# Amicus Curiae Brief — CSX Transp. v. GEORGIA STATE BD. OF EQUAL. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0532%3A09 ## Record - **Collection:** Supreme Court brief - **Document type:** Amicus Curiae Brief - **Published:** January 1, 2007 - **Citation:** 552 U.S. 9 ## Text In the Supreme Court of the Anted States CSX TRANSPORTATION, INC., PETITIONER v. GEORGIA STATE BOARD OF EQUALIZATION, ET AL. ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT BRIEF FOR THE UNITED STATES AS AMICUS CURIAE SUPPORTING PETITIONER D.J. GRIBBIN General Counsel Department of Tra ion Washington, D.C. 20590 ELLEN D. HANSON General Counsel Surface Transportation oard Washington, D.C. 20423 PAUL D. CLEMENT Solicitor General Counsel of Record PETER D. KEISLER Assistant Attorney General THOMAS G. HUNGAR Deputy Solicitor General DOUGLAS HALLWARD-DRIEMEIER Assistant to the Solicitor General ANTHONY J. STEINMEYER ROBERT D. KAMENSHINE Attorneys Department of Justice Washington, D.C. 20530-0001 (202) 514-2217 QUESTION PRESENTED Whether, in an action by a railroad under 49 U.S.C. 11501(b)(1) claiming that a State has assessed the railroad’s property at a higher ratio of assessed value to true market value than the ratio for other commercial and industrial prop- erties, the district court may, in determining the railroad’s true market value, consider evidence of market value derived from accounting methodologies other than those used by the State, or whether, as the court of appeals held, the State’s chosen methodology is binding on the district court. (I) rest or r +1 Page UD CJ ERIN 5 5 ec cctcwnccccscececsevees ] ee ot. eek eco dduceseveccese 2 rd kewhbe Cama ee ee eaee es ) PR ae tele oe cn poaduustbectauewee wees 1] I. _ In deciding a claim of discriminatory overvaluation Il. TABLE OF CONTENTS under the 4R Act, a federal court is not required to accept the State’s method of valuation A. O° In providing a remedy against de facto as well as intentional discrimination, Congress required the federal courts to make independent determinations of true market gee Sh se eat he dick avscecaecs The text and structure of Section 11501 demonstrate Congress’s intent that federal courts determine true market value based on the best evidence available, not blind adherence to state methodologies ............. The legislative history likewise reflects Congress’s understanding that state assess- ments would be measured against a federal standard of true market value, rather than the States’ “outdated procedures” ................ The rule adopted by the court of appeals is neither workable nor justified A. The court of appeals’ distinction between valuation methodology and application is ephemeral and would lead to standardless i vikeccdcutuawsgeccenescces . The determination of a property’s true market value is a common judicial function that the courts cannot escape under Section 11501 ...... (IIT) “ee eneneevereeeene . 1B IV Table of Contents—Continued: C. The court of appeals’ reliance on concerns of federal comity is misplaced .................... CORURIIEMN. «00's Kiba dc cated desis Pinees ba eee eee TABLE OF AUTHORITIES Cases: Batson v. Pearl River County, 35 $.2d 712 (Miss. BOER; +: n.kin.c 0 cnnebecnaneteteseaeneediaanen BOEEE Novica csecinadedevndsueytenttaheacsesas tel Burlington N. R.R. v. Department of Revenne, ee te SO eee ere Burlington N. R.R. v. Oklahoma Tax Comm'n, ee a ee eee Citicorp Real Estate, Inc. v. Smith, 155 F.3d 1097 GSU sos vonccuvercus\anahebewinewenes ven : Consolidated Rail Corp. v. Town of Hyde Park, 47 F.3d 473 (2d Cir.), cert. denied, 515 U.S. 1122 = S ~ ee CSX Transp., lie. v. Board of Pub. Works, 95 F.3d SC OGD 6 v Kcncnd caneUhevebuunssueavenee 27 Department of Revenue v. ACF Indus., Ine., RE BA eee 2, 8, 29, 30 Dougherty County Bd. of Equalization v. Casto Dev. Co., 491 S.E.2d 483 (Ga. Ct. App. 1997) ............. 28 Hirsch v. Joint City County Bd. of Tax Assessors, 463 S.E.2d 703 (Ga. Ct. App. 1995) ..............05- 28 Kents 2124 Atlantic Ave., lne., In re, 166 A.2d 763 eas BD 6 ciccacnvesiscdcendsdebne seeeueee te 26 ~ é >- = got "i PES Oa Se 2 wa 8 a Be V 3 Cases—Continued: Page ? Louisville & Nashville R.R. v. Department of Revenue, 736 F.2d 1495 (11th Cir. 1984) ............ 26 McMurray v. Commissioner, 985 F.2d 36 (1st Cir. tie cide bnasigehépoesocecceses 25 | Metlyn Realty Corp. v. Esmark, Inc., 763 F.2d 826 EES SE ree 23 Nordlinger v. Hahn, #5 U.S. 1 (1992) ................ 26 . Powerex Corp. v. Reliant Energy Servs., Inc., | EE 15 Rubin v. United States, 449 U.S. 424 (1981) ........... 13 United States v. 50 Acres of Land, 469 U.S. 24 (1984) ... 25 VFB LLC v. Campbell Soup Co., 482 F 3d 624 EEE TERE FOP OEE POT ED 25 Constitution and statutes: . U.S. Const. Amend. V (Just Compensation Clause) ..... 25 . Act of Oct. 17, 1978, Pub. L. No. 95-473, 92 Stat. 1337 EG RE a 2 I 2,4, 11 § 11503(b)(4), 92 Stat. 1446 (49 ULS.C. EEE SS ll § 11503(¢)(1), 92 Stat. 1446 (49 U.S.C. i ELE EEE 3 | ICC Termination Act of 1995, Pub. L. 104-88, § 102(a), 109 Stat. 804 (49 U.S.C. 10101 et seq.) ....... 2 Railroad Revitalization and Regulatory Reform Act of 1976, Pub. L. No. 94-210, 90 Stat. 31: DE tccbbacebeceecstcccccccescecens 2 § 306, 90 Stat. 54 (49 U.S.C. 11501) ......... passin ED wees cocesescvesecveveveess 2 SP A> Set gt ee Ee Dee Ae, re ay ee ee ee ee eee VI Statutes—Continued: re iv. cinececsccnvccevetans 49 U.S.C. 26e(1Xd) (1976) .......... 22. eens 49 US.C. BielZle) (IGTE) .... 22. ccccccccvccess I opis divcccnsicsoscaasdied DUBE. BRD) oc cccccccccccceses IED hc cc vccceccccces senna GE MED occsccccccsccccessees os es oo SE MENEEUID 0 vcsccesccccccssseseuen i oucets vicaise cecesweaecncosscnnel Miscellaneous: Appraisal Inst., Te Appraisal of Real Estate GED 5 o6n 0 didn 0s oc s¥dedkbe nespeeds 20, 21, 23 James H. Boykin & Alfred A. Ring, Valuation of Real UCIT Uc ans évdudodcis ov detescecunds 20 Discriminatory Taxation of Common Carriers: Hearings on S. 927 Before the Subcomim. on Surface Transportation of the Senate Comm. on Commerce, 90th Cong., Ist Sess. (1967)... 0. ...2.-. 18 H.R. Rep. No. 725, 94th Cong., Ist Sess. (1975) ......... 2 H.R. Rep. No. 1395, 95th Cong.,2d Sess. (1978) ......... 3 : International Association of Assessing Officers. Improving Real Property Assessment: SE TED TOI 6. oo oi bk cvcdctcncectesves 3 4 . i Vil Miscellaneous—Continued: Page Committee on Unit Valuation, National Ass’n of Tax Adm’rs, Appraisal of Railroad and Other Public Utility Property for Ad Valorum Tax Purposes: Report of the Committee on Unit Valuation dint sd wovkent ie tanh cekuoderee chon «a 5, 20, 21 Note, Inequality in Property Tax Assessments: New Cures for an Old Ili, 75 Harv. L. Rev. 1374 (1962) .... 26 S. Rep. No. 445, 87th Cong., Ist Sess. (1961) ........... 16 S. Rep. No. 1483, 90th Cong., 2d Sess. (1968) ........ 