Petition for Writ of Certiorari — United Air Lines, Inc. v. Board of Assessment Appeals of Colorado

Supreme Court brief1989

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What actually matters in this document.

Text

ta Bupreme Court, U.S.

f JUL 2i 1988

JOBEPH FoF arin;

Cle ro

De A A ne

§9-1.24

No.

IN THE

Supreme Court of the United States

OCTOBER TERM, 1989

UNITED AIR LINES, INC., et al.,

Petitioners,

VS.

BOARD OF ASSESSMENT APPEALS OF THE

STATE OF COLORADO, et ai.,

Respondents.

PETITION FOR WRIT OF CERTIORARI

To THE COLORADO SUPREME COURT

WILLIAM E. MURANE

(Counsel of Record)

ROBERT ALAN POE

ELIZABETH A. PHELAN

JOHN R. MAXFIELD

HOLLAND & HART

Post Office Box 8749

Denver, Colorado 80201

(303) 295-8000

Attorneys for Petitioners

July, 1989

QUESTION PRESENTED

Did the Colorado Supreme Court err in permitting the

State of Colorado and its political subdivision, the City and

County of Denver, to assess, levy, and collect discriminatory

taxes on the property of certain airline companies after the

effective date of § 532(b) of the Airport and Airway Improve-

ment Act of 1982, 49 U.S.C. App. § 1513(d), which expressly

prohibits such discriminatory taxes as an unreasonable bur-

den on interstate commerce?

RULE 28.1 STATEMENT

A list of all parent companies, subsidiaries (except

wholly owned subsidiaries) and affiliates of each Petitioner,

as required by Rule 28.1, is set forth as Appendix H.

LIST OF PARTIES

etitioners are: United Air Lines, Inc.; Frontier Airlines,

Inc.; Continental Airlines, Inc.; Western Airlines, Inc.; Delta

Airlines, Inc., Republic Airlines, Inc.; Texas International

Airlines, Inc.. Trans World Airlines, Inc.; Ozark Airlines,

Inc.; Eastern Air Lines, Inc.; and American Airlines, Inc.

Respondents are: the State Board of Equalization of the

State of Colorado; Don Eberle, Carl B. Bledsoe, Ted L. Strick-

land, Kenneth Smith, and C. Michael Callihan, in their offi-

cial capacity as members of the State Board of Equalization

of the State of Colorado; the Board of Assessment Appeals of

the State of Colorado; Henry F. Shriver and F. William Beier,

in their official capacity as members of the Board of Assess-

ment Appeals of the State of Colorado; the Board of Equaliza-

tion of the City and County of Denver sitting as a Board of

County Commissioners; John Mrozek, Wes Martin, Thomas

P. Briggs, Felicia Muftic, and Ted Hackworth, in their official

capacity as members of the Board of Equalization of the City

and County of Denver; the Department of Revenue of the

City and County of Denver; Thomas P. Briggs, in his official

capacity as Manager of the Department of Revenue of the

City and County of Denver; and Mary Anne Maurer, in her

official capacity as the Property Tax Administrator of the

State of Colorado.

The parties to the proceeding in this Court are the same

as the parties to the proceeding in the Colorado Supreme

Court, except that School District No. | in and for the City

and County of Denver, which appeared as amicus curiae in

the Colorado Supreme Court, is not a party to this

proceeding.

ill

TABLE OF CONTENTS

wh w we cwnn

ae ri yaw ck

Statutory Provisions Involved.................

munmommome Or the Case ...... ww

Reasons for Granting the Petition..............

II.

III.

The Colorado Supreme Court’s Reliance on a

State Law Definition of the Term

“Assessment” as Used in 49 U.S.C. App.

§ 1513(d) is Directly Contrary to this Court’s

1987 Decision in Western Air Lines, Inc. v.

Board of Equalization, 480 U.S. 123........

The Colorado Supreme Court’s Interpretation

of the Levy and Collection Prohibitions of

§ 1513(d)(1\(B) Renders that Provision of the

Federal Statute Meaningless, Contrary to

Eppomee @r umes Court... ww ke

The Colorado Supreme Court’s Interpretation

of the Prohibition Against Discriminatory Tax

Rates in § 1513(d)(1)(C) Conflicts with Federal

Precedent and with the Underlying Policy and

RT ENG wt wae

TABLE OF AUTHORITIES

CASES

Arkansas-Best Freight System, Inc. v.

Cochran, 546 F.Supp. 904 (M.D. Tenn.

POR ie ee ee a ain es

Burlington Northern Railroad Co. v.

Department of Revenue, 604 F.Supp.

31s Oe TE es ba ee ox

Denver v. Tax Research Bureau, 101 Colo.

140, 71 P.20 GOS (1937) «2... a eae

Lamm v. Barber, 192 Colo. 511, 565 P.2d

Pe OTT Ce ee ee ee ee ae

Mountain States Telephone and Telegraph

Co. v. Pueblo of Santa Ana, 472 U.S. 237

PEW Ses 5 ee eee ee ae ks

Tennessee v. Louisville & Nashville

Railroad Co., 478 F.Supp- 199 (M.D.

Tenn. 1979), aff'd, 652 F.2d 59 (6th Cir.),

cert. denied, 454 U.S. 834 (1981) ......

Trailer Train Co. v. State Board of

Equalization, 697 F.2d 860 (9th Cir.),

cert. denied, 464 U.S. 846 (1983) ......

United States v. Menasche, 348 U.S. 528

Seu bic oe ee a are a es

Weinberger v. Hynson, Westcott and

Dunning, Inc., 412 U.S. 609 (1973)... ..

Western Air Lines, Inc. v. Board of

Equalization, 480 U.S. 123 (1987) .....

STATUTES

Section 523(b) of the Airport and Airway

Improvement Act of 1982, Public Law

Se, Wee Wee Io a ee ee eee

PAGE

4,9

PAGE

Section 532(b) of the Airport and Airway

Improvement Act of 1982, Public Law

97-248, 96 Stat. 701, 49 U.S.C. App.

SD UWUMEEE ha a wks eau ea Oe eG 2,4

Section 31 of the Motor Carrier Act of

1980, Public Law 96-296, 94 Stat. 823,

TP Waa EE bs 4 eee 9, 14

Section 306 of the Railroad Revitalization

and Regulatory Reform Act of 1976,

Public Law 94-210, 90 Stat. 54, 49

3 0 gal gio. BRA Alena Abe ae ene 14

As SE ec oe ee 2

Section 39-1-104(9)(a), 16B Colo. Rev.

seat. (1962 Repl. Vol.)...........,5. 5

Section 39-4-101(2.5), 16B Colo. Rev.

me CE Sae WP os cee ee 5

Section 39-4-102(3)(a), 16B Colo. Rev. :

ae. (ise Wa eee : 5

CONSTITUTION

Supremacy Clause of the United States

Comeieien, ot. VIG. 2 6 65 cheat 18

Py, WHY

ne ey

ay Ps

No.

IN THE

Supreme Court of the United States

OCTOBER TERM, 1989

JNITED AIR LINES, INC., et ai.,

Petitioners,

BOARD OF ASSESSMENT APPEALS OF THE

STATE OF COLORADO, ef ai.,

Respondents.

PETITION FOR WRIT OF CERTIORARI

TO THE COLORADO SUPREME COURT

Petitioners United Air Lines, Inc., Frontier Airlines.

Inc., Continental Airlines, Inc., Western Airlines, Inc., Delta

Airlines, Inc., Republic Airlines. Inc., Texas International

Airlines, Inc., Trans World Airlines, Inc., Ozark Airlines,

Inc., Eastern Air Lines, Inc., and American Airlines, Inc.

(collectively, the “Airlines”’), respectfully petition for a writ

of certiorari to review the judgment of the Colorado Supreme

Court in this case.

OPINIONS BELOW

The opinion of the Colorado Supreme Court, repro-

duced as Appendix A, is not yet officially reported. The opin-

ion of the Colorado Court of Appeals, reproduced as

Appendix B, is reported at 749 P.2d 986. The ruling and

amendment of ruling issued by the District Court for the City

and County of Denver, Colorado, reprcduced as Appendix C

and Appendix D, respectively, are not reported. The separate

opinions issued by the two members of the Colorado Board of

Assessment Appeals, reproduced as Appendix E and Appen-

dix F, respectively, are not reported. The ruling of the Board

of County Commissioners of the City and County of Denver,

Colorado, reproduced as Appendix G, is not reported.

JURISDICTIONAL STATEMENT

The judgment of the Colorado Supreme Court, repro-

duced as Appendix A, was entered on April 24, 1989. No

petition for rehearing in the Colorado Supreme Court was

filed, and no extension of time to file a petition for writ of

certiorari in this Court has been sought. This Court has juris-

diction to review the judgment of the Colorado Supreme

Court by writ of certiorari pursuant to 28 U.S.C. § 1257(a).

STATUTORY PROVISIONS INVOLVED

Section 532(b) of the Airport and Airway Improvement

Act of 1982, Public Law 97-248, 96 Stat. 701, as codified at 49

U.S.C. App. § 1513(d), provides as follows:

(d) Acts which unreasonably burden and discriminate

against interstate commerce; definitions

(1) The following acts unreasonably burden and dis-

criminate against interstate commerce and a State, sub-

division of a State, or authority acting for a State or

subdivision of a State may not do any of them:

(A) assess air carrier transportation property at a

value that has a higher ratio to the true market value of

the air carrier transportation property than the ratio

that the assessed value of other commercial and indus-

trial property of the same type in the same assessment

jurisdiction has to the true market value of the other

commercial and industrial property:

(B) levy or collect a tax on an assessment that may

not be made under subparagraph (A) of this paragraph;

air carrier transportation property at a tax rate that

exceeds the tax rate applicable to commercial and

industrial property in the same assessment

jurisdiction.

(2) In this subsection —

(A) “assessment” means valuation for a property ,

tax levied by a taxing district;

(B) “assessment jurisdiction” means a geographi-

cal area in a State used in determining the assessed

value of property for ad valorem taxation;

property, as defined by the Civil Aeronautics Board,

owned or used by an air carrier providing air

transportation;

(D) “commercial and industrial property” means

property, other than transporiation property and land

used primarily for agricultural purposes or timber

growing, devoted to a commercial or industrial use and

subject to a property tax levy: and

(E) “State” shall include the Commonwealth of

Puerto Rico, the Virgin Islands, Guam, the District of

Columbia, the territories or possessions of the United

States, and political agencies of two or more States.

(3) This subsection shall not apply to any in lieu tax

which is wholly utilized for airport and aeronautical

purposes.

STATEMENT OF THE CASE

Prior to 1982 a number of states, including Colorado,

discriminated against airline companies by imposing prop-

erty taxes on the property of such companies that exceeded,

as a percentage of the true market value of such property, the

property taxes imposed on other commercial and industria!

property in the same jurisdiction. Congressional concern

about the impact of such discrimination on the nation’s air

transportation system resulted in the inclusion in the Airport

and Airway Improvement Act of 1982, Public Law 97-248, of

a specific statutory prohibition against such discrimination.

Section 532(b) of that statute, as codified at 49 U.S.C. App.

§ 1513(d), provides that certain acts unreasonably burden

and discriminate against interstate commerce, and it prohib-

its a State, a subdivision of a state, or an authority acting for a

state or a subdivision of a state from commiting such acts.

As of the effective date of § 1513(d), the following acts

are prohibited: (1) the assessment of air carrier transportation

property at a value that has a higher ratio to the true market

value of such property than the ratio of the assessed value of

other commercial and industrial property to the true market

value of such other property; (2) the levy or collection of a tax

on such an assessment; and (3) the levy or collection of a

property tax on air carrier transportation property at a tax

rate that exceeds the tax rate applicable to commercial and

industrial property in the same jurisdiction. Under the gen-

eral effective date provision of the Airport and Airway

Improvement Act of 1982, § 1513(d) took effect on the date of

enactment, which was September 3, 1982. Section 523(b) of

Public Law 97-248, 96 Stat. 695.

