercial prop- and industrial erty jurisdiction in the same assessment has to the true market value of the other commercial and industrial property.

“(2) levy or collect a tax on may an assessment (1) not be made under clause of this subsection. “(3) levy or collect an ad valorem tax on rail transportation property at a tax rate that exceeds the applicable tax rate prop- commercial and industrial erty in jurisdiction. the same assessment

“(4) impose against a another tax that discriminates providing transportation rail carrier ... (b)(l)-(3) straightforward:

The reach of subsections provisions imposition higher These forbid the assessment upon transportation property or ratios tax rates than property.” “other commercial and industrial The (b)(4), scope imposition of subsection forbids the against provid- “another tax that discriminates a rail carrier ing transportation,” is as clear. challenge Oregon’s prop-

The Carlines do not ad valorem (b)(l)-(3). erty tax under subsections We attribute this subjects nonexempt prop- choice to the fact that the State all erty equal pro- “to assessment and taxation and ratable §307.030 portion.” Rev. Rather, Ore. Stat. it is the Oregon’s Carlines’ contention that tax should be considered carrier,” “another tax that discriminates a rail in vio- exempts lation of subsection because it certain classes taxing commercial and industrial while cars in full. reviewing stipulated Court,

The District after record, discriminatory property held that are sub (b)(4). ject challenge pre under subsection the facts On Oregon’s sented, however, the court determined that ad val complied provision. orem with the The court only that, observed exempt other cases, those state taxes ing personal prop more than 50% of nonrailroad commercial erty had been found to contravene See (CA8 1988), Leuenberger, Trailer Train Co. v. 885 F. 2d 415 (1989);Burlington denied, cert. 490 U. S. 1066 Northern R. (CA8 1985). Co. (according Bair, v. 2dF. Because calculations) to the Oregon exempted court’s only 31.4% personal property nonrailroad commercial taxation, granted judgment court to the State. (CA9 1992). Appeals reversed. 961 F. 2d 813

In precedent, accordance with Circuit see Industries, ACF (CA9 1983), Inc. Arizona, 714 F. 2d the court ac- *6 338 (b)(1) (3)

knowledged speak that subsections do not to the — question discriminatory property exemptions. of tax Like Appeals accepted the Court, however, District the property the Carlines’ contention that are (b)(4). subject challenge under subsection court ex “ plained ‘prevent enacted 11503 tax dis against any crimination railroads in whatsoever.’” form (emphasis (citing Ogilvie original) in 2d, F. at 820 v. State Equalization (CA8), D., Bd. N. 657 F. 2d cert. (1981)). denied, U. S. 1086 Rejecting apparent the District Court’s view that ad val- exempting orem tax schemes less than 50% of nonrailroad property proscribed business are not Appeals reading” the Court of held that the “most natural provision exemption “any given of the dictates that to other taxpayers possible but not to railroads” forbidden, exemption[s].” room for “a de level of minimis 961 2d, F. (emphasis original). Oregon’s The court found that property generous tax, under the calculation most to the exempted State, 25% nonrailroad commercial far exceeding any possible exception. de minimis On this ground, the court concluded that the State’s taxation of rail- road Id., violated subsection at 823. Hold- ing that “were exemp- Carlines entitled to the same total preferred property enjoyed,” tion enjoined owners the court levying any upon the State from the Carlines’ railroad property. Ibid. granted (1993),

We certiorari, 508 U. S. 905 and now reverse.

II passing upon validity Oregon’s Before ad valorem 11503(b)(4), Appeals under the Court of preliminary question: District Court addressed a Whether a tax is even to chal- lenge ground under subsection on the that certain other classes of commercial and industrial are We same consider the exempt. question.

Both contend that of subsection parties plain meaning (b)(4), which “another tax that prohibits discriminates carrier,” a rail dictates an answer their In favor. view, State’s the word “another” means “different (b)(1) (3) that which Because precedes it.” subsections ad-— *7 dress taxes and only taxes, it property property follows (b)(4) the term “another tax” in subsection must “a mean tax different from a tax.” The State concludes that property (b)(4) subsection does not to speak discriminatory property tax for the reason that the does' exemptions simple provision not to speak taxes all. property Carlines,