8,17 S. Rep. No. 630, 91st Cong., lst Sess. ax sthithiatehednbedy et debed kooeee 16, 17, 18, 30 State Tax Discrimination Against Interstate Carrier Property: Hearing on S. 2289 Before the Subcomm. on Surface Transportation of the Senate Comm. on Commerce, 91st Cong., lst Sess. Siti dee dab usu scabedecbtlenes beens avasces 18 - Teens: In the Supreme Court of the United States F No. 06-1248 { CSX TRANSPORTATION, INC., PETITIONER : ; v. : : : GEORGIA STATE BOARD OF EQUALIZATION, ET AL. . ; ON WRIT OF CERTIORARI : : TO THE UNITED STATES COURT OF APPEALS : . FOR THE ELEVENTH CIRCUIT j BRIEF FOR THE UNITED STATES AS AMICUS CURIAE SUPPORTING PETITIONER INTEREST OF THE UNITED STATES , This case concerns the scope of federal protection against discriminatory state taxation provided to railroads by Section 306 of the Railroad Revitalization and Regulatory Reform Act of 1976 (4R Act), Pub. L. No. 94-210, 90 Stat. 54 (49 U.S.C. 11501). The Surface Transportation Board—the independent federa! agency with responsibility for the economic regulation of the Nation’s railroads, 49 U.S.C. 721—is charged with fos- tering economic conditions that allow rail carriers to earn adequate revenues. The Department of Transportation is the federal agency charged with, among other functions, oversee- ing rail safety, 49 U.S.C. 20103 (2000 & Supp. IV 2004), and thus also has an interest in the financial health of the Nation’s railroads. The United States has participated as amicus cu- riae in previous cases regarding the scope of the 4R Act's protections. See Burlington N. R.R. v. Oklahoma Tar ' f , + f : ‘oh 4 -s 4 - 2 - 4 : (1) : ’ 3 J Lk r ; _ ; ; 4 ; 2 Comm'n, 481 U.S. 454 (1987) (Burlington Northern); Depart- ment of Revenue v. ACF Indus., Tue., 510 U.S. 332 (1994) (ACF). STATEMENT 1. The 4R Act was enacted in response to the economic deterioration of the rail industry. See 4R Act § 101, 90 Stat. 33. Section 11501, originally Section 306 of the 4R Act, fo- cuses on discriminatory state taxation as a particular cause of that decline. See § 306, 90 Stat. 54 (49 U.S.C. 11501); H.R. Rep. No. 725, 94th Cong., Ist Sess. 78 (1975).' After 15 years of study, Congress had found that discriminatory state taxa- tion of railroad property “constitute|s] an unreasonable and unjust discrimination against, and an undue burden on, inter- state commerce.” 4R Act § 306, 90 Stat. 54 (49 U.S.C. 26¢(1) (1976)). In order to protect those critically important chan- nels of interstate commerce, Congress took the extraordinary step of carving out an exception to the Tax Injunction Act, 28 U.S.C. 1341, and empowered federal courts to enjoin prohib- ited forms of discriminatory state taxauon. 4R Act § 306, 90 Stat. 54 (49 U.S.C. 11501(¢)). Section 11501 specifies certain forms of prohibited discrim- ination and also broadly prohibits States from imposing any other “tax that discriminates against a rail carrier providing transportation.” 49 U.S.C. 11501(b)(4). With respect to tax assessments (and taxes levied or collected on the basis of such assessments) in particular, the statute requires that a State’s ' The statutory language of the original 4 Act was altered slightly when Section 306, originally codified at 49 U.S.C. 26¢ (1976), was recodified in 1978 at 49 U.S.C. 11503 (1994) as part of the positive enactment of Title 49. See Act of Oct. 17, 1978 (1978 Act), Pub. L. No. 95-473, 92 Stat. 1337. The restatement of prior law effected by the 1978 reenactment was “without substantive change.” 1978 Act § 3(a), 92 Stat. 1466. In 1995, the provisions of Section 11503 were again reenacted without substantive change but renumbered as Section 11501, as part of a general amendment of Subtitle IV of Title 49 thet abolished the Interstate Commerce Commission and created the Surface Transportation Board. ICC Termination Act. Pub. L.. 104-88, § 102(a), 109 Stat. 804. APSR ee EE ee Te ~~ ch Sn ks BS eh ht oN Dt than tee De eet 3 (or political subdivisions) assessment of railroad property for purposes of an ad valorem tax be tested by a simple compari- son of two arithmetic ratios. Under that test, a State’s assess- ment practices are unlawfully discriminatory if the ratio of assessed value to “true market value” (assessment ratio) for railroad property exceeds the assessment ratio for “all other commercial and industrial property.” 49 U.S.C. 11501(b)(1). The statute expresses a preference for establishing the assessment ratio for non-railroad commercial and industrial property “through the random-sampling method known as a sales assessment ratio study.” 49 U.S.C. 11501(b)(1).” If the assessment ratio for non-railroad commercial and industrial property cannot be established satisfactorily by that method, the statute then requires the court to enjoin any discrimina- tion that is revealed by a comparison of the railroad’s assess- ment ratio to the assessment ratio for “all other property subject to a property tax levy in the assessment jurisdiction,” i.e., a ratio not limited to commercial and industrial property. 49 U.S.C. 11501(¢)(1) (emphasis added).* * A“sales assessment ratio study” compares the assessed value to the actual sale price for a representative and statistically valid sample of property within the assessment jurisdiction. See International Ass'n of Assessing Officers, Improving Real Property Assessment: A Reference Manual 122-155 (1978). ' Section 11501(c\(1) contains a serivener’s error, which was introduced when Title 49 was recodified and enacted as positive law in 1978. In the original 4R Act, Congress provided unambiguously that the alternative comparison ratio (if a sales assessment ratio study of commercial and industrial property was inadequate) was the ratio of assessed value to true market value of “all other property in the assessment jurisdiction” subject to tax, /.¢., not just the ratio of assessed to market value of other commercial property. See 4R Act § 206, 90 Stat. 55 (49 U.S.C. 26e(2Xe) (1976)). In 1978, when Congress re- codified Title 49, the words “commercial and industrial” were inserted into the description of the denominator of that alternative ratio, but no similar limitation was added to the numerator, which continues to refer to “all other property subject to a property tax.” 1978 Act § 11503(¢)(1), 92 Stat. 1446 (49 U.S.C. 11501(¢(1)). The House Report made no reference to the change. See H.R. Rep. No. 1395, 9th Cong., 2d Sess. 179 (1978). Comparison of the railroad’s assessment ratio to the ratio indicated by the literal terms of the “se eS + A federal court that finds state property tax assessments to discriminate against railroads is empowered to enjoin the violation. 