Without question, Colorado’s property tax system in

effect for the 1982 tax year discriminated against air carrier

transportation property, including the property of the Air-

lines who are petitioners in this case. Specifically, the Airlines

were Classified as public utilities for Colorado property tax

purposes, and their property was therefore assessed at a 1981

level of value rather than the 1973 level of value generally

applied to commercial and industrial property other than the

property of public utilities. Sections 39-4-101(2.5), 39-4-

102(3)(a), and 39-1-104(9)(a), 16B Colo. Rev. Stat. (1982

Repl. Vol.). The parties to this case stipulated in the state

district court that the application of those Colorado statutory

provisions in tax year 1982, produced assessments on the

property of the Airlines that were nearly double the assess-

ments that would be imposed on that property if the antidis-

crimination rules of § 1513(d) were applied to those

assessments. Stipulation, reproduced as Appendix I.

After September 3, 1982, the effective date of § 1513(d),

certain agencies and officials of the State of Colorado and the

City and County of Denver (“‘Denver’’) took actions to adopt

the discriminatory 1982 property tax assessments on the Air-

lines’ property and to levy and collect taxes on those assess-

ments. Specifically, the Colorado State Board of Equalization

met after September 3, 1982, and, pursuant to Colorado con-

stitutional and statutory provisions, performed its equaliza-

tion function by reviewing and approving the abstracts of

assessment for the various Colorado counties. The Colorado

State Auditor thereafter certified the abstracts of assessment

to the county assessors on September 21, 1982. The 1982

taxes were levied on property in Denver, including the prop-

erty of the Airlines, after the State Auditor had certified the

abstract of assessment to the Denver assessor, and the 1982

taxes were not collected from the Airlines until February and

July, 1983.

In view of the actions taken by the state and county tax

officials after September 3, 1982, to assess, levy and collect

discriminatory property taxes on their property, the Airlines

sought relief through the prescribed Colorado administrative

and judicial process, raising at each stage of the proceedings

the federal statute’s prohibition against the assessment, levy

and collection of the discriminatory taxes.'! This process

culminated in the Colorado Supreme Court’s reversal of the

holding of the Colorado Court of Appeals that the collection

of the discriminatory taxes violated § 1513(d). The Colorado

Supreme Court determined that the “equalization” function

performed by the State Board of Equalization was distinct

from the assessment function, and therefore held that the

assessments on the Airlines’ property for tax year 1982 were

completed prior to the effective date of § 1513(d). Appendix

at A-19. Having found that the assessments were completed

prior to the effective date of § 1513(d), the court held that

§ 1513(d)(1)(A) did not prohibit the assessments. Appendix at

A-21. The court further held that Denver was not prohibited

from levying and collecting the discriminatory taxes after the

effective date of § 1513(d), because subparagraph (B) of that

section only prohibits the levy and collection of taxes on

assessments that are themselves prohibited by subpara-

graph (A). Appendix at A-22. Finally, the court held that

§ 1513(d)(1)(C) did not prohibit the levy and collection of the

discriminatory taxes. on the theory that subparagraph (C)

only applies when the nominal tax rate (as opposed to the

effective tax rate) discriminates against air carrier transporta-

tion property. Appendix at A-23 to A-24.

| Pursuant to Rule 21.1(h), the Appendix contains an excerpt from

the relevant document filed by the Airlines at each administrative and

judicial level. Specifically, Appendix'J is an excerpt from the Petitions

for Abatement or Refund of Taxes filed with Denver, Appendix K is an

excerpt from the Petitions of Appeal filed with the Board of Assessment

Appeals, Appendix L is an excerpt from the Complaints filed in Denver

District Court, and Appendix M is an excerpt from the Airlines’ Notice

of Appeal from the Denver District Court’s decision. The Airlines’

claim that § 1513(d) prohibited the assessment, levy, and collection of

the discriminatory_taxes was rejected by each administrative agency

and court except the Colorado Court of Appeals. Appendix at A-51, A-

44, A-36, and A-30.

REASONS FOR GRANTING THE PETITION

I. THE COLORADO SUPREME COURT'S

RELIANCE ON A STATE LAW DEFINITION OF

THE TERM “ASSESSMENT” AS USED IN 4S

U.S.C. APP. § 1513(d) IS DIRECTLY CONTRARY

TO THIS COURT’S 1987 DECISION IN WESTERN

AIR LINES, INC. V. BOARD OF EQUALIZATION,

480 U.S. 123.

The Colorado Supreme Court’s decision in this case

hinges entirely on its conclusion that the discriminatory 1982

property tax assessments on the Airlines’ property were com-

pleted before September 3, 1982, the effective date of

§ 1513(d). In reaching this conclusion, however, the court

erroneously relied on a state law definition of the term

“assessment,” in direct contravention of this Court’s ruling in

Western Air Lines, Inc. v. Board of Equalization, 480 U.S. 123

(1987). The Colorado Supreme Court’s decision not only fails

to give effect to the policy and purpose underlying § 1513(d),

it also establishes a precedent under which states may circum-

vent the antidiscrimination mandates of § 1513(d) and simi-

lar federal statutes through the use of carefully selected

terminology in their discriminatory property tax laws.

The Colorado Supreme Court acknowledged that, after

September 3, 1982, certain agencies and officials of the State

of Colorado took actions that were necessary steps in the

process of providing to county officials the final valuations

against which 1982 property taxes were levied. In particular,

the review of the abstracts of assessment by the State Board of

Equalization and the subsequent certification of those

abstracts to county assessors by the State Auditor did not

occur until after the prohibitions of § 1513(d) became law.

Appendix at A-10. The court held that these actions by the

State Board of Equalization and the State Auditor did not

violate § 1513(d), because such actions were part of the

“equalization” process rather than the assessment process

under state law. Appendix at A-17 to A-19. The court

described the state law distinction between these two

processes as follows: :

In contrast to assessment, which consists of placing a

valuation on a particular piece of property belonging

to a particular taxpayer, the duty of the State Board

of Equalization is to equalize the assessed valuations

of classes and subclasses of property on a statewide

basis by adjusting the total valuations placed upon

particular classes or subclasses of property. We rec-

ognized this distinction between assessment and

equalization in Lamm v. Barber, 192 Colo. 511,

521, 565 P.2d 538, 545 (1977), where we stated:

Assessment is the act of placing a value for

tax purposes upon the property of a partic-

ular taxpayer. Equalization, on the other

hand, is the act of raising or lowering the

total valuation placed upon a class, or sub-

class, of property in the aggregate. Equali-

zation deals with all the property of a class

or subclass within a designated territorial

limit, such as a county, without regard to

who owns the individual parcels making up

the class or subclass. Assessment relates to

individual properties; equalization relates

to classes of property collectively.

Appendix at A-17 to A-18.

The Colorado Supreme Court’s reliance on a state law

distinction between two steps of the process of fixing final

valuations against which property taxes are levied is directly

contrary to the reasoning of the Court in Western Air Lines,

480 U.S. at 129-30. In that case, the Court specifically sought

the views of the parties and the Solicitor General on the

question of whether the definition of a phrase in § 1513(d)

was a question of state law or federal law. The Court con-

ciuded that:

The general principle that, absent a clear

indication to the contrary, the meaning of

words in a federal statute is a question of

federal law has especial force when the pur-

pose of the federal statute is to eliminate

discriminatory state treatment of interstate

commerce.

480 U.S. at 129-30. The Court then interpreted the Statutory

phrase at issue in that case “‘in light of the policy embodied in

the federal provision” and “in a manner that comports with

the policies of the Airport and Airline [sic] Improvement

Act.”” 480 U.S. at 130, 134.

In this case, Congress specifically defined the term

“assessment” in § 1513(d) to mean “valuation for a property

tax levied by a taxing district.” 49 U.S.C. App.

§ 1513(d)(2)(A). In addition, Congress did not provide for a

delayed effective date for the antidiscrimination provisions

of § 1513(d), but rather specified that those provisions would

take effect on the date of enactment of the Airport and Airway

Improvement Act of 1982. Section 523(b) of Public Law 97-

248, 96 Stat. 695. The absence of a delayed effective date for

the virtually identical antidiscrimination provisions of Sec-

tion 31 of the Motor Carrier Act of 1980, Public Law 96-296.

94 Stat. 823, 49 U.S.C. § 11503a, led a federal district court tc

the “inescapable”’ conclusion that:

Congress determined to take immediate

action to alleviate some of the competitive

disadvantages to which motor carriers had

been subjected at the hands of the

States. . . . The court concludes that

immediaie implementation of the Motor

Carrier Act was intended... .

Arkansas-Best Freight System, Inc. v. Cochran, 546 F.Supp.

904, 912-13 (M.D. Tenn. 1981). Thus, by adopting § 151 3(d)

without a delayed effective date, Congress clearly intended

that, as of September 3, 1982, the states and their subdivi-

sions lost all power to take any action to establish valuations

for property tax levies that discriminated against air carrier

transportation property, regardless of whether such action

was characterized under state law as part of the assessment

process, the equalization process, or some other process.

For the 1982 tax year in Colorado, the valuations against

which Denver could levy property taxes did not exist until the

final abstracts of assessment were approved by the State

Board of Equalization and certified to the county assessors by

the State Auditor, both of which actions occurred after the

effective date of § 1513(d). Denver v. Tax Research Bureau,

101 Colo. 140, 144, 71 P.2d 809, 811 (1937) (“[T]he assess-

ment for ad valorem taxes is not fully completed until the

termination of the annual meeting of the State Board of

Equalization . . . *’). Since the final valuations against

which property taxes could be levied did not exist under state

law until after September 3, 1982, the state action necessary

to complete those valuations was prohibited by § 1513(d).

The illegality of such actions cannot be changed by the Colo-

rado Supreme Court’s state law characterization of those

actions as part of the “equalization” rather than assessment

process.

In its decision, the Colorado Supreme Court concluded

that the assessment process in Colorado for tax year 1982

ended when the Airlines were notified of their valuations or

adjusted valuations and did not seek further review of those

valuations or adjusted valuations. Appendix at A-19. This

focus on the pre-assessment assignment of values to the prop-

erty of the Airlines fails to give effect to the purpose of the

statutory scheme under § 1513(d). The entire thrust of

§ 1513(d) is to equalize property tax assessments on air car-

rier transportation property with assessments on other com-

mercial and industrial property in the same assessment

jurisdiction. Thus, the particular values assigned to the prop-

erty of the Airlines are, in the abstract, meaningless in deter-

mining whether § 1513(d) has been violated. It is only by

comparing the values assigned to the property of the Airlines

with the values assigned to all other commercial and indus-

trial property in the assessment jurisdiction that violation of

or compliance with § 1513(d) can be determined. Such a

comparison cannot be made, even if the values of the prop-

erty of the Airlines have been finally determined, until the

final values of all commercial and industrial property in the

assessment jurisdiction have been determined. This process

is not complete until all steps have been taken to establish the

final values against which property taxes may be levied,

including (in the words used by the Colorado Supreme Court

to define the ‘“‘equalization”’ process) “adjusting the total val-

uations placed upon particular classes or subclasses of prop-

erty.”’ Appendix at A-18. Whether under state law those steps

are characterized as “‘assessment,” “‘equalization,” or some-

thing else, they constitute state action that is part of the pro-

cess of fixing valuations for property taxes levied by taxing

districts in Colorado, and the taking of such steps after Sep-

tember 3, 1982, was illegal, since the resulting final valuations

were discriminatory.