The like the Court of take a different Appeals, They view. understand “another tax dis phrase a criminates rail carrier” to be a residual category to reach state designed tax, any discriminatory including taxes, discriminatory not covered property subsections (b)(1) (3). It follows that tax property disfavor exemptions — railroad ing transportation the Car- property — lines in effect admit fall outside the of scope subsections see Brief (b)(1) (3), for Respondents 16-17—are within the — (b)(4). e. Trailer ambit of subsection Train Co. v. g., Accord, (CA8 Leuenberger, 415, 417-418 885 F. 2d 1988), denied, cert. 490 U. 1066 (1989); Department Revenue Fla. v. S. of of Co., Trailer Train (CA11 1987). 2d 1567, 1573 F. If Con had intended gress to exclude taxes from reach property subsection contend, the Carlines it have would drafted the provision tax other prohibit than a “any prop tax,” and erty phrased statute as it did. Brief for 17. Respondents

Both the State’s and the Carlines’ are readings defensible (b)(4) if subsection is read North- cf. isolation, Burlington ern R. Co. Oklahoma Tax Comm’n, (lan- S., 481 U. at 461 guage declares “plainly [its] purpose”), and so we must look elsewhere to determine its meaning. as a answer, structure whole does an one yield to the

adverse Carlines’ challenge Oregon’s tax. property that a We conclude State from a may grant exemptions gen- ad erally valorem without applicable property exposing taxation to invalidation under sub- section (b)(l)-(3) §of 11503, noted,

Subsections as the im- forbid higher rates assessment ratios position “rail than upon transportation property” “other com- 11503(b)(1)- §§ mercial and industrial 49 U. S. property.” C. and industrial “Commercial which serves as property,” for class unlawful discrimination comparison measuring under those provisions, defined as other than “property, and land used transportation primarily agri- cultural or timber devoted purposes to a commer- growing, levy.” cial or industrial use and 11503(a)(4). (b)(l)-(3) The interplay between subsections and the defi- nition of “commercial and industrial in subsection property” *8 (a)(4) (b)(4). central is to the of subsection interpretation For the definition of example, “commercial and industrial excludes “land used property” primarily agricultural pur- The fact that made this poses.” exclu- particular sion demonstrates its intent to the States to tax rail- permit road at a than property higher rate agricultural land, (b)(3)’s subsection notwithstanding general of prohibition rate discrimination. One still could we maintain, suppose, that taxing at a rate property higher than agricul- tural land should be considered “another tax that discrimi- nates a carrier,” against and thus forbidden under sub- section That interpretation, however, would subvert the statutory plan by reading to prohibit what subsection conjunction subsection (a)(4), was designed to allow. The result would contravene the canon “elementary of construction that a statute should be so as not to render one interpreted part inoperative.”

341 Pueblo Mountain States & Co. v. Telephone Telegraph (internal (1985) Ana, 472 U. S. 249 quotation Santa omitted). marks the definition of “commercial and indus-

Congress qualified further, to trial the class property” limiting comparison to a C. “subject tax 49 U. S. property property levy.” 11503(a)(4). § The statute does not define this which phrase, (1) its on face could bear one of two interpretations: taxed (2) or taxable a broader consist- property; property, category of the mass of ing general within the State’s property juris- tax, diction and to a power including enjoys current exemption.

The first has been the of some criti interpretation subject cism, see Lines, Western Air Inc. v. Board Equalization D., S., S. we (White, J., U. but concurring),* Lines, *Western Air Inc. v. Board D. Equalization S. raised question whether exemptions prohibited certain were under provisions the antidiscrimination Airport Airway Improvement of the (AAIA), 1513(d)(l)(A)-(C), §§ Act of 1982 App. 49 U. S. C. which are identi- Act, for all purposes analogous cal relevant provisions under the 4-R 11603(b)(l)-(3). §§ 49 U. S. C. appeal Supreme The case was on Dakota, Court of South not had held such were Lines, Hughes Air challenge Western Inc. under the AAIA. County, 372 N. W. ruling upon 2d rested this its court conclusion that property” definition of “commercial and industrial AAIA, 1513(d)(2)(D) which, U. S. C. App. parallel like the defini- — 11503(a)(4), in 49 U. tion S. C. property “subject prop- limited to erty levy” exempt property, taxed not —included 2d,W.N. at 110. comparison Because the class which tax discrim- 1513(d)(l)(A)-(C) §§ ination was exempt measured under did not include the court prohibit reasoned that did AAIA exemptions. affirmed, We grounds but on unrelated to the court’s construction of the terms property” “commercial and industrial and “sub- *9 Lines, ject property levy.” to a Western Air tax Equal- Inc. v. Board of D., S. ization S., 480 concurred, U. at 129-134. ex- Justice White pressed his “ground view that the on Supreme which the South Dakota Id., “plainly sustained the tax” was improvident.” 135; see also Airlines, Dakota, Northwest (N. Inc. North 515, v. N. 358 W. 2d 517 D. 1984). 342 the used way Congress