49 U.S.C. 11501(c). Congress limited the impact of the anti-diserimination prohibition, however, by barring the district court from granting any relief under Section 11501 unless the assessment ratio for the railroad’s property ex- ceeds the assessment ratio for other commercial and indus- trial property by at least 5%. /bid. 2. In Georgia, publie utilities (1.e., railroads, investor- owned electric utilities, investor-owned telephone companies, pipeline companies, and gas distribution companies) are as- sessed at the State level. The State Revenue Commissioner, acting on proposed assessments prepared by the Property Tax Division of the Georgia Department of Revenue (Depart- ment), certifies the proposed assessments to each county in which there is taxable property. Pet. App. 2a-3a. Other prop- erties, including non-utility commercial and industrial proper- ties, are assessed locally. See id. at 2a. Georgia, like most States, assesses public utilities using the “unit rule,” under which the appraiser “values the entire oper- ating system * * * asa going concern and integrated whole irregardless of where it is located,” Pet. App. 30a, and then multiplies the value of the whole unit “by the percentage of the entity located within Georgia to determine what portion of the company should be allocated to the state,” id. at 3a. statute would be nonsensical, because the latter ratio would be a meaningless apples-to-oranges comparison of vastly disparate classes of property. Because the statute would be absurd if applied as written, and because Congress specified that the enactment of Title 49 was a restatement of prior law “without substantive change,” that could “not be construed as making a substantive change in the laws replaced,” § 3ta), 92 Stat. 1466, the reenactment's introdue- tion of the words “cummercial and industrial” in the denominator of the comparison ratio in Section 11501(¢)(1) must be deemed a scrivener’s error. Although this Court quoted the “commercial and industrial” language from Section 11501(c)(1) in Burlington Northern, 481 U.S. at 462, that language was not itself at issue and the Court did not analyze the - > b | 11 ARGUMENT I. IN DECIDING A CLAIM OF DISCRIMINATORY OVER- VALUATION UNDER THE 4R ACT, A FEDERAL COURT IS NOT REQUIRED TO ACCEPT THE STATE’S METHOD OF VALUATION A. In Providing A Remedy Against De Facto As Well As In- tentional Discrimination, Congress Required The Federal Courts To Make Independent Determinations Of True Market Value Congress enacted Section 306 of the 4R Act to address the problem of “discriminatory state taxation of railroad prop- erty.” Burlington Northern, 481 U.S. at 457. Thus, Congress provided a remedy against any tax that “results in diserimina- tory treatment of a common carrier by railroad.” 4R Act § 306, 90 Stat. 54 (emphasis added) (49 U.S.C. 26¢(1)(d) (1976)).* Significantly, as this Court explained in Burlington Northern, Congress forbade “‘acts’ which ‘unreasonably bur- den and discriminate against interstate commerce’” without reference “to the intent of the actor.” 481 U.S. at 463 (quoting 49 U.S.C. 11501(b)). With respect to discriminatory assessments, Section 11501(b)(1) forbids, and Section 11501(c) authorizes the fed- eral courts to enjoin, States from assessing railroad property “at a value that has a higher ratio to [its] true market value” than the corresponding ratio for “other commercial and indus- trial property.” 49 U.S.C. 11501(b)(1). As the Court recog- nized in Burlington Northern, “(i]t is clear from this language that in order to compare the actual assessment ratios, it is ' The 1978 Act replaced the words “results in discriminatory treatment” with “discriminates,” see 1978 Act § 11503(bX4), 92 Stat. 1446 (49 U.S.C. 11501(bx4)), but that “change| | ‘may not be construed as making a substantive change in the laws replaced."” Burlington Northern, 481 U.S. at 457 11 (quoting 1978 Act § A(a), 92 Stat. 1466). 12 necessary to determine what the ‘true market values’ are.” 481 U.S. at 461. The Court rejected the argument that the federal courts must accept “whatever the State determines the value of the railroad to he.” /d. at 461-462. The statutory reference to “true market value” is not a reference to a State’s definition of value for its own assessment purposes. Rather, the railroad’s “true market value” is a federal ques- tion “to be litigated in federal court.” Jd. at 462. In Burlington Northern, the railroad had “not challenged the valuation methodology” used by the State to determine the railroad’s value, but had limited its challenge to “the ap- plication of that methodology.” 481 U.S. at 463 n.5. Thus, the Court noted, without deciding, the question “whether a rail- road may, in an action under | Section 11501), challenge in the district court the appropriateness of the accounting methods by which the State determined the railroad’s value, or is in- stead restricted to challenging the factual determinations to which the State’s preferred accounting methods were ap- plied.” /bid. Although Burlington Northern reserved the question, its logic requires that the federal court also be able to consider questions of valuation methodology. There is no clear line that separates methodological choices from mere questions of application. Moreover, because, as the district court con- ceded, it is the State’s choice of “a particular methodology that, to a large extent, predetermines the result,” Pet. App. 38a, foreclosing any challenge to the State’s methodology would essentially eviscerate the protection afforded by Sec- tion 11501(b)\(1), particularly if “methodology” is understood in the broad sense employed by the courts below. The Burlington Northern Court recognized that Section 11501(b)(1) and (ce) plainly require the reviewing court to de- termine the “true market value” of the railroad’s property. There is no indication in the statutory text that Congress intended to bind the federal! courts to employ the particular 13 methodological judgments adopted by state or local govern- ment appraisers in performing that inquiry. To the contrary, the statute reflects Congress’s understanding that a prop- erty’s “true market value” is a question of fact that is to be decided by the federal court using the best evidence available to it, even if that evidence points to an approach that diverges from the State’s chosen method of valuation or demonstrates that the State’s methodology is deeply biased or flawed. Moreover, as discussed below, a rule that rests on a purported distinction between method and application, allowing litiga- tion of only the latter, would lead to unnecessary litigation and produce standardless and unpredictable decisionmaking regarding the question whether a particular challenge fell on one side or the other of that ephemeral line. The facts of this case amply demonstrate the weaknesses of such a rule. B. The Text And Structure Of Section 11501 Demonstrate Congress's Intent That Federal Courts Determine True Market Value Based On The Best Evidence Available, Not Blind Adherence To State Methodologies The text of Section 11501 demonstrates that Congress in- tended the federal courts to determine true market value using the best evidence available, even when that evidence departs from the State’s various methodological choices. In Burlington Northern, the Court found the language of the 4R Act “clear” in requiring the federal courts “to determine what the ‘true market values’ are.” 481 U.S. at 461. See zbid. (find- ing the legislative history “irrelevant” because “the terms of [the] statute [are] unambiguous”) (quoting Rubin v. United States, 449 U.S. 424, 430 (1981)). Not only does the 4R Act’s directive that federal courts independently determine “true market value” not distinguish between the State's choice of methodology and its application of that methodology—the latter of which is unquestionably subject to federal review, see id. at 462—it affirmatively