If allowed to stand, the Colorado Supreme Court’s deci-

sion may have an effect far beyond the immediate — and not

insubstantial — result that the Airlines were required to pay

over $3 million in discriminatory Property taxes in Colorado

for tax year 1982.2 The court’s formalistic distinction

2 In addition to the refunds sought by the Airlines from Denver. the

Airlines have requested refunds from the seven other Colorado coun-

ties in which they paid 1982 property taxes. Those requests are being

held in abeyance at various administrative levels, pending the outcome

of this case. In total, the Airlines have requested refunds of

$3,121,481.20 from Colorado counties, plus interest on that amount.

between the assessment process and the “equalization” pro-

cess under state law establishes a precedent under which

states can circumvent the prohibitions of § 1513(d). Because

§ 1513(d)(1)(A) prohibits only discriminatory assessments, a

state could, under the court’s decision, issue nondiscrimina-

tory “assessments” to airline companies, and then increase

those assessments (or decrease the assessments of other com-

mercial and industrial property) through the “‘equalization”

process. Since, as is discussed below, the Colorado Supreme

Court also ruled that the levy and collection of discriminatory

taxes is prohibited only if the assessments are prohibited or if

the nominal tax rate (as opposed to the effective tax rate)

discriminates, this blatant discrimination against air carrier

transportation property would not be prohibited by

§ 1513(d), as interpreted by the court. This interpretation

“would do no more than place a meaningless hurdle before

state legislatures seeking to conform their tax scheme to the

requirements” of § 1513(d), Western Air Lines, 480 U.S. at

133, and should not be allowed to stand without review by

this Court.

The Congressional purpose and policy of immediately

prohibiting state property tax discrimination against air car-

rier transportation property, embodied in § 1513(d), is not

served by the court’s application of a state law definition to

the term “‘assessment” as used in the federal statute. Rather,

as this Court held in the Western Air Lines case, the terms

used in § 1513(d) must be defined by federal law in a way that

implements, rather than frustrates, the Congressional man-

date. The Colorado Supreme Court’s failure to apply a federal

law definition in this case creates a conflict between its deci-

sion and the decision of this Court in the Western Air Lines

case, and the petition for writ of certiorari should be granted

to resolve that conflict.

Il. THE COLORADO SUPREME COURT'S

INTERPRETATION OF THE LEVY AND

COLLECTION PROHIBITIONS OF § 1513(d)(1)(B)

RENDERS THAT PROVISION OF THE FEDERAL

STATUTE MEANINGLESS, CONTRARY TO

DECISIONS OF THIS COURT.

It is undisputed that the actual levy of the 1982 taxes

against the Airlines’ property and the collection of those taxes

occurred well after the effective date of § 1513(d). The Air-

lines have contended throughout the course of this litigation

that such levy and collection of the discriminatory 1982 taxes

after the effective date of § 1513(d) constituted an indepen-

dent violation of that statute; specifically, § 1513(d)(1)(B).

which provides that a state or a subdivision of a state may not

“levy or collect a tax on an assessment that may not be made

under subparagraph (A)” of § 1513(d)(1). It is evident from

the statutory scheme that subparagraph (B) proscribes a sec-

ond type of state action, beyond the state action prohibited by

subparagraph (A). Thus, subparagraph (B) is violated by the

levy and collection of discriminatory taxes after the effective

date of § 1513(d), even if the discriminatory assessments were

completed prior to the effective date.

The Colorado Supreme Court rejected the Airlines’

argument on this point, ruling that “if an assessment does not

violate subparagraph (A), then the levy and collection of a tax

on such an assessment is not within the prohibition of subpar-

agraph (B).”” Appendix at A-22. Notwithstanding the court’s

disclaimer to the contrary, Appendix at A-21, the effect of the

court’s interpretation of subparagraph (B) of § 1513(d)(1) is to

render the subparagraph superfluous. As interpreted by the

Colorado Supreme Court, subparagraph (B) adds nothing to

the prohibition of subparagraph (A), and subparagraph (B)

would not apply in any case unless subparagraph (A) has also

been violated. This interpretation ascribes to Congress an

intent to include a meaningless or redundant subparagraph in

§ 1513(d)(1). As the Colorado Supreme Court itself acknowl-

edged in a different part of its opinion in this case, this

Court’s pronouncements preclude ascribing such an intent to

Congress. Appendix at A-23, citing Mountain States Tele-

phone and Telegraph Co. v. Pueblo of Santa Ana, 472 U.S.

237, 249 (1985); Weinberger v. Hynson, Westcott and Dun-

ning, Inc., 412 U.S. 609, 633 (1973); United States v. Menas-

che, 348 U.S. 528, 538-39 (1955).

In this case, a reasonable interpretation of § 1513(d)(1)

exists which gives meaning and effect to both subparagraph

(A) and subparagraph (B) of that section. The proper interpre-

tation ascribes to Congress an intent to eliminate, as of the

effective date of § 1513(d), all state action that discriminated

against air carrier transportation property with respect to

property taxes, regardless of whether such state action was

part of the process of assessing the discrimjnatory taxes or

was part of the process of levying or collecting the discrimina-

tory taxes. Congress intended that, as of the effective date of

§ 1513(d), all state laws providing for or permitting discrimi-

natory property taxation of air carrier transportation prop-

erty would be preempted, in order to provide immediate

relief for the nation’s air transportation system from the

unreasonable burden imposed on it by the discriminatory tax

policies of the states.

This interpretation is consistent with the efforts of fed-

eral courts to give full effect to the purpose and policy under-

lying virtually identical federal antidiscrimination laws

applicable to rail transportation property (Section 306 of the

Railroad Revitalization and Regulatory Reform Act of 1976

(the “4-R Act”), Public Law 94-210, 90 Stat. 54, 49 U.S.C.

§ 11503) and motor carrier transportation property (Sec-

tion 31 of the Motor Carrier Act of 1980, Public Law 96-296,

94 Stat. 823, 49 U.S.C. § 11503a).3 For example, in refusing

to allow California to collect discriminatory taxes on rail

transportation property after the effective date of the 4-R Act.

the Ninth Circuit Court of Appeals rejected that state’s argu-

ment that such collection was legal because the assessments

upon which the discriminatory taxes were collected pre-dated

the effective date of the 4-R Act. Trailer Train Co. v. State

Board of Equalization, 697 F.2d 860, 864-65 (9th Cir.), cert.

denied, 464 U.S. 846 (1983) (“Allowing the additional tax to

relate back to 1978 and escape the application of [the 4-R

Act] not only would subvert Congress’ purpose in postponing

the statute’s effective date, but also would run counter to the

basic policy of [the 4-R Act] to prohibit discriminatory taxa-

tion of railroad property”). Similarly, in Arkansas-Best

Freight System, Inc. v. Cochran, 546 F.Supp. 904, 912 (M.D.

Tenn. 1981), the federal district court rejected Tennessee’s

argument that the Motor Carrier Act of 1980 did not apply to

the 1980 tax year in that state because state law established an

assessment date of January 1, which pre-dated the effective

date of the federal statute. See also Tennessee v. Louisville &

Nashville Railroad Co., 478 F.Supp. 199, 209 (M.D. Tenn.

1979), aff'd, 652 F.2d 59 (6th Cir.), cert. denied, 454 U.S. 834

(1981) (“On the basis of the doctrine of federal supremacy,

therefore, this Court concludes that the federal statute

prohibiting tax discrimination against rail transportation

property, which became effective February 5, 1979, requires

the State of Tennessee to reduce the assessment ratio for

railroad property to the assessment ratio of other commercial

and industrial property for the 1979 tax year’’).

> Both of these similar statutes specifically grant to federal district

courts jurisdiction to enjoin state actions that violate their antidis-

crimination prohibitions. The reason for the absence of such a provi-

sion in § 1513(d) is not explained in the legislative history of that

statute. Surely, however, Congress did not intend by this omission to

authorize state courts to interpret and apply § 1513(d) in a more restric-

tive fashion than that utilized by the federal courts under statutes

containing virtually identical language and intended to address the

same problems.

The strained, narrow and restrictive interpretation of

§ 1513(d)(1)(B) by the Colorado Supreme Court stands in

stark contrast to these federal courts’ efforts to give full effect

to the purpose and policy underlying the antidiscrimination

provisions of the 4-R Act and the Motor Carrier Act of 1980.

The Colorado Supreme Court erred in failing to give effect to

the Congressional purpose underlying subparagraph (B) of

§ 1513(d)(1), and the petition for writ of certiorari should be

granted in order to correct that error.

III. THE COLORADO SUPREME COURT'S

INTERPRETATION OF THE PROHIBITION

AGAINST DISCRIMINATORY TAX RATES

IN § 1513(d)(1(C) CONFLICTS WITH

FEDERAL PRECEDENT AND WITH THE

'JNDERLYING POLICY AND PURPOSE OF

§ 1513(d).

Subparagraph (C) of § 1513(d)(1) prohibits the levy or

collection of an ad valorem property tax on air carrier trans-

portation property at a tax rate thai exceeds the tax rate

applicable to commercial and industrial property in the same

assessment jurisdiction. The Airlines acknowledge that the

nominal tax rate applied to the valuations for assessment of

their property in Denver for tax year 1982 was the same as the

nominal tax rate applied to the valuations for assessment of

other commercial and industrial property. However, the val-

uation of the Airlines’ property at the 1981 level of value

while other commercial and industrial property was valued at

1973 levels of value produced a higher effective tax rate on the

Airlines’ property than the effective tax rate applicable to

other commerical and industrial property. As noted above,

the additional tax paid by the Airlines as a result of the appli-

cation of the 1981 level of value to their property exceeds $3

million. The Airlines have contended throughout this litiga-

tion that the levy and collection after September 3, 1982. of

the 1982 property taxes on their property at the higher effec-

tive tax rate violated § 1513(d\(1)(C).

The Colorado Supreme Court rejected the Airlines’

claims under § 1513(d)(1)(C), on the theory that subpara-

graph (C) applies only if the nominal tax rates discriminate.

Appendix at A-23. The court rejected as unpersuasive author-

ity the contrary analysis in the amended opinion of the fed-

eral district court in Burlington Northern Railroad Co. v.

Department of Revenue, 604 F.Supp. 1575 (W.D. Wis. 1985).

a case involving the application of the antidiscrimination

provisions of the 4-R Act. In that case, the court applied 49

U.S.C. § 11503(b)(3), which is nearly identical to

§ 1513(d)(1)(C), to the 1981 through 1983 tax years in Wis-

consin. The court was required to compare tax rates applica-

ble to rail transportation property for those tax years to the

tax rate applicable to other commercia! and industrial prop-

erty. In doing so, the court did not restrict iiself to considera-

tion of the nominal tax rates applied to the relevant classes of

property. Rather, the court determined the effective tax rate

applicable to commercial and industrial property by consid-

ering specifically the impact of varying assessment ratios on

such effective tax rates. 604 F.Supp. at 1580. Thus. the court

clearly recognized that the statutory provision analogous to

§ 1513(d)(1)(C) prohibited discriminatory effective tax rates.

even if the source of the discrimination was a difference in the

assessment ratios applied in valuing different classes of prop-

erty for property tax purposes, rather than a difference in the

nominal tax rates applied to the valuations for assessment of

the different classes of property.

The analysis of the federal district court in Burlington

Northern Railroad Co. is consistent with, and the decision of

the Colorado Supreme Court in this case is contrary to, the

purpose and policy underlying § 1513(d)(1)(C). By its use of

three separate subparagraphs in § 1513(d)(1), Congress

unequivocally expressed its mandate that, as of the effective

date of § 1513(d), state property tax discrimination against

air Carrier transportation property would cease, regardless of

the form or source of such discrimination and regardless of

the nature of the state action occurring after the effective date

with respect to such discriminatory taxation. It is inconceiv-

able that Congress could have intended to distinguish

between a state that discriminated against the Airlines

through different nominal tax rates and a state, such as Colo-

rado, that achieved the same result through the application of

discriminatory valuation standards. The former was clearly

prohibited by subparagraph (C) from collecting the discrimi-

natory taxes as of September 3, 1982, but the Colorado

Supreme Court permitted the latter to collect the discrimina-

tory taxes in July, 1983, nearly eleven months after the effec-

tive date of § 1513(d).

