CSX Transportation, Inc. v. Georgia State Board of Equalization - Oral Argument - November 05, 2007

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

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

Audio Transcription for Opinion Announcement - December 04, 2007 in CSX Transportation, Inc. v. Georgia State Board of Equalization

Audio Transcription for Oral Argument - November 05, 2007 in CSX Transportation, Inc. v. Georgia State Board of Equalization

John G. Roberts, Jr.:

We'll hear argument first this morning in Case 06-1287, CSX Transportation v. the Georgia State Board of Equalization.

Mr. Phillips.

Carter G. Phillips:

: Thank you, Mr. Chief Justice, and may it please the Court: Congress in what is now Section 11501(b)(1) crafted what this Court described as a straightforward approach to determining whether a State is unlawfully taxing railroad property.

Congress used a precise formula that is set out in a pictorial form on page 6 of the Petitioner's brief, and I think it's probably easier to kind of follow along on that.

What basically Congress said is that the court in making a determination as to whether there's an illegal tax considers the assessed value of rail transportation property as the numerator on the left side of the fraction, compares that to the true market value of rail transportation property, and then compares that ratio to the ratio created by examining the assessed value of other commercial and industrial property over the true market value.

Fortunately, in this particular case three out of four of those variables are agreed to by the parties, so the only issue in this case is what constitutes the true market value of the rail transportation property within the meaning of that statute.

This Court in Burlington Northern first evaluated the language of this statute and held, in what I think the Court later would describe as a straightforward fashion, that 10501(b)(1) declares that the district court... for the district court, that it is necessary for that court to determine what the true market values of the respective properties are.

Samuel A. Alito, Jr.:

Is it realistic to think that you can calculate with any degree of precision what the true market value of CSX's property is?

The range of values that were calculated by both of these experts are really astonishing, from 12.3 billion to 8.1 billion for Dickerson, from 9.3 to 5.9 for Tegarden.

It's like $3 billion or $4 billion doesn't mean anything.

What is the... can this be done with any precision or is it more realistic just to say that what the district court would have to do is to figure out whether the State's calculation is within some reasonable range?

Carter G. Phillips:

No, I think it's pretty clear that Congress did not adopt that particular formulation.

What Congress tasked the district court with doing was determining the true market value.

And if you look at footnote 8 of the district court's opinion, I think he does a fairly interesting job of explaining what that would normally mean.

He says: In an ordinary valuation case I would take in all of the expert testimony from the railroad, I would take in all of the expert testimony of the State, I would evaluate them and I would come up with a conclusion as to what I think is the true market value.

John G. Roberts, Jr.:

And do you want the district court to in addition determine which methodology most accurately reflects that true market value?

Carter G. Phillips:

No, I don't--

John G. Roberts, Jr.:

You want to be able to challenge the state's chosen methodology for determining market value?

Carter G. Phillips:

--Yes.

I think every facet of the question of, that goes into the determination of what is a true market value.

John G. Roberts, Jr.:

So if the, so if the district court says this methodology, Methodology A, most accurately yields true market value, that is giving rise to a Federal rule of determining value, isn't it?

Carter G. Phillips:

No.

I think all it says is that in this particular case under these particular circumstances that methodology led to what was the true market value.

John G. Roberts, Jr.:

Well, I don't see how it varies based on the particular circumstances.

If he says I think, you know, whatever it is, discounted value approach is the best way for determining market value, he's not going to in the next case or the district court isn't going to be able to say, I think reproduction cost is the best method.

You're going to establish a Federal rule for what is the best way of determining market value.

Carter G. Phillips:

Mr. Chief Justice, I think that's not accurate.

I think what will happen is that the circumstances change every day.

Let's just take a pretty simple example.

Let's assume that in year 1 the district court decides to use discounted cash flow.