believe it follows from identical lan 11503(c) §in elsewhere 11503. Section confers guage juris courts to diction United States district enforce the 11503(b) terms of the bar otherwise despite imposed by (c)(1) Act, Tax 28 S. C. 1341. Subsection Injunction U. (under district courts certain circum grants power here) stances not pertinent prohibit “an assessment of the rail at a transportation property value that has a ratio to the true market higher value of the rail than the transportation assessed property property levy to a tax of all other value property assessment has to the true jurisdiction market value of all other commercial and industrial property.” added.) (Emphasis

In the context of this which provision, concerns the differen- tial assessment of taxed property, words sub- “property to a must mean ject levy” “taxed property.” Given “normal rule of construction” that statutory “‘“identical words used in different of the same act parts Sorenson are intended to have the same meaning,”’” v. Secretary Treasury, (1986) 860 851, U. S. (quoting Helvering v. Stockholms Bank, Enskilda U. S. Dyers, (in (1934) Atlantic Cleaners & Inc. turn quoting States, United (1932))), U. S. that must phrase the same carry meaning (a)(4), where it quali- fies the definition of “commercial and industrial property.”

All this bears on the case before us. Because property to a “subject means levy” is taxed, the definition of “commercial and industrial property” excludes exempt. Exempt then, is not of the part class comparison discrimina- tion is measured under subsections and it (b)(1) (3), follows — that railroads may challenge property under those provisions.. *10 agricultural pay land,

As was the case with we heed must Congress placed exempt property beyond to the fact that (b)(1) (3). illogical the reach of subsections It would be — Congress, having grant conclude that allowed the States to (b)(1) (3), exemptions in subsections would — nullify turn its around own choice in subsection (b)(4), reading plausible of So the Carlines’ while (see 339), supra, when viewed isolation at is untenable §11503 light of as a whole. See Gade v. National Solid Management (1992); Assn., Wastes U. S. see also United Sav. Assn. Tex.v. Timbers Inwood Forest Asso of of (“A (1988) provision may ciates, Ltd., 484 S. U. ambiguous seem in isolation is often clarified the remain statutory only per der of the of scheme ... because one meanings produces missible a substantive effect that is com law”). patible with the rest of the It is true that exemptions, as an matter, abstract a could be variant of tax Dept. Michigan Treasury, discrimination. See Davis v. 489 U. S. 803 11503, however, structure of warrants the conclusion that subsection does not limit levy state discretion to a tax railroad while exempting property. various classes of nonrailroad

Other considerations reinforce our construction of stat- drafting Congress prohibited ute. In §11503, discrimina- tory tax rates and assessment ratios in terms, no uncertain §§11503(b)(l)-(3), see precise 49 U. S. C. and set forth stand- judicial scrutiny ards challenged rate assessment 11503(c)(1)(2). §§ practices, By see contrast, the statute — speak any degree does not particularity ques- to the exemptions. tion of tax prohibits Subsection “imposing] the States another tax that discriminates against a vague carrier,” point. is, best, on the Con- gress did not state whether are a form forbid- den discrimination rail carriers, and further did not provide distinguish a standard for courts to valid from in- exemption valid schemes. Congress, permitting the taxation of