Through its restrictive interpretation of subpara-

graph (C), the Colorado Supreme Court effectively postponed

the application of § 1513(d) until the 1983 tax year in Colo-

rado, for which taxes were not collected until 1984, nearly

two full years after the effective date of § 1513(d). As a federal

district court said in rejecting Tennessee’s similar attempt to

avoid the application of the antidiscrimination provisions of

the 4-R Act to the 1979 tax year in that state, “[s]uch a

construction frustrates the congressional purpose in fixing the

effective date” of the federal statute. Tennessee v. Louisville &

Nashville Railroad Co., 478 F.Supp 199, 209 (M.D. Tenn.

1979), aff'd, 652 F.2d 59 (6th Cir.), cert. denied, 454 U.S. 834

(1981). Thus, on the basis of the Supremacy Clause of the

United States Constitution, art. VI, cl. 2, the Colorado laws

permitting the levy and collection of property taxes on the

Airlines’ property at a discriminatory effective tax rate were

preempted as of September 3, 1982. The petition for writ of

certiorari shouid be granted in order to correct the Co.orado

Supreme Court’s restrictive and erroneous interpretation of

subparagraph (C) that permitted the levy and collection of the

discriminatory taxes long after the effective date of the federal

Statute.

CONCLUSION

Based on the foregoing, the petition for writ of certiorari

should be granted.

Respectfully submitted.

WILLIAM E. MURANE

(Counsel of Record)

ROBERT ALAN POE

ELIZABETH A. PHELAN

JOHN R. MAXFIELD

HOLLAND & HART

Post Office Box 8749

Denver, Colorado 80201

(303) 295-8000

Attorneys for Petitioners

July, 1989

APPENDIX

TABLE OF CONTENTS

. Opinion of the Colorado Supreme Court in

State Board of Equalization, et al. v.

American Airlines, Inc., et al., No. 87 SC 430,

oe eae re arr eee

. Opinion of the Colorado Court of Appeals in

American Airlines, Inc., et al. v. State Board

of Equalization, et al., No. 85 CA 1154,

August 27, 1987, reported at 749 P.2d 986 .

. Ruling of the District Court, City and County

of Denver, Colorado, in American Airlines,

Inc., et al. v. Board of Assessment Appeals of

the State of Colorado, et al., Civil Action

Nos. 84 CV 4505 through 84 CV 4515 and

OO CV Giem, Weer 6 F908 oii ees

. Amendment of Ruling of the District Court,

City and County of Denver, Colorado, in

American Airlines, Inc., et al. v. Board of

Assessment Appeals of the State of Colorado,

et al., Civil Action Nos. 84 CV 4505 through

84 CV 4515 and 84 CV 6469, June 6, 1985...

Member Shriver’s Opinion, Board of

Assessment Appeals, State of Colorado, in

American Airlines, Inc., et al. v. Denver

County Board of Commissioners, Docket

Nos. 4668 through 4680, April 13, 1984 ....

Member Beier’s Opinion, Board of

Assessment Appeals, State of Colorado, in

American Airlines, Inc., et al. v. Denver

County Board of Commissioners, Docket

Nos. 4668 through 4680, April 13, 1984 ....

PAGE

A-|

A-33

A-45

. Ruling of the Board of County

Commissioners of the City and County of

Denver, Colorado, November 22, 1983 .....

. List of Parent Companies, Subsidiaries

(Except Whoily Owned Subsidiaries) and

Affiliates of Petitioners Pursuant to Rule 28.1

Stipulation filed in District Court, April 23,

GSS vcs we eee

Excerpt from Petitions for Abatement or

Refund of Taxes filed with Denver, July 22,

1983 (Exhibits D-1 through D-11 of Board of

Assessment Appeals Record).............

. Excerpt from Memorandum attached to

Petitions to Colorado Board of Assessment

Appeals, December 20, 1983 ............

Excerpt from Complaints filed by Airlines in

the District Court, City and County of

Denver, Colorado, May 9, 1984 ..........

. Excerpt from Plaintiffs’-Appellants’ Joint —

Notice of Appeal, filed in Colorado Supreme

Court, July 26, 1903. os 44

PAGE

A-1

APPENDIX A

SUPREME COURT, STATE OF COLORADO

No. 878C430 April 24, 1989

STATE BOARD OF EQUALIZATION OF THE STATE OF COLO-

RADO; DON EBERLE, CARL B. BLEDSOE, TED L. STRICKLAND,

KENNETH SMITH, and C. MICHAEL CALLIHAN, in their official

capacity as members of the State Board of Equalization of the

State of Colorado; BOARD OF ASSESSMENT APPEALS OF THE

STATE OF COLORADO; HENRY F. SHRIVER and F. WILLIAM

BEIER, in their official capacity as members of the Board of

Assessment Appeals of the State of Colorado; BOARD OF

EQUALIZATION OF THE CITY AND COUNTY OF DENVER SIT-

TING AS A BOARD OF COUNTY COMMISSIONERS; JOHN

MROZEK, WES MARTIN, THOMAS P. BRIGGS, FELICIA MUF-

TIC, AND TED HACKWORTH, in their official capacity 2s mem-

bers of the Board of Equalization of the City and County of

Denver; DEPARTMENT OF REVENUE OF THE CITY AND

COUNTY OF DENVER; THOMAS P. BRIGGS, in his official

capacity as Manager of the Department of Revenue of the

City and County of Denver; and MARY ANNE MAURER, in her

official capacity as the Property Tax Administrator of the

State of Colorado.

Petitioners,

¥V.

AMERICAN AIRLINES, INC.; CONTINENTAL AIRLINES, INC.;

DELTA AIRLINES, INC.; EASTERN AIRLINES, INC.; FRONTIER

AIRLINES, INC.; OZARK AIRLINES, INC.; REPUBLIC AIRLINES,

INC.; TEXAS INTERNATIONAL AIRLINES, INC.; TRANS WORLD

AIRLINES, INC.; UNITED AIRLINES, INC.; AND WESTERN AIR-

LINES, INC.,

Respondents.

A-2

Certiorari to the Colorado Court of Appeals

EN BANC JUDGMENT REVERSED

Stephen H. Kaplan, City Attorney

Robert F. Strenski, Assistant City Attorney

Denver, Colorado

Attorneys for Petitioners

Holland & Hart

William E. Murane

Alan Poe

John R. Maxfield

Denver, Colorado

Attorneys for Respondents

Semple & Jackson, P.C.

Michael H. Jackson

Dwight L. Pringle

Denver, Colorado

Attorneys for Amicus Curiae

School District No. 1

CHIEF JUSTICE QUINN delivered the Opinion of the

Court.

A-3

The question in this case is whether section 532(b) of the

Tax Equity and Fiscal Responsibility Act of 1982,!' codified at

49 U.S.C. § 1513(d) (1982), which was signed into law on

September 3, 1982, and prohibits state taxing authorities

from taxing air carrier transportation property differently

from other commercial and industrial property in the same

assessment jurisdiction, is applicable to the 1982 Colorado

property taxes assessed on the property of eleven airline com-

panies and levied and collected by Colorado taxing authori-

ties. In American Airlines, Inc. v. State Board of Equalization,

749 P.2d 986 (Colo. App. 1988), the court of appeals held that

49 U.S.C. § 1513(d) applied to the 1982 Colorado property

taxes because the taxes were based on disparate assessment

values and the actual collection of the taxes occurred subse-

quent to the effective date of the federal legislation. We reach

a contrary result. We construe 49 U.S.C. § 1513(d) as apply-

ing only to the levy and collection of taxes based on assess-

ments made on or after September 3, 1982, the effective date

of the federal legislation. Since the assessments in this case

were completed prior to the effective date of the federal stat-

ute and were made in accordance with then existing Colorado

law, the provisions of 49 U.S.C. § 1513(d) did not prohibit

Colorado taxing authorities from levying and collecting the

taxes so assessed. We accordingly reverse the judgment of the

court of appeals.

The petitioners are the State Board of Assessment

Appeals, the State Board of Equalization, the Denver Board

of Equalization, the Denver Department of Revenue, the

individual members of those taxing entities, the State Prop-

erty Tax Administrator, and the Manager of the Denver

! The Tax Equity and Fiscai Responsibility Act is a comprehensive

bill which includes Title V, the Airport and Airway Improvement Act

of 1982, of which section 532(b) is a part. Pub. L. No. 97-248, 96 Stai.

701 (1982).

A-4

Department of Revenue. The respondents are the following

eleven corporate airline companies, each of which is subject

to the payment of 1982 Colorado property taxes: American

Airlines; Continental Airlines; Delta Airlines; Eastern Air-

lines, Frontier Airlines; Ozark Airlines; Republic Airlines;

Texas International Airlines; Trans World Airlines; United

Airlines; and Western Airlines. Before outlining the facts, we

summarize the statutory framework out of which this case

arises.

By statute, the official assessment date for all taxable

property in the state, both real and personal, is twelve noon

on the first day of January of each year. § 39-1-105, 16B

C.R.S. (1982 & 1988 Supp.). Property located within the siate

at that time and date must be appraised and valued for assess-

ment in the county wherein it is located on the assessment

date. Jd.

In 1982 the Colorado property tax statutes distinguished

certain types of property for purposes of valuation. This was

accomplished by applying different base-year levels of value

to some properties, including the property of public utilities.

The term “public utility” included every company doing bus-

iness in this state as an airline company. § 39-4-101(2.5), 16B

C.R.S. (1982). In determining the value of a public utility for

purposes of 1982 property taxes, the public utility’s actual

1982 value was adjusted by the state Property Tax Adminis-

trator (hereinafter referred to as administrator) to its level of

value in 1981, § 39-4-102(3) (a), 16B C.R.S. (1982), 2 while

2 Section 39-4-102(1), 16B C.R.S. (1982), authorized the adminis-

trator to determine the actual value of public utility property, such as

the property of an airline company, by considering the following factors

and assigning such weight to them as will secure a just value of the

public utility as a unit:

(footnote continues)

A-5

other commercial and industrial property, not subject to spe-

cific statutory valuation, was adjusted to its 1973 level of

value pursuant to section 39-1-104(9)(a), 16B C.R.S. (1982).

Although airline property was valued at a more current level

of value than the value applicable to other commercial and

industrial property, the statutory valuation rate applicable to

both types of property was the same. Once the levels of value

were adjusted to their respective base years, the valuations for

assessment for both airline and other commercial and indus-

trial properties were determined by multiplying the adjusted

levels of value by 30%. Section 39-1-104(1), 16B C.R.S.

(1982), in this respect, provided as follows:

Except when otherwise prescribed in articles | to 13 of

this title, the valuation for assessment of all taxable prop-

erty in the state shall be thirty purcent of the actual value

thereof as determined by the assessor and the adminis-

trator in the manner prescribed by law, and such percent-

age shall be uniformly applied, without exception, to the

actual value, so determined, of the various classes and

subclasses of real and personal property located within

the territorial limits of the authority levying a property

ee aes

(footnote continued)

(a) The tangible property comprising its plant, whether the

same is situated within this state or both within and without this

state, exclusive of any tangible property situated without this state

which is not directly connected with the business in which such

public utility is engaged within this state;

(b) Its intangibles, such as special privileges, franchises, con-

tract rights and obligations, and rights-of-way:

period of time not to exceed the most recent five-year period,

capitalized at indicative rates;

(d) The average market value of its outstanding securities dur-

ing the preceding calendar year, if such market value is

determinable.