indicates Congress’s presump- tive preference for using a particular methodology for deter- 14 mining true market value (viz., a sales methodology) when feasible and satisfactory to the court, regardless of the method(s) preferred by the State. Section 11501(c) provides that “(t]he burden of proof in determining assessed value and true market value is governed by State law.” 49 U.S.C. 11501(c). As the Court has recog- nized, “(i]t would be inconsistent to allocate the burden of proof as to an issue which could not be litigated in federal court in the first place.” Burlington Northern, 481 U.S. at 462. Section 11501(c) goes on to provide that if satisfactory evidence is available, the federal court should generally utilize “the random-sampling method known as a sales assessment ratio study (to be carried out under statistical principles ap- plicable to such a study)” to determine “the ratio of the as- sessed value of other commercial and industrial property in the assessment jurisdiction to the true market value of all other commercial and industrial property.” 49 U.S.C. 11501l(c). In other words, Congress concluded that arms- length sales that take place in the marketplace are presump- tively the best evidence of “true market value,” and it directed the federal courts to rely on such actual sales information whenever it can be used to determine the ratio of assessed to true market value of non-railroad commercial and industrial property “to the satisfaction of the district court.” /bid. Plainly, it would not be open to a State to object to such evi- dence on the ground that, for example, the State had deter- mined the true market value of non-railroad commercial and industrial property using the income, rather than sales, method of valuation. Section 11501(¢c) thus makes clear that Congress expected the federal courts to calculate the true market value of other commercial and industrial property by employing a sales-based approach whenever that method was satisfactory to the district court—and entirely without regard to the State’s preferred method(s), if any, for making that determi- 4 ; 15 nation. It logically follows that Congress’s use of the same term—*“true market value”—with respect to railroad property likewise refers to the value of the property as determined to the satisfaction of the district court without regard to the methodology utilized by the State. See Powerex Corp. v. Reli- ant Energy Servs., Inc., 127S. Ct. 2411, 2417 (2007) (“identi- cal words and phrases within the same statute should nor- mally be given the same meaning”). It is inconceivable, for example, that in light of Congress’s expressed preference for sales information as evidence of true market value, Congress would have expected or intended that a State’s methodological choices could preclude a court from considering the price at which a railroad was sold at the end of the previous year in determining its true market value. The Court considered and rejected in Burlington Northern the argument that Section 11501(c)’s reference to a particular method for deriving the true market value of other commer- cial and industrial property implies, by negative inference, that Congress did not intend the federal courts to determine independently the true market value of railroad property. Rather, “the language of subsection (c) leads to the opposite conclusion.” 481 U.S. at 462. The statute makes clear that “assessed value and true market value are subjects for judi- cial inquiry, and are to be proved,” and the specific reference in subsection (¢) to a method for proving the ratio for com- mercial property by a statistical sample is simply a “particu- lar grant of authority * * * to use statistical methods.” Ibid. It “raises no implication whatever that the value of an- other kind of property may not be proved at all.” /d. at 463. By the same token, it raises no implication that a court is bound by the State’s choice of methodology for valuing rail- road property, but instead reflects Congress's expectation that federal courts would make a determination concerning “true market value,” and that methodological choices, like 16 other aspects of that inquiry, would be matters for judicial resolution “to the satisfaction of the district court.” C. The Legislative History Likewise Reflects Congress's Un- derstanding That State Assessments Would Be Measured Against A Federal Standard Of True Market Value, Rather Than The States’ “Outdated Procedures” The legislative history confirms that Congress did not in- tend to bind federal courts to the methodologies used by the States to evaluate railroad property. Indeed, the contrary intent is clearly reflected in the Senate Report's recognition that railroads “are discriminated against as compared to other property taxpayers in the same jurisdiction, due in large mea- sure to outdated procedures (which are sometimes deliber- ately retained) for assessment of property.” S. Rep. No. 630, 91st Cong., lst Sess. 2 (1969) (emphasis added) (quoting In- terstate Commerce Commission letter, which quoted the re- port on National Transportation Policy, S. Rep. No. 445, 87th Cong., Ist Sess. 451 (1961) (Doyle Report)). The Doyle Report noted that “|cjost, whether it be original or reproduc- tion cost, is poor evidence of system value for railroads,” but that it nonetheless “remains in use” by States as a valuation method because “cost is usually a higher figure for railroads than current cash value.” Doyle Report 456-457. By “justify[ing] a higher full value” for the railroad through the use of a cost methodology, a State could “in turn appear to produce a lower equalized assessment ratio.” /d. at 457.” Plainly Congress did not forbid the federal courts to scruti- ' The Second Circuit's decision in Consolidated Rail Corp. v. Town of Hyde Park, 47 F.3d 473. cert. denied, 515 U.S. 1122 (1995), exemplifies the cost meth- adology” potential to overvalue a railroad’s property. In that case, the New York State Board of Equalization and Assessment, using a “cost approach,” determined that Conrail’s property in New York had a “true market value of $974 million,” which was more than twice the $451 million value indicated by the “stock and debt” and “income capitalization” methods. /d. at 430. : ; ” 17 nize those same valuation “procedures” that were the cause of the problem Congress sought to remedy. The Senate Report further reflects the Committee's under- standing that the statutory standard of “true market va‘ue” was to be the federal standard against which state assess- ments would be compared in determining discrimination. S. Rep. No. 630, supra, at 25-26; S. Rep. No. 1483, supra, at 22. The report indicates that the bill did not “require a State to change its assessment standards, assessment practice, or the assessments themselves,” but that it did “provide| | a sin- gle standard”—true market value—“against which all affected assessments must be measured.” /bid. True market value “is not a standard for determining value; it is a standard to which values that have already been determined [7.e., the State’s assessments] must be compared.” /bid. Thus, “true