Had as condition power exempt state intended to restrict *11 are confident that it would have we nonrailroad exemptions clarity precision. Property spoken and with policy. important aspect local tax It was an of state and are § drafted, now, time as it is common at the 11503 was generally applicable taxes ad valorem States property. exempt Before various classes of commercial granted exemptions. See, a number of States such 1960, (1949) § (exempting g., unmanufac- e. Mo. Rev. Stat. 150.040 consigned by held commission articles for sale and tured (1937) §54:4-3.20 merchants); (exempting N. Rev. J. Stat. warehouse); public personal property stored in a Vt. Stat. (1959) (exempting implements tools and Ann., 32, 3802 Tit. highway-building possessed farmers, and and mechanics Tangible Exemption equipment); Jacobs, see also Person- (1939) alty, Exemptions (by in 16 141, 1938, Tax States newly newly permitted “temporary exemption of located or plants, machinery equipment and in such constructed the By plants”). granted 1960’s, about 20 real and States pollution personal exemptions facili- control McNulty, Fight Incentives to Pollution, ties. See State Tax 1970). (Aug. By 747, 748, 1971, 56 A. B. A. J. and n. 8 still majority before enactment of a of the Act, well the 4-R exempted personal one States or more classes of business property, including inventories, business raw materials used manufacturing, manufacturing machinery in textile and al- equipment, lied and mechanics Education tools. See Com- Property Exemptions: States, mission of the Assessment (Mar. 1973). They Reform, 10, Need Table C-l Given prevalence exemptions when §11503’s enacted the Act, 4-R silence on the —in light explicit prohibition of the of tax rate and assessment permit ratio discrimination—reflects a determination place. States to leave their Principles support, compel, of federalism fact our view. 11503, like the whole sets limits Subsection authority authority government, of state an we the taxation sovereignty. g., recognized See, have as central to state e. (1976); Tully Inc., 68, v. 429 U. S. Railroad Co.v. Griffin, determining Peniston, 18 Wall. When impinges upon pre-empts breadth of federal statute that or powers, the States’ traditional we are hesitant to extend beyond scope. Cipollone Liggett statute its evident See (“We (1992) Group, Inc., not, 505 U. S. do absent unambiguous scope pre-emption beyond infer a evidence, clearly by Congress’ language”) that which mandated concurring); (opinion J., id., at 523 of Stevens, (Blackmun, *12 J.); Reynolds County, R. J. Tobacco Co.v. Durham 479 U. S. (1986). interpret pre:empt 130,140 will to the We statute only powers traditional state if is “the and that result clear purpose Congress.” manifest Fe Rice Santa Elevator (1947). Corp., explained 331 U. S. As above, neither (b)(4) nor subsection the whole of 11503meets this standard regard prohibition exemptions. with to the tax legislative history The Carlines contend that the of 11503 upon interpretation, history casts doubt our but the the —to any inquiry extent it has relevance to our the Car- —affords excerpts legislative lines no The comfort. from the record nothing cited the Carlines do than more manifest Con- gress’ general discriminatory concern with the taxation of (1976)(de- g., Rep. p. See, carriers. e. No. 94-595, S. scribing the adopted, Senate bill, the Conference as prohibiting imposition any “the tax other which results discriminatory any in the treatment of common or contract carrier”). point single do Carlines ato instance legislative suggesting par- any record had exemptions, ticular concern with tax or that Con- gress prohibit exemptions intended to in subsection In suggests fact, the opposite available evidence of what the Carlines would Cong. have us believe. See 120 Rec. (b)(4) (1974) (providing that subsection assurances granting prevent tax from the States

would not (remarks Reps. development) encourage industrial to Kuykendall). Staggers, Adams, single instance to a attention draw our do the Carlines Nor history in which 15-year legislative Act of the 4-R in the industry expressed concern representatives of the railroad exemptions. discriminatory property fact, In about (b)(4), industry adopt urging to the Senate when prohibiting provision as representatives characterized gross receipts discriminatory taxes; only in lieu taxes exemptions, mentioned. were not contrast, Transpor- Hearings on Surface before the Subcommittee See Legislation on on Commerce Committee tation of Senate Cong., Passenger Sess., 1st Relating 94th Service, to Rail argument pp. pt. sum, In Carlines’ 1837, 1883 history legislative respect foundation. is without that our inter- the contention matter, we address As a final result. to an anomalous pretation leads of subsection nonsensical for Con- that it would be maintain The Carlines higher imposing rates gress prohibit the States upon than other ratios or assessment permitting the time States while at the same taxed property alto- exempt nonrailroad or all classes of some argued, prohibits gether. discrimination of it is result, That *13 permits think our it in the extreme. We form, a mild implausible. interpretation is not at all begin railroads— this is not a case in which the with, To targeted group— part and alone or as of some isolated either only to an ad valorem are the commercial entities Superior, Burlington property Northern R. Co.v. tax. Cf. (CA7 1991) (occupation tax on owners and 2d 1185 932 F. practical operators effect, in docks,” of “iron ore concentrates carrier). only particular applied to docks owned one say might it be incorrect to arise, If such a case were to “exempted” property. Rather, one the State the nontaxed say singled property that the had could State out discriminatory for treatment. Hellerstein Hell- See J. & W. (5th 1988)(the erstein, State and Local Taxation 973 ed. term “exemption” every does not mean from reach exclusion levy, “property, persons, a but rather exclusions trans- base”). logically actions . . . which are within the tax On Oregon’s us, the record before ad valorem tax does single not out railroad manner, need we prohibit decide whether not would tax of that nature. though may