A-6

Colorado’s statutory scheme requires the state tax

administrator, not later than the first day of June in each year,

to advise both the county assessor and the public utility of the

amount of valuation for assessment of public utility property

in the county. § 39-4-107, 16B C.R.S. (1982). The amount of

valuation is then entered on the tax roll of the county by the

county assessor. /d. Not later than July | of the same year, a

public utility may file a petition with the administrator

objecting to the valuation on the basis that the actual value of

its property and plant as determined by the administrator is

illegal, erroneous, or not uniform with the actual value of like

property similarly situated. § 39-4-108(1), 16B C.R.S. (1982).

The administrator is required to hear evidence on the peti-

tion and to render a decision in writing not later than the first

day of August. § 39-4-108(4) & (5), 16B C.R.S. (1982). If the

petition is granted, the administrator must make appropriate

corrections or changes in the valuation for assessment of the

public utility property, or in the apportionment thereof, and

is required to certify the corrections or changes to the respec-

live county assessor. § 39-4-108(6), 16B C.R.S. (1982). If, on

the other hand, the administrator denies the petition, the

party adversely affected by the administrator’s decision may

appeal to the State Board of Assessment Appeals not later

than thirty days after the administrator’s decision. §§ 39-4-

108(8) and 39-2-125(1)(b)(I), 16B C.R.S. (1982). The deci-

sion of the Board of Assessment Appeals is subject to judicial

review in the District Court of the City and County of Den-

ver. § 39-4-109(2), 16B C.R.S. (1982). 3

3 In the case of a petition for judicial review by a public utility, the

utility is required to pay the full amount of all taxes levied upon the

valuation for assessment prior to filing the petition for judicial review.

§ 39-4-109(2), 16B C.R.S. (1982). If the petition for judicial review is

sustained, then, upon presentation to the county treasurer of a certified

copy of the order modifying the assessment valuation, the treasurer

must forthwith make the appropriate refund of taxes, together with

interest at the rate of 6% per annum from the date of payment.

§ 39-4-109(3), 16B C.R.S. (1982).

A-7

Not later than August 10 of each year, the county

assessor is required to prepare an abstract of assessment list-

ing the value of all taxable property located within the county.

§ 39-5-123(1), 16B C.R.S. (1982). The administrator must

review the abstract of assessment, and if any of the various

classes or subclasses of real and personal property located

within the county have not been valued as required by law,

the administrator is required to determine the amount of

increase or decrease in valuation necessary to conform to the

requirements of law and to file a complaint with the State

Board of Equalization specifying the amount recommended

to be added to or deducted from the valuation for the follow-

ing taxable year. § 39-2-115(2), 16B C.R.S. (1982). If the

administrator determines that various classes or subclasses of

real and personal property have been properly valued for

assessment purposes, the administrator must transmit the

abstracts of assessment to the State Board of Equalization not

iater than the second Monday in September of each year.

§ 39-2-115(3), 16B C.R.S. (1982). Not later than the fourth

Monday in September of each year, the State Board of Equali-

zation is required to complete its review of the abstracts of

assessment of the several counties, and the state auditor must

thereupon certify to the assessor of each county a statement of

any changes ordered by the board for the current taxable year,

as well as for the next succeeding taxable year, and also to

return the abstracts of assessment for the current taxable year

to each county. § 39-9-105(1), 16B C.R.S. (1982).

The Colorado taxing authorities were following the

above statutory scheme for 1982 property taxes when 49

U.S.C. § 1513(d) was enacted into law as part of the Tax

Equity and Fiscal Responsibility Act of 1982. The federal law

became effective on September 3, 1982, when it was signed by

President Reagan. See Pub. L. No. 97-248, § 523,

96 Stat. 671, 695 (1982); Acts Approved by the President,

1982 Public Papers of the Presidents of the United States 1699,

A-8

1700 (Appendix D). 49 U.S.C. § 1513(d) (1) provides as

follows:

(1) The following acts unreasonably burden and dis-

criminate against interstate commerce and a State, sub-

division of a State, or authority acting for a State or

subdivision of a State may not do any of them:

(A) assess air Carrier transportation property at a

value that has a higher ratio to the true market value of

the air carrier transportation property than the ratio

that the assessed value of other commercial and indus-

trial property of the same type in the same assessment

jurisdiction has to the true market value of the other

commercial and industrial property;

(B) levy or collect a tax on an assessment that may

not be made under subparagraph (A) of this paragraph;

air carrier transportation property at a tax rate that

exceeds a tax rate applicable to commercial and indus-

trial property in the same assessment jurisdiction.

49 U.S.C. § 1513(d) (2) defines the following terms used in

subsection (1):

(A) ‘“‘assessment” means valuation for a property tax

levied by a taxing district:

(B) “assessment jurisdiction” means a geographical

area in a State used in determining the assessed value of

property for ad valorem taxation;

property, as defined by the Civil Aeronautics Board,

owned or used by an air carrier providing air

transportation;

(D) “commercial and industrial property’ means

property, other than transportation property and land

A-9

used primarily for agricultural purposes or timber grow-

ing, devoted to a commercial or industrial use and sub-

ject to a property tax levy.

There is no dispute as to the essential facts of this case.

The administrator determined the 1982 value of each airline

company’s operating property and plant as of January 1,

1982, adjusted the 1982 value to its level of value in 1981 by

applying an equalization factor of 93%, then multiplied the

adjusted level of value by 30% — the uniform percentage for

determining the valuation of all property in the state — and

apportioned the assessed value among the counties in propor-

tion to the airlines’ properties located in each county. See

§§ 39-1-104(1), 39-4-102, and 39-4-106, 16B C.R.S. (1982).

This procedure resulted in a 27.9% ratio of assessed valuation

to market value for airline property with respect to 1982

property taxes, while if 49 U.S.C. § 1513(d) had been applied

to the 1982 tax year the assessment ratio for airline property

would have been 14%.‘

On May 26, 1982, the administrator notified the airlines

and the county assessors of the assessed valuation attributa-

ble to each airline. § 39-4-107, 16B C.R.S. (1982). Five of the

airlines (Continental, Frontier, Texas International, Trans

4 In the airlines’ subsequent appeals to the Board of Assessment

Appeals, the administrator testified that she determined the 1982

assessed value of airline property by first multiplying the 1982 value by

the equalization factor of 93% and thereby obtained its 1981 value, and

then by multiplying the 1981 value by 30% in order to obtain the

valuation for assessment. The result was an assessment ratio of 27.9%

for airline property. The administrator also testified that if 49 U.S.C.

§ 1513(d) applied to the 1982 tax year, the assessment ratio for airline

property would be 14%. The 14% figure was reached by multiplying

48% — the percentage necessary to reduce the 1982 value of commer-

cial and industrial property to the 1973 level — by 30%, which was the

percentage used for the valuation for assessment of all taxable property

in the state pursuant to section § 39-1-104(1), 16B C.R.S. (1982).

A-10

World, and United) objected to the 1982 valuations, whiie

the other airlines did not. The five objecting airlines filed

petitions with the administrator on or before July 1, 1982.

§ 39-4-108(1), 16B C.R.S. (1982). A hearing was held before

the administrator, who thereafter issued notices of adjusted

valuation on July 30, 1982. § 39-4-108(5), 16B C.R.S. (1982).

None of the five airlines or the counties appealed the adminis-

trator’s adjusted valuations to the Board of Assessment

Appeals. See § 39-4-108(8), 16B C.R.S. (1982).

Upon receiving the notices of valuation and adjusted

valuation for the airlines, the county assessors entered the

amounts of valuation on the county tax rolls, § 39-4-107, 16B

C.R.S. (1982), and after review by their respective County

Boards of Equalization, § 39-8-102(1), 16B C.R.S. (1982), the

county assessors prepared abstracts of assessment listing the

value of all taxable property located in their counties and filed

the abstracts with the administrator prior to August 10, 1982.

See §§ 39-2-115(1) and 39-5-123(2), 16B C.R.S. (1982). The

administrator examined the abstracts prepared by the county

assessors, §§ 39-2-115(2) and 39-5-124(2), 16B C.R.S. (1982),

and the State Board of Equalization then reviewed the valua-

tions for assessment upon the various classes and subclasses

of property in each county pursuant to section 39-9-103(1),

16B C.R.S. (1982). On September 21, 1982, the State Board

of Equalization approved the abstracts of assessment for

1982 prepared by the respective county assessors. See § 39-9-

105, 16B C.R.S. (1982).

_ The City and County of Denver, where a large portion of

the airlines’ properties was situated, determined the airlines’

tax liabilities by multiplying a uniform tax rate mill levy of

89.261 mills to the valuations for assessment, and informed

the airlines that their 1982 tax liabilities to Denver County

was due by April 30, 1983, or could be paid in two install-

ments in February and July of 1983. See § 39-10-104(1) (a),

16B C.R.S. (1982). All eleven airline companies made their

A-11

installment payments on the amounts due to Denver County

in February and July of 1983.

On July 25, 1983, almost eleven months after the enact-

ment of 49 U.S.C. § 1513(d), the eleven airline companies

filed petitions with the Denver Board of Equalization, sitting

as a board of county commissioners, for abatement or refund

of their 1982 property taxes paid to Denver County on the

basis that the federal statute prohibited Denver County from

assessing 1982 property taxes against airline property at a

higher assessment ratio than that applied to other commer-

cial and industrial property in the same assessment jurisdic-

tion, and from levying and collecting the taxes so assessed.

The Denver Board of Equalization denied the airlines’ peti-

tions for abatement or refund on November 21, 1983, and the

airlines appealed to the State Board of Assessment Appeals.

The various appeals were consolidated for hearing

before the State Board of Assessment Appeals, which then

consisted of only two members, rather than three, because a

vacancy on the board had not yet been filled by appointment

of the Governor. See § 39-2-123(2), 16B C.R.S. (1982). One

member voted to deny the airlines’ requests for a refund,

reasoning that 49 U.S.C. § 1513(d) did not become effective

until September 3, 1982, and was thus not retroactively appli-

cable to taxes assessed prior to the effective date of the stat-

ute. The other board member voted to grant a refund because

as of September 3, 1982, the effective date of 49 U.S.C.

§ 1513(d), the process of determining actual value, including

the equalization phase of the taxing scheme, had not yet been

completed. Because the two-member board did not reach a

majority decision, the appeals of the airline companies were

denied. See § 39-2-127(2), 16B C.R.S. (1982).

A-12

The airline companies filed petitions for judicial review

in the Denver District Court.5 After consolidating all the

petitions into one proceeding, the district court ruled that 49

U.S.C. § 1513(d) did not apply to the 1982 tax liabilities of

the airlines because the valuations for those taxes were made

prior to the effective date of the federal statute and were in

accordance with the then existing Colorado law. The airlines

appealed to the court of appeals, which reversed the judgment

of the district court, concluding that 49 U.S.C. § 1513(d)(1)

was applicable to the 1982 property taxes assessed against the

airlines and that the federal statute was violated because the

1982 disparate market values for airline property, on the one

hand, and for other commercial and industrial property, on

the other, “resulted in a significantly higher tax burden on the

airlines.”” American Airlines. Inc., 749 P.2d at 989. We there-

after granted the taxing authorities’ petition for certiorari in

order to consider whether 49 U.S.C. § 1513(d) is applicable to

the 1982 property taxes assessed against and paid by the

airline companies.® :

Il.

At the outset of our analysis, it will be helpful to state

briefly what this case is not about and then outline the opera-

tive principles applicable to our resolution of the issue before

us.

