CSX Transportation, Inc. v. Georgia State Board of Equalization

In 1976 Congress enacted the Railroad Revitalization and Regulatory Reform Act (the act) to protect the rail industry. The act forbade states from discriminating against railroads by assessing railroad property at a higher value than other commercial property for state property-tax purposes. If a state valued railroad property at a rate at least 5 percent higher than it valued other property, a federal district court could enjoin the state’s tax. CSX Transportation, Inc. (CSX) (plaintiff) was a rail carrier that owned property in Georgia. Under Georgia law, although most commercial property was valued by county boards, railway property was valued by the state board of equalization (the board) (defendant). In 2001 the board assessed CSX’s state property-tax liability as $4.6 million. In 2002 the state changed its valuation methods and found that CSX’s property was worth 46 percent more than its 2001 assessed value. As a result, CSX’s 2002 property-tax liability was $6.5 million. CSX filed a lawsuit in federal district court arguing that the board’s 2002 tax assessment violated the act by overestimating the value of CSX’s property. To support its argument that the board valued its railroad property at a rate 5 percent higher than the state valued other commercial property, CSX introduced evidence from a professional appraiser whose appraisal methods differed from those used by the board. The district court ruled in favor of the board, reasoning that the board used accepted valuation methods to determine the value of CSX’s property. The district court further held that the act did not allow a railroad to challenge a state’s chosen valuation methods, but instead limited challenges to applications of a state’s chosen valuation methods. The court of appeals affirmed, explaining that the text of the act did not allow a railroad to challenge a state’s valuation methods and that allowing such a challenge would interfere with a state’s taxing power. The United States Supreme Court granted certiorari.