In addition, some think it unwise to forbid discrimination in tax rates and assessment ratios while permitting exemptions property, of certain nonrailroad result is “so bizarre that ‘could not have ” Manspeaker, intended’ it. Demarest v. 498 U. S. (1991) (citing Contractors, Inc., v. Oceanic 458 U. S. Griffin (1982)). grant property 564, 575 half About States exemptions encourage investment in air and water pollution control devices. See 1 691- CCH State Tax Guide practice grant it is And standard for States to pur to commercial other entities for beneficial 21(F) poses. e.g., (10-year See, Const., VII, La. Art. ex emption any manufacturing [any] “new establishment or existing establishment”); manufacturing addition an Ore. (1991) §285.597 (exemption Rev. Stat. for business (1991) §58.1-3661 “enterprise zone”); an Va. Ann. Code (permitting any county, city, exempt or town from its energy equipment, tax “solar or facilities devices” devices”). “recycling equipment, or facilities, It Congress’ weigh within sound discretion to benefit preserving exemptions, those hand, on the one protecting every benefit of rail carriers from tax scheme that property, favors some nonrailroad on the other. expresses Congress’

We conclude that reso- lution matter, of the does not limit the States’ discretion to exempt property, nonrailroad but not railroad *14 We taxes of general application.

ad valorem of and of the Court Appeals therefore reverse judgment consistent with this opinion. remand the case for proceedings

It is so ordered. Stevens, dissenting. Justice 306(l)(d) and Regu- of the Railroad Revitalization Section (4-R amended, as Act), 54, Act of 1976 90 Stat. Reform latory 11503(b)(4) (subsection (b)(4)), States prohibits 49 U. S. C. In taxes that discriminate railroads.1 against from imposing a state tax that fell railroad view, my nonrailroad was exempt, comparable errs in would that clearly implicate prohibition. that such are not even to chal- holding arrangements under subsection lenge (b)(4)

Because subsection its terms bars tax that by any it is not carriers, “discriminates” against surprising of have held that Appeals provision applies Courts to revenue measures that discriminate taxes on by imposing similar owned by exempting (and others.2 While those courts the District Court and (b)(4) enacted, originally prohibited As the States from im “any posing discriminatory other tax which in results treatment of a com railroad____” Act, §306(l)(d), mon carrier 4-R 90 Stat. 54. Pursuant 1978, to a recodification in speaks the current version of subsection of “another tax against” Congress spe discriminates rail carrier. cifically provided “may that the 1978 recodification not be construed as making change replaced.” a substantive in the laws 92 Stat. 1466. 2In case, addition to the Ninth Circuit’s decision this 961 F. 2d (1992), see Department Co., Revenue Fla. v. Trailer Train 818-820 (CA11 1987) 1567, 1573 F. “discrimination in all (provision targets 2d guises” its “requires determining consideration of tax treatment”) (citation whether there has been discriminatory and internal omitted); Oglivie D, quotation Equalization v. State Bd. N. marks (CA8) 657 F. 2d (history provision 209-210 demonstrates that “its purpose prevent any was tax discrimination railroads in form whatsoever,” including exemption property), denied, of nonrailroad cert.

349 case) Appeals precisely in this how Court of have differed on exemption unlawfully a “dis- to decide whether wholesale gives liability, to criminates” and thus rise none has taken position accepted by today predi- that a claim discriminatory exemptions cognizable cated on is not under (b)(4). subsection (b)(4) explains, ante,

As the Court subsection does specific prohibition against imposing not contain a on rail- roads an tax ad valorem from which other owners exempt. omission, course, are That does not answer the question Oregon imposed before us: whether the tax that has against meaning “discriminates a rail carrier” within the (b)(4). might subsection A State discriminate a dis- taxpayers variety ways. favored class a The absence provision specifically addressing exemp- in the 4-R Act a significant provision tions nois more than the absence of a addressing collecting pro- deductions, credits, methods of or testing penalties. Surely taxes, state or a state tax law that taxpayers except allowed tax substantial deduction for all readily recognized discriminatory. rail carriers would be as That conclusion would not be affected that the the fact speak specifically antidiscrimination statute does not de- to suggests exemption Indeed, ductions. the Court that an taxpayers except all rail carriers would make the dis- criminatory. ante, See at 346. addressing every might