market value” is not an assessment method or practice that the St tes were being required by Congress to adopt. States remain free to use any method they like in arriving at the numerator of assessed value. But the denominator of “true market value” is a federal standard as to which States are not owed particular deference. That remains true even if states calcu- late a market value or true market value as a step in their assessment. Their assessment, including any calculation cf market value, is taken as a given for purposes of the numera- tor, but “true market value” in the denominator of Section 11501(b)’s ratio remains a question for the federal court. In- deed, as discussed at pp. 26-27, infra, some States do not even attempt to base assessments on true or fair market value. “True market value” is simply the federal standard to which state assessments are to be compared in determining whether a railroad has been subjected to discrimination. Plainly, “true market value” would not be much of a litmus test if the State’s own assertions as to true market value were dispositive. The court of appeals read the above-quoted statement from the Senate Report as “support|ing] the conclusion that rail- 18 roads may not challenge state valuation methodologies in fed- eral court.” Pet. App. 14a; id. at 40a-4la. But the assertion that States are not required to “change” their “assessment standards, assessment practices, or the assessments them- selves,” S. Rep. No. 630, supra, at 25, cannot plausibly be read to suggest that those matters—including “the assessments themselves”—are binding on the federal courts in the course of making their independent determinations of “true market value.” The court of appeals’ reading proves too much, as it would entirely nullify the Act (and overrule Burlington Northern) by forbidding any meaningful] examination of true market value, at least in the many taxing jurisdictions that purport to “assess” at that value or a fixed proportion thereof. Throughout the hearings leading up to the enactment of Section 306, state representatives repeatedly objected to an assessment-ratio test like the one ultimately adopted by Con- gress, on the precise ground that it would entail independent federal court determinations of value.” Notwithstanding those objections, Congress enacted the assessment ratio approach into law, signalling its rejection of those concerns. The legis- lative history thus confirms that Congress did not intend to limit the discretion of federal courts to employ valuation ap- proaches different from those utilized by the States. ' See Discriminatory Taxation of Common Carriers: Hearings on S927 Before the Subcom. on Surtace Trausp. of the Senate Comm. on Com merce, “Oth Cong., Ist Sess. 114 (1967) (statement of Charles F. Conlon); State Tar Discrimination Against lnterstate Carrier Property: Hearing on S. 2289 Before the Subcom. on Surtace Transp. of the Senate Comm. on Commerce, #1st Cong., 1st Sess. 09, 102 (1969) (statement of George Kinnear). 19 Il. THE RULE ADOPTED BY THE COURT OF APPEALS IS NEITHER WORKABLE NOR JUSTIFIED A. The Court Of Appeals’ Distinction Between Valuation Methodology and Application Is Ephemeral And Would Lead To Standardless Collateral Litigation The approach adopted by the lower courts presupposes a meaningful and discernible distinction between a State’s unreviewable choice of a valuation “methodology” and its reviewable “application” of that methodology. That purported distinction, however, is far too indeterminate and ephemeral to support the weight that the lower courts would place upon it. As the facts of this case demonstrate, valuation “methodol- ogy” and “application” are often indistinguishable in practice, and a rule that makes so much turn on the supposed distinc- tion would only invite unnecessary and ultimately standard- less collateral litigation about whether various aspects of the State’s calculations fall on one or the other side of the line. The rule adopted by the lower courts—that “[tJhe district court was not allowed to consider a valuation methodology different from the methodology of the Board,” Pet. App. 15a (emphasis added)—was based on the mistaken premise that “each appraisal is based on a particular methodology.” Jd. at 38a (emphasis added). See id. at 12a (deference to the State’s “selection of a valuation methodology”). Valuation treatises make elear, however, that in general no single method of valu- ation produces a property’s “true market value.” Rather, an appraiser's ultimate estimate of value reflects evidence gath- ered from a variety of approaches (and techniques within ap- proaches), the relative strength of which the appraiser weighs based on the particular facts and circumstances concerning the property. In most instances, there will be no single state “methodology” to which the court could defer. “Appraisers develop an opinion of property value with spe- cific appraisal procedures that reflect three distinct methods 20 of data analysis: 1. Cost{;] 2. Sales comparison{;] 3. Income capitalization.” Appraisal Inst., The Appraisal of Real Estate 62 (12th ed. 2001) (Appraisal Inst.). None of those approaches (or variations on those approaches) yields, in itself, the prop- erty’s “true market value”; rather, each provides an “indica- tion of value,” i.e., “evidence of value.” Jd. at 597; Unit Valua- tion Report 3 (emphasis added). In any given appraisal, “more than one approach to value is usually applied, and each approach typically results in a different indication of value.” Appraisal Inst. 597; James H. Boykin & Alfred A. Ring, Valu- ation of Real Estate 434 (4th ed. 1993) (Boykin) (“[TJhe ap- praiser proceeds with an analysis of the data under each of the value approaches”). Indeed, “several value indications may be derived in a single approach,” such as different indica- tions of value derived “from applying income multipliers to specific types of income, directly capitalizing net income, and discounting cash flows.” Appraisal Inst. 597. The ultimate task of the appraiser is to reconcile the dis- tinct indications of value generated by the different ap- proaches to reach a final estimate of value. The process of reconciliation is not simply “a mathematical process involving mere averaging of the estimates derived under the independ- ent value approaches.” Boykin 434; see Appraisal Inst. 597- 598. The appraiser’s “task is to weigh the pertinency of such evidences and to make an objective analysis of each.” Unit Valuation Report 59. “The appraiser weighs the relative sig- nificance, applicability, and defensibility of each value indica- tion and relies most heavily on the approach that is most ap- propriate to the nature of the appraisal problem.” Appraisal Inst. 600. The final opinion of value “need not be identical to the value produced by” any single approach. /bid. Thus, the lower courts’ assumption that there will be a single “state methodology” to which to defer is mistaken. In any given appraisal, the State’s final opinion of value often will not represent the figure that a single approach would 21 generate, but rather the appraiser’s weighing of the different “evidences of value.” That weighing process should reflect the appraiser’s consideration of all the relevant facts, includ- ing the strength of the data upon which the calculations were derived and the nature of the property or enterprise being evaluated. Appraisal Inst. 600. It is impossible to discern where, in such a situation, the State’s purportedly unreview- able “choice of methodology” ends and where its “application” begins.’ The facts of this case demonstrate the difficulty of identify- ing a principled basis for distinction. Here, it was undisputed that Georgia did not value all properties in Georgia, or even all centrally assessed properties, according to a single valua- tion approach. For each centrally assessed property, the State “calculat|ed] five values under three different methods and select{ed] a figure at the low end of the resulting range.” * At the highest level of generality, when a State is making the initial deter- mination whether to use the unit rule or the surnmation method to value railroad or other property, it may be fair to say that the choice is purely one of methodology, or perhaps even that it is part of the logically prior decision of what property the State is going to tax. One might argue that there is also a sufficiently clear methodological dichotomy between a “cost” approach, on the one hand, and an “income” or “sales” approach, on the other. See Unit Valuation Report 3 (“The cost approach is a summation appraisal, and as such may not be regarded as a measure of unit value.”). Even at that level, however. the distinction becomes much less clear, because although cost is not itself an indication of unit value, it is “good information to guide judgment. and therefore is a proper evidence to consider in finding value.” /bid. As discussed above, most appraisers use a cost approach as just one of many evidences of value, with the final value opinion being derived from no one approach alone. There is even more practical overlap between the income and sales approaches. and moreover the choice of approach even at that high level of generality may reflect a fact-based assessment of the particular circumstances of the entity to be valued. In any event, there is simply no discernible line between “methodol- ogy” and “application” once the appraiser moves past the threshold question of cost, income, anc/or sales methods and begins selecting sub approaches (c.¢.. DCF versus vield ratio), choosing techniques (¢.q., for determining a discount rate), and making assumptions and judgments based on the particular facts and curcurnstances. 22 Pet. App. 17a. The lowest figure could have been generated by the income approach in the case of one utility, by the stock and debt approach in the ease of another, and by the market multiples approach in the case of a third. As the court of ap- peals recognized, in this case, the State’s selection “of an ap- praisal amount nearest to the discounted cash flow number did not reflect the conclusion that discounted-cash flow was the most accurate of the methods used, only that it was the lowest.” Jd. at 18a. It is at best awkward to describe the State’s approach—always to choose the lowest of the calcu- lated figures—as an “accounting method[]” or “valuation methodology” to which the courts must defer. And if defer- ence is due here, it would seem equally applicable to a State’s decision always to choose a particular method that is well- established to overvalue railroads relative to other commer- cial property. The lower courts’ refusal to consider the “yield capitaliza- tion” valuation proposed by petitioner’s expert, Tegardcn, on the ground that it was a different methodology from the State’s DCF approach further demonstrates the difficulty of drawing the line that is at the heart of the court of appeals’ rule. The district court recognized Tegarden’s “yield capital- ization” analysis as a “cousin” to the “discounted cash flow” analysis used by the State, because both are versions “of the income approach.” Pet. App. 35a-36a. The court nonetheless concluded (and the court of appeals agreed, id. at 15a-18a) that Tegarden’s was “a different valuation method” that could not be considered, id. at 45a. That conclusion expands the scope of “methodology” into the realm of mere assumptions made by appraisers. While Dickerson and Tegarden expressed their respective ap- proaches by different formulae, see Pet. App. 36a, the latter is simply a mathematical shorthand of the former if one as- sumes, as Tegarden did, that petitioner's income would re- main level. See J.A. 80-81 (setting out Dickerson’s DCF for- 23 mula, and noting that “|wJhere income has the characteristics of a perpetuity * * * , the universal capitalization formula, Value = Income + Rate, can be used”).” Tegarden’s calcula- tions could likewise have been expressed in Dickerson’s lon- ger form, with the numerator remaining constant each year. Thus, the difference between the two formulae boils down to the appraisers’ differing asswmptions regarding the growth of petitioner’s future income. An approach that deems ap- praisers’ mere assumptions to qualify as unreviewable “meth- odology” would effectively preclude any meaningful review of state determinations of true market value, because the as- sumptions made by the appraiser at each step of the process ultimately determine the outcome of any valuation approach. See Metlyn Realty Corp. v. Esmark, Inc., 763 F.2d 826, 835 (7th Cir. 1985) (Easterbrook, J.) (“It is a simple matter to increase or reduce the outcome of a cash flow analysis by 200% by making changes in assumptions [such as the firm’s costs, rate of growth, and the discount rate] that appear by themselves to be insignificant.”). In an attempt to justify its conclusion that Tegarden’s ap- proach could not be considered, the court of appeals held that “all nonfactual determinations involved in constructing a valu- ation process, regardless of how broad or narrow they may be,” qualify as “accounting methods” that a railroad may not challenge. Pet. App. 17a. In the first place, however, there is no basis for the court of appeals’ view that an appraiser's par- ticular assumptions about the best way to value a particular taxpayer's property are “nonfactual determinations” —surely the question whether a railroad’s income should be held con- stant or assumed to increase in future years is more factual than legal in nature, as are most, if not all, of the myriad of ~ The district court's representation of Dickerson’s discounted cash flow formula (Pet. App. 34a) contains an error. The court failed to compound the discount rate in each successive year. Under the correct formula, the denominator (1 + discount rate) should be squared in vear two, cubed in vear three, etc. See Appraisal Inst. 688. 