5 Simultaneously with their filing of appeals in the district court, the

airlines filed petitions with the State Board of Equalization, requesting

the board to determine whether it had jurisdiction over the airlines’

challenges to the assessments. The Board of Equalization ruled that it

would not accept jurisdiction over the airlines’ challenges.

whether the application of 49 U.S.C. § 1513(d) to the 1982 taxes

assessed against the airline companies would amount to an unconstitu-

tional usurpation of state sovereignty in violation of the Tenth Amend-

ment to the United States Constitution. Because we find that § 1513(d)

does not apply to the 1982 property taxes assessed against the airline

companies, we need not and do not address the constitutional claim

raised by the taxing authorities.

A-13

The taxing authorities and the airlines do not dispute the

proposition that Colorado’s 1982 property tax scheme set the

valuation of air carrier transportation property at a 1981

value, rather than the 1973 value applicable to other commer-

cial and industrial property, and to that extent assessed air

carrier transportation property at a value that had a higher

ratio to the true market value of air carrier transportation

property than the ratio applicable to other commercial and

industrial property. Nor is it disputed that

49 U.S.C. § 1513(d) is binding on the state of Colorado under

the Supremacy Clause, U.S. Const. art. VI, for tax years sub-

sequent to the effective date of the federal statute. Nor,

finally, is any claim made that the refusal of the taxing author-

ities to apply 49 U.S.C. § 1513(d) to the 1982 tax year denied

the airline companies due process or equal protection of the

laws. Rather, the dispute in this case centers on whether the

airlines are entitled to a refund of their 1982 property taxes

by reason of the applicability of 49 U.S.C. § 1513(d) to taxes

assessed prior to the effective date of the statute but levied

and collected subsequent to the date of the statutory enact-

ment. 7 Resolution of that question involves a matter of statu-

tory construction.

7 By stipulation, the parties have agreed that if 49 U.S.C. § 1513(d) is

applicable to the 1982 property taxes assessed against the airline com-

panies, the companies would be entitled collectively to a refund of

approximately $3,200,000.00. The parties have also stipulated that,

although section 39-10-114(1) (a), 16B C.R.S. (1982), provides that no

abatement or refund of taxes shall be made more than six years after the

taxes were due, the failure of the parties to complete the available

statutory processes to finally resolve this litigation within the six year

period will not bar or otherwise prohibit the refund «. 1982 property

taxes overpaid by the airlines, plus interest as provided by law, in the

event ultimate resolution of the case is in favor of the airlines.

It has been stated that “the first rule of construction is

that legislation must be considered as addressed to the future,

and not to the past.”’ Union Pacific Railroad Co. v. Laramie

Stock Yards Co., 231 U.S. 190, 199 (1913). This rule of pre-

sumptive prospective application “prevents the assigning of a

quality or effect to acts or conduct which they did not have or

did not contemplate when they were performed.” Jd. While a

remedial statute that does not affect preexisting rights or obli-

gations may be applied retroactively in accordance with its

salutary purpose, see generally N. Singer, 2 Sutherland Statu-

tory Construction § 41.04 (4th ed. 1986), a statute that

changes the status of claims fixed in accordance with earlier

law should not be applied retroactively unless the legislative

purpose to do so unmistakably appears in the statute itself.

See. e.g., Claridge Apartments Co. v. Commissioner of Inter-

nal Revenue, 323 U.S. 141 (1944) (retroactivity, even where

permissible, is not favored except upon clearest legislative

mandate): Hassett v. Welch, 303 U.S. 303 (1938) (recognizing

and applying well settled rule of statutory construction that a

law is presumed to operate prospectively in absence of clear

expression to the contrary); United States v. Magnolia Petro-

leum Co., 276 U.S. 160 (1928) (section 1019 of Revenue Act

of 1924, which provided for refund of taxes erroneously or

illegally assessed or collected, was not to be construed retroac-

tively with respect to refunds allowed under earlier revenue

act but not yet computed or paid when 1924 statute was

enacted). This general prohibition against retroactive appli-

cation is but a recognition of the fact that it is the normal and

usual function of legislation to discriminate between past and

future transactions. Claridge Apariments Co., 323 U.S. at

164.

The starting point in statutory interpretation is the statu-

tory language itself. E.g., United States v. Turkette,

452 U.S. 576, 580 (1981); Touche Ross & Co. v. Redington,

442 U.S. 560, 568 (1979). Where the statutory language is

A-15

clear and certain, the statute should be construed as written,

since the function of the court in such a case is to enforce the

statute according to its terms. E.g., Turkette, 452 U.S. at 580;

Caminetti v. United States, 242 U.S. 470, 485 (1917). Where,

however, the statutory language is unclear, resort to legisla-

tive history is appropriate in order to arrive at an interpreta-

tion that effectuates legislative intent. E.g., Blum v. Stenson,

465 U.S. 886, 896 (1984); United States v. An Article of Drug,

394 U.S. 784, 799 (1969); United States v. Public Utilities

Commission of California, 345 U.S. 295, 315 (1953). More-

over, wherever practicable, a statute should be interpreted in

a manner that gives effect to all its provisions, and not in a

way that renders one or more of its parts inoperative. F.g.,

Mountain States Telephone and Telegraph Co. v. Pueblo of

Santa Ana, 472 U.S. 237, 249 (1985); Weinberger v. Hynson,

Westcott and Dunning, Inc., 412 U.S. 609, 633 (1973); United

States v. Menasche, 348 U.S. 528, 538-39 (1955).

It is with these considerations in mind that we turn to

the appropriate construction of 49 U.S.C. § 1513(d).

IIl.

The taxing authorities argue that 49 U.S.C. § 1513(d)(1)

does not apply to the 1982 tax year because as of the statute’s

effective date of September 3, 1982, the assessments for the

1982 property taxes were completed and the federal legisla-

tion was not intended to apply to 1982 taxes which were

assessed prior to September 3, 1982, but not yet levied or

collected until after the statutory enactment became effective.

The airline companies, on the other hand, argue that

49 U.S.C. § 1513(d)(1) protected them against the levy and

collection of the 1982 taxes because as of September 3, 1982,

the process of fixing the 1982 Colorado property tax assess-

ments had not yet been completed.

Determining the applicaosility of 49 U.S.C. § 1513(d) (1)

to the 1982 property taxes assessed against the airlines, and

A-16

later levied and collected by the taxing authorities, requires

that we address the preliminary question of whether the

assessments for 1982 were completed before September 3,

1982, the effective date of the federal statute. We therefore

consider that question first and then take up the applicability

of subparagraphs (A), (B), and (C) of § 1513(d)(1) to the

factual circumstances of this case.

The “‘valuation for assessment” was initially determined

in this case when the administrator ascertained the actual

value of the property of the eleven airline companies, applied

the equalization factor to the actual value, multiplied by 30%,

see § 39-1-104(1), 16B C.R.S. (1982), and then, pursuant to

section 39-4-107, 16B C.R.S. (1982), notified the counties

and the airline companies on May 26, 1982, of the valuation

for assessment that had been apportioned to each county.

Because the airline companies had the right to challenge the

valuations as illegal, erroneous, or not uniform with the

actual value of like property similarly situated and to petition

the administrator for a correction or change, § 39-4-108(1),

16B C.R.S. (1982), and because the administrator had the

authority to grant or deny such requests, § 39-4-108(6) & (7),

16B C.R.S. (1982), the administrator’s initial valuations were

preliminary in nature. Six airline companies (American,

Delta, Eastern, Ozark, Republic, and Western), however, did

not challenge the administrator’s initial valuations and,

therefore, these valuations became final as of May 26, 1982.

Five airline companies (Continental, Frontier, Texas Interna-

tional, Trans World, and United) did chailenge the adminis-

trator’s valuations for assessment and petitioned the

administrator to correct or change the valuations, with the

result that these valuations were delayed until July 30, 1982,

the date on which the property tax administrator adjusted the

valuations and sent out “Notices of Adjusted Valuations” to

the five airline companies and the respective counties affected

me etme Sb

A-17

by the adjusted valuations. Since the five airlines did not seek

further review of the adjusted valuations by appealing to the

Board of Assessment Appeals, as they had a right to do pursu-

ant to section 39-4-108(8), 16B C.R.S. (1982), the assessment

process for 1982 property taxes was finalized for these five

airlines as of July 30, 1982.

The airlines, taking a different view of the assessment

process, argue that the valuations for assessment were not

completed until September 21, 1982, when the State Board of

Equalization approved the abstracts of assessment submitted

by the county assessors. See § 39-9-105(1), 16B C.R.S. (1982).

We find this argument unpersuasive. The duties of the Board

of Equalization, as applicable to this case, were outlined in

article X, § 15 of the Colorado Constitution as follows:

As may be prescribed by law, the state board of equaliza-

tion shall review the valuations determined for assess-

ment of taxes upon the various classes of real and

personal property located in the several counties of the

state, and shall raise, lower and adjust the same, to the

end that all valuations for assessment of taxes shall be

just and equalized; provided, however, that said state

board of equalization shall have no power of original

assessment.$

In contrast to assessment, which consists of placing a valua-

tion on a particular piece of property belonging to a particular

taxpayer, the duty of the State Board of Equalization is to

8 In September 1982 the Board of Equalization consisted of the

Governor, State Auditor, State Treasurer, Secretary of State, and Attor-

ney General. Colo. Const. art. X, § 15, 1A C.R.S. (1980). Effective

December 30, 1982, the composition of the Board was changed to the

Governor or his designee, the Speaker of the House of Representatives

or his designee, the President of the Senate or his designee, and two

members appointed by the Governor with the consent of the Senate.

The constitutional duties of the Board, however, remained substan-

tially the same as before. Colo. Const. art X, § 15(1)(b), iA C.R.S. (1988

Supp.).

A-18

equalize the assessed valuations of classes and subclasses of

property on a statewide basis by adjusting the total valuations

placed upon particular classes or subclasses of property. We

recognized this distinction between assessment and equaliza-

tion in Lamm vy. Barber, i192 Colo. 511, 521, 565 P.2d 538,

545 (1977), where we stated:

Assessment is the act of placing a value for tax pur-

poses upon the property of a particular taxpayer. Equali-

zation, on the other hand, is the act of raising or lowering

the total valuation placed upon a class, or subclass, of

property in the aggregate. Equalization deals with all the

property of a class or subclass within a designated territo-

rial limit, such as a county, without regard to who owns

the individual parcels making up the class or subclass.

Assessment relates to individual properties; equalization

relates to classes of property collectively.

This distinction between assessment and equalization

finds further support in the respective statutory responsibili-

ties of the administrator, the county assessors, and the State

Board of Equalization regarding the valuation of public util-

ity property, including that of airline companies, at the time

of the events in question. Section 39-2-109(1)(a), 16B C.R.S.

(1982), imposed on the administrator the duty of valuing

airline property in the manner outlined in section 39-4-102,

16B C.R.S. (1982). In contrast, the county assessor was not

authorized to value airline property, but rather was required

to receive the assessmenis made by the administraior and to

enter those amounts on the tax roll. § 39-4-107, 16B C.R.S.

(1982). Nor was the State Board of Equalization empowered

to value airline property for assessment purposes. The

board’s duty was to examine and review the valuations for

assessment of the various classes and subclasses of taxable

real and personal property located in the several counties of

the state and to raise or lower the aggregate valuation for a

particular class or subclass of property. § 39-9-103(1), 16B

C.R.S. (1982).

A-19

In light of the long-standing distinction between assess-

ment and equalization, we cannot accept the airline compa-

nies’ claim that the valuations for assessment were not

completed until September 21, 1982, when the State Board of

Equalization approved the abstracts of assessment submitted

by the county assessors. On the contrary, the valuations for

assessment were completed for six airline companies on

May 26, 1982, when the administrator notified them and the

county assessors of the valuations and the six airline compa-

nies did not thereafter challenge the valuations. In the case of

the five other airline companies, the valuations for assess-

ment were completed on July 30, 1982, when the administra-

tor notified them and the county assessors of the adjusted

valuations for assessment that resulted from the companies’

challenges to the initial assessment and the companies did not

seek further review of the adjusted valuation. In both

instances, the valuations for assessment were completed prior

to September 3, 1982, the date on which 49 U.S.C. § 1513(d)

became effective.