Rather than means that be de- discriminatory vised to accord tax treatment to carriers, (differential Congress specified two familiar methods rates assessments) general provision and then included a de- U. Only S. 1086 Virginia Supreme Court has reached the Richmond, contrary conclusion, & R Corporation F. R. Co. v. State see Comm’n, 260, 262, (1985), Va. E.S. 2d and it did so on a I basis do not understand accept today the Court to ad because —that valorem property are subsections, taxes treated in the first three an ad may valorem be discriminatory never attacked as under sub section to block other routes to the same end. In my signed opin- 11503(b) ion, it is anomalous to read even minor prohibit assessments, deviations in rates or but then allow States burdens on railroads put manifestly disproportionate most Both the text of by exempting comparable property. and its evident convince me that purposes means, intended to bar discrimination in- by any cluding exemptions.

In Davis v. Michigan Dept. Treasury, 489 U. S. 803 of (1989), this Court held that a State’s of a limited exemption class of residents violated a general statutory prohibition (4 111) taxation against U. S. C. that made discriminatory no reference to IWhile specific exemptions. disagreed the Court’s conclusion that the limited at issue exemption could be fairly characterized as discrimination the against class, Davis demonstrates that protected surely an exemp if tion, even not may the con expressly prohibited, support clusion that a tax Indeed, is discriminatory. make a tax

may unconstitutionally See, discriminatory. Dias, e. Bacchus g., Ltd. v. Imports, (1984); 468 U. S. Armco Inc. Hardesty, 638, 642-646 I U. S. see no reason should be why they when totally ignored has “discrimination” expressly prohibited against particu lar kind of interstate enterprise.

The Court stock in the difference between puts great the and strict bar specific against tax rates and discriminatory (b)(l)-(3) assessments subsections and the open-ended of subsection language (b)(4), which speaks only of tersely As the Court the “discriminat[ion].” definition explains, of “commercial and industrial that is property” applicable (b)(l)-(3) subsections is best read to embrace only property taxed, that rather than If we exempted. were accept (b)(4) the Carlines’ position, reasons, subsection would render the earlier redundant and would provisions the limitations “nullify” on the rate and Congress placed Ante, assessment I provisions. disagree. 343. discriminatory targets ban on rates assessments patent historically two forms of discrimination. common ratios, In order to find discrimination in rates or assessment only compare applica- a court need the rates and assessments to the ble to railroads rates and assessments of other owners comparable property. inquiry That would be com- plicated required if indeed the courts were to divine the governing property “rates” and “assessments” that is ex- empt surprising, then, from tax. It is not strict against disparate bars rates and assessments exclude from comparison class that is not taxed at all. Congress’ exempted property exclusion com- (b)(1) (3) parison purposes class for does subsections — (b)(4), scope provi- determine the subsection for that depend sion does not on limited definition of “commercial property” governs neighbors. and industrial its Read- ing require judicial scrutiny subsection state ex- emption disharmony schemes creates no with subsections (b)(1) (3) unless one assumes that the test of “discrimina- — per under

tion” like the se rules *17 prohibits differential rates and assessments, all the but most prop- minor differentials in tax treatment between railroad erty property. assumption and owners of similar That is unwarranted. (like today

The statute before the Court the statute it con- Davis) strued in does not contain a definition term concept policies “discrimination,” but that familiar and the provide guidance. 4-R Act Like the statute at issue protects taxpayers Davis, the 4-R Act who often have policy taxing little voice in the State, decisions of the likely whose targets situation makes them for unfavorable prohibition treatment.3 The of discrimination should be high Railroads’ rates of fixed investment their immobile assets them leave able less than other enterprises interstate to restrain state taxation threatening pull up Burlington their stakes and leave. See Superior, Northern R. v. Co. 1185, 1186 (CA7 1991). 932 F. 2d give read to effect to those concerns, it need not be read broadly. prohibited more A sensible test for discrimina- focusing protected being on whether class is tion— treated substantially favorably similarly less than most situ- persons employ ated leave the States room to ex- —would emptions falling without afoul of subsection suggests, As amicus the Solicitor General a discrimination impose disparate allows the standard States to tax burdens disparity supported by legitimate when the some differ- exempted ence between the nonrailroad and the property.4 my exemption taxed railroad In view, an for a minority taxpayers small of the resident would not warrant prohibited a conclusion that “discrimination” has occurred. dissenting). Davis, S., See U. 819-823 (Stevens, J., (b)(4)merely protects Because subsection railroads from dis- conferring right crimination, rather than on them a to be favorably taxpayer, treated like the most treated a violation paid prop- would not be established when the tax on railroad erty materially greater imposed is not than the tax on most comparable property.5 surely imposed But a tax on rail car- merely riers is not saved from discrimination because some (e. carriers) enterprise g., other kind of subject motor is also to taxation. purpose part