24 other assumptions that appraisers must make in selecting, applying, and weighing various valuation approaches. Under the court of appeals’ rule, moreover, any valuation rule that a State can articulate in general terms would appar- ently become unassailable. For example, if the State were to adopt a general rule to treat property as obsolete only in cer- tain circumstances, it could foreclose challenge to its refusal to make deductions for obsolescence for property that did not satisfy the rule as articulated by the State. Likewise, if the State adopted a “methodology” for determining the discount rate in DCF calculations, such as using the Federal Reserve Board's federal funds rate, that “nonfactual determination * * * in constructing (the] valuation process,” Pet. App. 17a, would seemingly be immune from judicial scrutiny. Plainly, the court of appeals’ rule cannot be squared with this Court’s holding in Burlington Northern, in which the Court specifically held that the district court could adjudicate petitioner’s challenges to “the State’s evaluation of the cost of capital” and its “refusal to make deductions for property which petitioner claims is obsolete.” 481 U.S. at 463 n.5. Yet there is no other obvious place to draw a principled, meaning- ful, and judicially manageable line between that which is sub- ject to judicial review and that which is not. B. The Determination Of A Property's True Market Value Is A Common Judicial Function That The Courts Cannot Escape Under Section 11501 The court of appeals’ reluctance to undertake judicial re- view of valuation methodologies reflects its view that such an inquiry would amount to inappropriate “freewheeling judicial second-guessing.” Pet. App. 17a. The district court likewise believed that it was being asked to “dictate a particular valua- tion method to the Department,” which it was not qualified to do. /d. at 42a. But the valuation of property is a function that courts routinely undertake, in numerous contexts. Moreover, because States need not make any attempt to calculate “true 25 market value” in the course of making property assessments, but instead can use an assessment formula driven by other factors, such as historical sales prices, courts applying Section 11501 will sometimes have no choice but to make an independ- ent determination of “true market value,” which necessarily will entail making determinations regarding methodology. The court’s role in assessing “true market value” for purposes of the federal-law denominator is not materially different whether or not a State calculates market value as a step in its assessment process. The federal court’s role under Section 11501 is not that of a state court deferentially reviewing ad- ministrative agency action; rather, it is to conduct a de novo hearing on whether the State has violated the railroad’s fed- eral right against de facto discrimination. The federal courts are routinely called upon to decide ques- tions of property valuation in contexts other than Section 11501. See, e.g., l/nited States v. 50 Acres of Land, 469 U.S. 24, 29-30 (1984) (Just Compensation Clause); VF'B LLC v. Campbell Soup Co., 482 F.3d 624, 632 (3d Cir. 2007) (action in bankruptcy to set aside sale of corporate division as fraudu- lent); Citicorp Real Estate, Inc. v. Smith, 155 F.3d 1097, 1106 (9th Cir. 1998) (determination of property’s fair value in suit for deficiency judgment); McMurray v. Commissioner, 985 F.2d 36, 40 (1st Cir. 1993) (valuation of land donated to char- ity in action for tax deficiency). There is no reason to believe that federal courts are any less competent to weigh expert testimony regarding valuation issues in litigation under Sec- tion 11501 than they are in those other contexts. The courts below believed that Congress intended that federal courts not make determinations regarding valuation methodology pursuant to Section 11501(b)(1). To the con- trary, however, by making a determination of “true market value” an essential component of any suit under Section 11501(b)(1), and without requiring States to undertake such a calculation, Congress plainly contemplated that the determi- 26 nation of value (which necessarily entails judgments regard- ing methodology) was one for the federal courts to make. Although most States do determine some version of market value as part of their assessment processes, that is not neces- sarily the case. Historically, some taxing jurisdictions simply “estimate[d] the ‘fractional’ valuation directly without even attempting to first determine full value.” Note, /nequality in Property Tax Assessments: New Cures for an Old Ill, 75 Harv. L. Rev. 1374, 1379 (1962); see Jn re Kents 2124 Atl. Ave., Inc., 166 A.2d 763, 767 (N.J. 1961) (when “they valued new construction, the assessors expressly eschewed any con- ception of the value of the properties” in favor of drawing an “assessment” value directly from comparable properties); Batson v. Pearl River County, 35 S. 2d 712 (Miss. 1948) (up- holding “arbitrary assessment value of $2.50 per acre” for “all cut-over lands in the county”). More recently, in Nordlinger v. Hahn, 505 U.S. 1 (1992), the Court upheld a state constitu- tional amendment that made it the express policy of the State nol to tax properties as a percentage of their market value, but according to a formula based upon their historical value. Id. at 5-6, 18. Actions under Section 11501 likewise illustrate that not all States calculate “true market value” within the meaning of the 4R Act. See, e.g., Louisville & Nashville R.R. v. Depart- ment of Revenue, 736 F.2d 1495, 1499 (11th Cir. 1984) (holding that “full market value” rather than “just value” represents “true market value for purposes of section [11501]”). Cf. Con- solidated Rail Corp. v. Town of Hyde Park, 47 F.3d 473, 476 (2d Cir. 1995) (noting New York’s practice of assessing rail- road property as a percentage of “taxable value,” which dif- fered from “true market value”). In fact, in the case at bar, the court of appeals recognized that the figure used by the State “did not reflect the conclusion that discounted cash flow was the most accurate of the methods used, only that it was the lowest.” Pet. App. 18a. Thus, federal courts simply can- ee eS a - 7 _, “ o , = 7h ge a ee eae 7 7 - 27 f not avoid their responsibility in an action under Section | 11501(b)(1) to determine the railroad property’s “true market value” for purposes of the federal statute. Whereas the court of appeals would preclude review of the State’s chosen methodology altogether, Pet. App. 15a, the district court attempted to chart a middle course, allowing review to determine whether the State’s methodology is un- reasonable or purposefully discriminatory. The district court's attempt to reintroduce a threshold element of discrim- | inatory intent into Section 11501(b)(1) runs directly contrary to this Court’s holding in Burlington Northern. Moreover, the district court’s approach, which is analogous to the stan- dard a court might apply in reviewing agency action, is inap- propriate for a statute that creates a federal right against de facto discrimination by the State. The courts of appeals have recognized as much in selecting the appropriate standard of proof to govern claims under Section 11501. See CSX Transp., Inc. v. Board of Public Works, 95 F.3d 318, 323 (4th Cir. 1996) (action under Section 11501(b)(1) is “an original action” and “does not involve