Having determined that the valuations for assessment

were completed prior to September 3, 1982, the next question

is whether the assessments were prohibited by 49 U.S.C.

§ 1513(d)(1)A), which prohibits a state from assessing air

carrier transportation property “at a value that has a higher

ratio to the true market value of the air carrier transportation

property” than the ratio applicable to other commercial and

industrial property of the same type in the same assessment

jurisdiction. The federal statute is silent on whether it was

intended to apply to assessments already completed prior to

September 3, 1982, or only to assessments made on or after

the effective date of the statute, and our review of the legisla-

tive history yields no indication whatever of any legislative

intent to accord retroactive effect to the statute. See Joint

Explanatory Statement of the Committee of Conference, 1982

A-20

U.S. Code & Admin. News 1190, 1484 (no mention whether

49 U.S.C. § 1513(d)(1)(A) applicable to assessments made

and completed prior to effective date of statute). In the

absence of any manifest expression of congressional intent to

accord retroactive effect to 49 U.S.C. § 1513(d)(1)(A), we

decline to read such a provision into the statute.

~—Colorado’s right to assess, levy, and collect taxes for use

in the conduct of its governmental operations is an essential

attribute of its sovereignty. subject of course to the con-

straints of the federal constitution. E.g., Bode v. Barnett, 344

U.S. 583 (1953); McCulloch v. Maryland, 17 U.S. (4 Wheat.)

316 (1819); see Western Air Lines v. Board of Equalization of

South Dakota, 480 U.S. 123 (1987) (question of whether

South Dakota tax on airline flight property constituted “in

lieu’? property tax within meaning of 49 U.S.C.

§ 1513(d)(1)(3), and thus exempt from discrimination prohi-

bition of § 1513(d)(1), was governed by federal law). Retroac-

tive application of subparagraph (A) of § 1513(d)(1) to the

1982 property taxes assessed on the airlines’ properties would

thwart Colorado’s reasonable expectation of, and inchoate

right to, tax revenues based on assessments made and com-

pleted in accordance with state law prior to the date on which

the federal legislation came into being.

Relying on the basic rule of statutory construction that

“a law is presumed, in the absence of clear expression to the

contrary, to operate prospectively,” Hassett, 303 U.S. at 314,

we read the statutory prohibition against disparate assess-

ment of air carrier transportation property as addressing

future assessments not yet completed prior to September 3,

1982, rather than past assessments already made and com-

pleted. See Arkansas-Best Freight System. Inc. v. Cochran,

546 F. Supp. 904 (M.D. Tenn. 1981) (court construes section

31 of Federal Motor Carrier Act of 1980, which prohibits an

assessment of motor carrier property at a higher ratio to true

market value than the ratio applicable to other commercial

A-21

and industrial property, as applicable to all assessments actu-

ally made after the effective date of federal statute). Because

the assessmenis in this case were completed in accordance

with Colorado law prior to September 3, 1982, and because

the federal statute does not provide for retroactive applica-

tion, we conclude that the 1982 assessments were not prohib-

ited by 49 U.S.C. § 1513(d)(1 (A).

c..

We next consider whether the taxing authorities were

prohibited from levying and collecting the 1982 property

taxes by reason of subparagraph (B) of 49 U.S.C. § 1513(d)(1),

which provides that “ta State or subdivision of a State may

not . . . levy or collect a tax on an assessment that may not

be made under subparagraph (A) of this paragraph.”’ We con-

clude that the taxing authorities were not prohibited from

levying and collecting on the 1982 taxes already assessed

against the airlines.

When statutory language is clear and unambiguous, the

statute should be enfozced as written, since the statutory lan-

guage itself is the best indicator of legislative intent or pur-

pose. See, e.g., United States v. Ron Pair Enterprises. Inc., No.

87-1043, slip op. at 5 (U.S. Sup. Ct. Feb.22, 1989); Turkette,

452 U.S. at 580; Caminetti, 242 U.S. at 485. Subpara-

graph (B) of § 1513(d)(1) unequivocally prohibits a state and

its subdivisions from levying or collecting a tax on an assess-

ment that was impermissibly made under § 1513(d)(1)(A).

Subparagraph (B), as so read, is not mere statutory surplus-

age. On the contrary, subparagraph (B) operates as a supple-

ment to subparagraph (A) by making explicit what would

otherwise be left only to inference — namely, when a state

places a valuation for assessment on air carrier transportation

property that is violative of subparagraph (A), the state is

prohibited from taking further action to levy or collect any

taxes based on the impermissible assessment. Subpara-

graph (B) thus closes a statutory gap by providing a clear

A-22

sanction for assessments violative of subparagraph (A) and,

to that extent, serves a function consistent with the overall

structure and purpose of the statutory scheme.

It follows from our interpretation of subparagraph (B)

that if an assessment does not violate subparagraph (A), then

the levy and collection of a tax on such an assessment is not

within the prohibition of subparagraph (B). As previously

discussed, the 1982 assessments did not violate

§ 1513(d)(1)(A), and, consequently, the levy and collection of

such taxes, even though subsequent to September 3, 1982,

were not prohibited by § 1513(d)(1)(B).

We next address whether the taxing authorities were

prevented from levying and collecting the 1982 property

taxes by virtue of subparagraph (C) of 49 U.S.C. § 1513(d)(1),

which prohibits a state or its subdivision from levying or

collecting an ‘“‘ad valorem property tax on air carrier trans-

portation property at a tax rate that exceeds the tax rate

applicable to commercial and industrial property in the same

assessment jurisdiction.”” We conclude that the levy and col-

lection of the 1982 taxes did not violate § 1513(d)(1)(C).

Both the taxing authorities and the airline companies

concede that the 89.261 mill levy was applied to all property

in Denver County, whether airline property or other commer-

cial and industrial property. For purposes of § 1513(d)(1)(C),

therefore, the 1982 “tax rate’ applicable to airline property

did not exceed the tax rate applicable to commercial and

industrial property in Denver County. The airline companies

nonetheless contend that, even though the 89.261 mill levy

was the same for all property, the mill levy was merely a

nominal tax rate and that § 1513(d)(1)(C) is directed at dis-

crimination in the “effective tax rates’’ — /.e., the rates estab-

lished by comparing the ratios between the nominal tax rate

and classes of properties assessed at different levels of value.

A-23

Employing this proposed construction of subparagraph (C),

the airlines claim that the 1982 effective tax rate for airline

property, which was assessed at a 1981 level of value, was

greater than the effective tax rate applicable to other commer-

cial and industrial property, which was assessed at a 1973

level of value. We reject the airlines’ claim.

The airline companies’ proposed construction of subpar-

agraph (C) of § 1513(d)(1), in our view, would render subpar-

agraph (B) devoid of function or purpose. Subparagraph (A)

prohibits discriminatory assessments, while subpara-

graph (B) prohibits the levy and collection of taxes based on

discriminatory assessments. If, as the airlines argue, the term

“tax rate” in subparagraph (C) were to be construed to mean

the “effective tax rate’’ resulting from a disparate assessment

violative of subparagraph (A), the prohibition of subpara-

graph (C) would be nothing more than a mere repetition of

subparagraph (B).

We decline to adopt a construction that creates a mere

statutory redundancy, especially when, as here, there is a

reasonable construction that gives effect to all the subpara-

graphs of § 1513(d)(1). See. e.g., Pueblo of Santa Ana, 472

U.S. at 249; Hynson, Westcott and Dunning, Inc., 412 U.S. at

633; Menasche, 348 U.S. at 548-49. We read subpara-

graph (C) of § 1513(d)(1) as prohibiting the application of tax

rates on airline property that exceed the authorized rates

applicable to commercial and industrial property in the same

assessment jurisdiction. Since the 1982 tax rate applied to

airline property did not exceed the tax rate applied to other

commercial and industrial property in the same assessment

A-24

jurisdiction, the levy and collection of the 1982 property

taxes did not violate 49 U.S.C. § 1513(d)(1)(C).?

9 In arguing that § 1513(d)(1)(C) prohibits differences in “effective

tax rates” between airline property and other commercial and indus-

trial property, even though the tax rates are nominally the same, the

airlines rely on Burlington Northern Railroad Co. v. Department of

Revenue, 570 F. Supp. 585 (W.D. Wis. 1983), modified 604 F. Supp.

1575 (W.D. Wis. 1985). In that case, the court held that Wisconsin’s

taxing scheme violated section 306 of the Federal Railroad Revitaliza-

tion and Regulatory Reform Act of 1976, 49 U.S.C. § 11503(b)(3)

(1982), which parallels the provisions of 49 U.S.C. § 1513(d)(1)(C) and

prohibits a state from levying or collecting an ad valorem property tax

on rail transportation property at a rate that exceeds the tax rate appli-

cable to commercial and industrial property in the same assessment

jurisdiction. We do not view the Burlington Northern case as persuasive

authority on the question whether 49 U.S.C. § 1513(d)(1)(C) was vio-

lated under the particular circumstances of this case.

Much of the discussion in Burlington Northern was devoted to resolv-

ing whether the “assessment jurisdiction” for purposes of the Railroad

Revitalization and Regulatory Reform Act was the State of Wisconsin

or local counties and municipalities. No such question is present here,

since it is undisputed that it was the City and County of Denver that

levied and collected the ad valorem property tax for purposes of any

arguable § 1513(d)(1)(C) violation.

Moreover, the court in Burlington Northern placed substantial

emphasis on Wisconsin’s assessment of rail transportation property at

100% of market value, while assessing other commercial and industrial

property at 80% of fair market value, 604 F. Supp. at 1580-81, and on

the state’s omission of rail transportation property from a state tax

credit system, while giving tax credits to other commercial and indus-

trial property, 570 F. Supp. at 593. The disparate assessment in Bur-

lington Northern resulted in the assessment of rail transportation

property at a value that had a higher ratio to true market value than the

ratio applicable to other commercial and industrial property and, to

that extent, violated the disparate assessment prohibition of

§ 11503(b)(1) of the Railroad Revitalization and Regulatory Reform

Act. 604 F. Supp. at 1580.

(footnote continues)

A-25

IV.

In summary, we hold as follows: that the 1982 Colorado

property tax assessments were completed prior to Septem-

ber 3, 1982, the effective date of 49 U.S.C. § 1513(d); that 49

U.S.C. § 1513(d)(1)(A) does not retroactively apply to assess-

ments completed prior to the effective date of the statute; that

49 U.S.C. § 1513(d)(1)(B) did not prohibit the levy and collec-

tion of the 1982 property taxes subsequent to the effective

date of the federal legislation, since the assessments were

completed prior to the effective date of the statute; and that

the 1982 tax rate applicable to airline property did not exceed

the tax rate applicable to other commercial and industrial

property and thus did not violate 49 U.S.C. § 1513(d)(1\(C).

We accordingly reverse the judgment of the court of appeals

and remand the case to that court with directions to reinstate

the judgment of the district court.

(footnote continued)

Finally, reading an “effective tax rate’ concept into 49 U.S.C.

§ 1513(d)(1)(C) would require that we apply the disparate assessment

provision of § 1513(d)(1)(A) retroactively to the facts of this case, for

only by retroactive application could a different “effective tax rate” for

airline property be established for the 1982 property taxes. As we have

noted in part III B, supra, there is no basis for such a retroactive

application of the disparate assessment prohibition of § 1513(d)(1)(A).

We agree in this respect with the observation of the court in Arkansas-

Best Freight System. Inc. v. Cochran, 546 F. Supp. 904 (M.D. Tenn.