The evident of this of the 4-R asAct, recognizes, protect is to a class of interstate enter- prises traditionally subject disproportion- has been ately heavy state and local tax burdens. This is an area in authority always which state has been most circumscribed, might, A State example, be able to exemption by defend an showing exempted class was equivalent to an tax to which rail roads were not. reasons, For similar Appeals the Court of erred when it held that the *18 remedy discriminatory for a exemption scheme is a refund of the entire tax paid by the railroad. 2d, See 961 F. remedy 823. To unlawful discrimination under subsection a State only need refund the differ ence between the tax collected from the railroad average and the tax im posed on comparable owners of property.

353 prominently by the Commerce Clause itself. Subsection (b)(4) requires plainly readjust arrange- their tax States to arrangements “discriminate].” ments to the extent I those agree “compels” cannot (b)(4) that federalism us to read subsection inapplicable exemption arrangements. ante, as to See at 345. weigh heavily

Federalism concerns would more in favor of Oregon’s position suggests, if, ante, as the Court at 344-345, reading apply exemption subsection to to schemes require exempting would States to choose between railroads eliminating exemptions or tax across the as I board. But explained, reading required. have such a no means Be- statutory permits cause the term “discrimination” the States greater flexibility employ than the bans on do disparate assessments, rates and concerns about Court’s imposing onerous choices on States are overstated.6 More- exemption meaningfully over, an that is available rail- example exemption roads—as in the Court’s of an for funds spent cleanup on environmental not make a tax “dis- —would criminatory” merely exemption may because the be more useful for some other businesses than it is for railroads. Burlington Superior, Cf. Northern R. v. 1185, Co. 932 F. 2d (CA7 1991)(invalidating activity “imposed on an only engage”). a railroad or railroads appears hedge against position The its that sub- (b)(4) flatly apply exemption section does not to taxes and operate disproportionately. schemes to burden railroads Thus, the Court intimates that the state ad valorem 6The cases in which exemption schemes have been unlawful under found (b)(4) certainly any do not suggest undue incursions into state g., policy. See, fiscal e. Trailer Leuenberger, Train Co. v. 885 F. 2d (CA8 1988) (violation imposed found because State ad valorem on personal property railroad over exempted percent comparable denied, property), Burlington (1989); cert. 490 U. S. 1066 Northern R. Co. Bair, (CA8 1985) (tax F. 2d 1223-1224 on personal property coupled exemption percent personal of other statute). violated *19 (b)(4), be under subsection to

must, scrutiny in order escape ante, and that a scheme 335, 340, applicable,” “generally all nonrailroad exempted but taxed not be a bona it would be unlawful because might ante, at 346-347. If I were con- fide See “exemption.” taxes were gener- ad valorem property that Oregon’s vinced I would with the Court’s disposition agree ally applicable, breadth of the exemptions, The narrowness or this case. na- the evenhanded or discriminatory and correspondingly railroads, whether a subsection on goes ture of the tax whether it is merit, cognizable. has not to claim no basis for prohibiting exemption statute provides allowing exemp- of nonrailroad property 100 percent of, percent. tion for example, of the “discrimina-

I that application statutory recognize of line will sometimes involve draw- problems tion” standard raise diffi- that discriminatory exemptions special ing, the statute courts to view, But, requires culties. my I remand those difficulties. the case grapple would it an to resolve the give opportunity Court Appeals the extent of burdens any about disparate parties’ disputes valorem and to on rail carriers ad by Oregon’s imposed in accordance with the con- review the discrimination issue in this siderations set forth opinion. I dissent.

Accordingly, respectfully