review of an assessment by a state agency or other compara)le body”); Burlington N. R.R. v. Bair, 766 F.2d 1222, 1226 (8th Cir. 1985) (rejecting stan- dard for administrative review in favor of that for “de novo review in state court”). But see Burlington N. R.R. v. De- partment of Revenne, 23 F.3d 239, 241 (9th Cir. 1994) (apply- ing Washington's “clear, cogent, and convincing evidence” standard for review of tax assessments).” " Section 11501(c) provides that the “burden of proof in determining assessed value and true market value is governed by State law.” 49 U.S.C. 1150l(c). Arguably, the reference to “burden of proof” refers to the question of which party bears the “burden,” not to the separate question of the standard of proof that party must bear. Alternatively, if read as referring to the standard of proof, it should be the State standard for civil proceedings generally, not for assessment appeals. See Bair, 766 F.2d at 1226. Were it otherwise, a State might effectively immunize itself from challenge under Section 11501(b\(1) by imposing an impossibly high standard of proof on those who challenge assessments in ils own courts. In any event, that question is not 28 Ironically, the approach adopted by the court of appeals grants state assessors more deference in an action under the 4R Act’s anti-discrimination provision than they enjoy when their assessments are appealed to Georgia’s own courts. As the Georgia courts have repeatedly held, “{j)ust and fair valu- ation of property is a question to be determined by the factfinder, [7.e.], the trial court.” Dougherty County Bd. of Equalization v. Casto Dev. Co., 491 S.E.2d 483, 485 (Ga. Ct. App. 1997). In the “de novo investigation” before the trial court, the burden is on the initiating party, but “neither party is entitled to any prima facia presumption regarding the cor- rectness of its evidence of valuation.” Hirsch v. Joint City County Bd. of Assessors, 463 S.E.2d 703, 705 (Ga. Ct. App. 1995) (citation omitted). Taxpayers may present the opinions of their own experts, who are free to offer testimony based on valuation methods different from those of the State. See, e.g., Casto Dev. Co., 491 S.E.2d at 484 (noting that taxpayer’s ex- pert had criticized “the county's cost approach” and offered his own multi-approach analysis that “ascribe|d| more weight to the income approach”). Like an action in Georgia court, an action in federal court under the 4R Act is a “de novo” pro- ceeding, in which the railroad should be permitted to prove its claim of discriminatory taxation with any competent evidence. C. The Court Of Appeals’ Reliance On Concerns Of Federal Comity Is Misplaced The court of appeals believed that its curtailment of federal court review was compelled by principles of federalism and respect for the States’ sovereign interest in setting tax policy. Pet. App. 12a-13a. This Court rejected that argument in Burlington Northern and it should do so here as well. In Burlington Northern, the State urged that “injunctive relief against state taxation offends the principles of comity.” presented in this case because Georgia permits a de novo hearing, with no presumption in favor of the State's assessment or its valuation methodology. See p. 28, snfru. 29 481 U.S. at 464 (citation omitted). The Court disagreed, ex- plaining that while such “policy considerations * * * may have weighed heavily with legislators who considered the Act,” the Court was “not free to reconsider them now.” /bid. The 4R Act itself, which creates an express exception to the Tax Injunction Act, 28 U.S.C. 1341, see 49 U.S.C. 11501(c), makes clear that Congress fully intended to authorize the federal courts to enjoin prohibited forms of discriminatory state taxation. Moreover, as Burlington Northern held, the statute unambiguously establishes “true market value” as an element of the railroad’s federal claim that must be proved to the district court's satisfaction. 481 U.S. at 462-464. There is no basis for the court of appeals’ insistence that Congress also specify in a “clear statement” (Pet. App. 14a) each element of “true market value” that the federal court is to determine. The court of appeals believed that this Court’s more recent decision in ACF, rather than Burlington Northern, was the more apposite, but its reliance on ACF was misplaced. There, the Court held that a State does not violate the 4R Act’s pro- hibition against “another tax that discriminates against a rail carrier,” 49 U.S.C. 11501(b)(4), when it exempts certain non- railroad property from a generally applicable ad valorem tax without providing a similar exemption for railroad property. 510 U.S. at 347-348. The Court reasoned that “{i]t would he illogical to conclude that Congress, having allowed the States to grant property tax exemption in subsections (b)(1)-(3), would turn around and nullify its own choice in subsection (b)(4),” which did “not speak with any degree of particularity to the question of tax exemptions.” /d. at 343. By contrast, the statutory text and structure of Section 11501(b)(1) and (ce) makes evident that Congress expected the federal courts to make an independent determination of “true market value,” which includes considerations of methodology. The court of appeals believed that ACF, rather than Burlington Northern, was more relevant because federal 30 review of the State’s choice of valuation methodology is more intrusive than review of the State's application of that meth- odology. Pet. App. lla-12a. In ACF, the Court stressed that “(p]roperty tax exemptions are an important aspect of state and local tax policy.” 510 U.S. at 344. But the only “[{ijmpor- tant question| | of state policy” that the court of appeals iden- tified regarding valuation methodologies was the possibility that a State would choose “a simple valuation methodology rather than a complicated one” due to budget constraints. /d. at 12a. There is no indication that Congress believed that a State's refusal to expend resources on an accurate appraisal should be a defense against a claim of de facto discrimination under the 4R Act. Indeed, among the problems that the Sen- ate Report identified and to which the 4R Act was addressed were the States’ “outdated procedures.” S. Rep. No. 630, supra, at 2. Nor is there any reason to conclude that the State’s “methodology” of choosing the lowest of five calcu- lated values, or its fortuitous use of the discounted cash flow approach in this case, reflects an “[i]mportant question[]} of state policy” that implicates the “fundamental power of the state.” Pet. App. 12a. CONCLUSION The judgment of the court of appeals should be vacated. Respectfully submitted. ¥ “ 5 D.J. GRIBBIN General Counsel Department of ransportation ELLEN D. HANSON General Counsel Su Transportation oard JULY 2007 31 PAUL D. CLEMENT Solicitor General PETER D. KEISLER Assistant Attorney General THOMAS G. HUNGAR Deputy Solicitor General DOUGLAS HALLWARD-DRIEMEIER Assistant to the Solicitor General ANTHONY J. STEINMEYER ROBERT D. KAMENSHINE Attorneys --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0532%3A09. Public record. Not legal advice.