1981). In construing section 31 of the Federal Motor Carrier Act, which

parallels the text of 49 U.S.C. § 1513(d)(1)(A), the court stated that the

doctrine of federal supremacy requires the application of the Motor

Carrier Act in the year it took effect “‘as to all assessments actually made

after [the statute’s] effective date.” 546 F. Supp. at 912.

A-26

APPENDIX B

Colorado Court of Appeals

No. 85CA1154

AMERICAN AIRLINES, INC;

CONTINENTAL AIRLINES, INC.;

DELTA AIRLINES, INC.;

EASTERN AIRLINES, INC.;

FRONTIER AIRLINES, INC.:

OZARK AIRLINES, INC.;:

REPUBLIC AIRLINES, INC.;

TEXAS INTERNATIONAL AIRLINES, INC.:

TRANS WORLD AIRLINES, INC.;

UNITED AIRLINES, INC.; and

WESTERN AIRLINES, INC.,

Plaintiffs-Appellants, )

A )

STATE BOARD OF EQUALIZATION OF THE )

STATE OF COLORADO; DON EBERLE, CARL )

B. BLEDSOE, TED L. STRICKLAND, KEN- )

NETH SMITH, and C. MICHAEL CALLIHAN, )

in their official capacity as members of the )

State Board of Equalization of the State of )

Colorado; BOARD OF ASSESSMENT APPEALS )

OF THE STATE OF COLORADO; HENRY F. )

SHRIVER and F. WILLIAM BEIER, in their )

official capacity as members of the Board )

of Assessment Appeals of the State of Colo- )

rado; BOARD OF EQUALIZATION OF THE )

CITY AND COUNTY OF DENVER SITTING AS )

A BOARD OF COUNTY COMMISSIONERS; )

JOHN MROZEK, WES MARTIN, THOMAS P. )

BRIGGS, FELICIA MUFTIC and TED HACK- )

WORTH, in their official capacity as mem- )

bers of the Board of Equalization of the )

Nem me ee ee ee ee”

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City and County of Denver; DEPARTMENT )

OF REVENUE OF THE CITY AND COUNTY OF )

DENVER; THOMAS P. BRIGGS, in his official )

capacity as Manager of the Department of )

Revenue of the City and County of Den- )

ver; and MARY ANNE MAURER, in her off.- )

cial capacity as the Property Tax Adminis- )

trator of the State of Colorado, )

Defendants-Appellees. )

COURT OF APPEALS

STATE OF COLORADO

Opinion filed and judg-

ment entered on the 27th

day of August, 1987.

Clerk of the Court

Appeal frem the District Court of the City

and County of Denver

Honorable Edward E. Carelli, Judge

DIVISION I JUDGMENT REVERSED

Opinion by JUDGE METZGER’ AND CAUSE REMANDED

Pierce and Kelly, JJ., concur WITH DIRECTIONS

Holland and Hart

William E. Murane

Alan Poe

John R. Maxfield

Denver, Colorado

Attorneys for Plaintiffs-Appellants

Stephen H. Kaplan,

City Attorney

Robert F. Strenski, Assistant City Attorney

Denver, Colorado

Attorneys for Defendants-Appellees

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Plaintiffs, American Airlines, Inc., Continental Air

Lines, Inc., Delta Air Lines, Inc., Eastern Airlines, Inc., Fron-

tier Airlines, Inc., Ozark Air Lines, Inc., Republic Airlines,

Inc., Texas International Airlines, Inc., Trans World Airlines,

Inc., United Airlines, Inc., and Western Airlines, Inc. (the

airlines) appeal a judgment of the district court affirming a

decision of defendant Board of Assessment Appeals (BAA),

in which the BAA denied petitions for abatement or refund of

taxes with respect to 1982 property taxes. We reverse and

remand.

The airlines argue that since the Tax Equity and Fiscal

Responsibility Act, 49 U.S.C. § 1513(d) (TEFRA), prohibited

discriminatory tax assessments of airline property after Sep-

tember 3, 1982, the district court erred in failing to find that

the manner in which taxes were levied on their property after

that date violated TEFRA. The airlines also argue that the

district court erred in failing to find that the assessment, levy,

and collection of discriminatory taxes. in violation of

TEFRA, contravened U.S. Const. art. VI, Cl. 2, the

supremacy clause of the United States Constitution.

The BAA argues that this court does not have jurisdic-

tion to hear this appeal because the airlines failed to exhaust

their administrative remedies. In the alternative, the BAA

argues that TEFRA was not applicable to the 1982 tax year in

Colorado because the tax assessments for that year were final

prior to the effective date of TEFRA. Finally, the BAA con-

tends that application of TEFRA to the 1982 tax year is

constitutionally prohibited by the Tenth Amendment

because such application would be destructive of state

sovereignty.

In 1982, the Colorado tax statute, § 39-1-104, C.R.S.

(1982 Repl. Vol. 16B), provided that airline property, like

that of other public utilities, would be taxed at 30% of the

1981 level of value. In contrast, all other commercial and

industrial property was valued and assessed for the 1982 tax

year at 30% of its 1973 level of value.

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The Property Tax Administrator made the appropriate

assessments of the airlines’ property and gave notice of the

assessments on or before June 1, 1982. When the notifica-

tions were received, five of the airlines protested the assess-

ments, pursuant to § 39-4-108(1), C.R.S. (1982 Repl. Vol.

16B), and adjusted assessments were issued on or before

August 1, 1982. No appeal from the decision was taken. The

remaining airlines did not contest the original assessments,

and all of the airlines timely paid their taxes in installments

on February 28 and July 31, 1983.

On September 3, 1982, prior to the tax payments by the

airlines, TEFRA was signed into law, and became effective on

that date. The TEFRA provision at issue here is codified at 49

U.S.C. § 1513(d), and prohibits states from assessing, levying,

or collecting an ‘‘ad valorem property tax on air carrier trans-

portation property at a tax rate that exceeds the tax rate

applicable to commercial and industrial property in the same

assessment jurisdiction.” The parties have stipulated that the

total assessment of the airlines’ property for tax year 1982

would be reduced from approximately $57 million to approx-

imately $29 million if 49 U.S.C. § 1513(d) applies.

On July 25, 1983, several days before the payment of the

final tax installments, the airlines filed petitions for abate-

ment and refund based upon the provisions of TEFRA,

claiming discriminatory tax treatment. The petitions were

denied by the Denver Board of Equalization. The airlines

then appealed to the BAA, requesting a de novo hearing. After

that hearing, the BAA denied the airlines’ claims, thus

affirming the 1982 assessments. The airlines appealed to the

district court, which affirmed the BAA’s decision. The court

specifically found that TEFRA did not apply to the 1982 tax

assessments-because TEFRA contained no provision making

it effective retroactively, and the assessments were complete

before the effective date of TEFRA. This appeal followed.

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As a preliminary matter, the BAA contends that the air-

lines failed to exhaust their administrative remedies and that,

thus, this court does not have jurisdiction. We disagree.

In Board of Assessment Appeals v. Benbrook, 735 P.2d

860 (Colo. 1987), cur supreme court held that taxpayers may

challenge a tax assessment, pursuant to § 39-1-113 and

§ 39-10-114, C.R.S. (1982 Repl. Vol. 16B), for an individual

abatement and refund without first exhausting administra-

tive remedies if the underlying claim is that the tax is partially

illegal or erroneous, and the time for other appeals has

passed. Here, the underlying claim is one of illegality, because

of the asserted conflict with TEFRA. This claim did not arise

until September 3, 1982, long after the time for other appeal

procedures had expired. Thus, the airlines have followed the

appropriate procedure, and this court has jurisdiction.

Il.

The airlines contend that the assessment, levy, and col-

lection of taxes based upon different base years, as provided

in § 39-1-104, C.R.S. (1982 Repl. Vol. 16B), violated TEFRA.

The district court held, and the BAA argues, that the provi-

sions of TEFRA do not apply because the tax assessments

were completed before its effective date. We agree with the

airlines that the collection of the taxes violated the provisions

of TEFRA.

TEFRA became effective on September 3, 1982. As of

that date, all conflicting state laws were preempted pursuant

to the supremacy clause of the United States Constitution.

U.S. Const. art. VI, Cl. 2; see Arkansas-Best Freight System,

Inc. v. Cochran, 546 F. Supp. 904 (M. D. Tenn. 1981).

TEFRA prohibits the assessment, levy, or collection of an ad

valorem property tax on air carrier transportation property in

excess of the applicable rate for other commercial and indus-

trial property.

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It is undisputed that all collection of the taxes at issue

here occurred after TEFRA’s effective date. It is further

undisputed that the taxes collected were based upon assess-

ments at different market values: the airlines’ property at its

1981 value, and all other commercial and industrial property

at its 1973 value. The result of the use of these disparate

market values resulted in a significantly higher tax burden on

the airlines. See Burlirgton Northern R.R. Co. v. Department

of Revenue, 570 F. Supp. 585 (W.D. Wis. 1983), modified, 604

F. Supp. 1575 (W.D. Wis. 1985).

Consequently, the provisions of TEFRA do apply, and

the district court erred in affirming the decision of the BAA

which denied the airlines’ claims for abatement and refund.

Ill.

The BAA asserts that the application of TEFRA to the

1982 tax years violate the Tenth Amendment, which pre-

cludes Congress from interfering with the taxing powers of

the states. However, the BAA does not argue that application

of TEFRA to any succeeding year has a like effect.

The plenary power of Congress under the commerce

clause, U.S. Const. art. I, § 8, cl. 3, is universally recognized.

This power encompasses the regulation of commerce itself, as

well as those activities affecting interstate commerce. Heart of

Atlanta Motel v. United States, 379 U.S. 241, 85 S.Ct. 348, 13

L.Ed.2d 258 (1964). This power permits some limitation on

the states’ power of taxation. So long as the federal legislation

is rationally related to the goal of protecting interstate com-

merce or the instrumentalities thereof, the fact that a state

taxation system is affected does not itself invalidate the legis-

lation. Arizona Public Service Co. v. Snead, 441 U.S. 141, 99

S.Ct. 1629, 60 L.Ed.2d 106 (1979).

In enacting TEFRA, Congress stated that assessing air

carrier transportation property at higher ratios of true market

value or taxing it at higher rates than other commercial and

industrial personal property unreasonably burdens interstate

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commerce. Congress intended to prohibit states from subject-

ing air carriers to discriminatory tax treatment. Aloha Air-

lines, Inc. v. Director of Taxation, 464 U.S. 7, 104 S.Ct. 291,

78 L.Ed.2d 10 (1983); Northwest Airlines, Inc. v. State Board

of Equalization, 358 N.W.2d 515 (N.D. 1984).

States do have an interest in collecting the greatest

amount of tax revenue possible and in maintaining property

classification for taxation purposes. These are legitimate and

vital state interests. Arkansas-Best Freight System, Inc. v.

Cochran, supra. However, contrary to the BAA’s assertions,

TEFRA does not completely prohibit the collection of taxes

from the airlines, nor does it undermine the state’s property

classification system. Rather, it merely requires that air trans-

portation property taxes be based upon the same rates as

other commercial and industrial property.

The tax provision of TEFRA is not unique. Congress has

exercised its commerce clause power in a similar fashion to

alleviate discrimination in taxation for other interstate carri-

ers. See, e.g., Motor Carrier Act of 1980, 49 U.S.C. § 11503a;

Railroad Revitalization and Regulatory Reform Act of 1976,

49 U.S.C. § 11503. Challenges to these acts on Tenth Amend-

ment grounds have been rejected. Tennessee v. Louisville &

Nashville R.R. Co., 478 F. Supp. 199 (M.D. Tenn. 1979) aff'd

652 F.2d 59 (6th Cir.), cert. denied, 454 U.S. 834, 102 S.Ct.

135, 70 L.Ed.2d 114 (1981); Arkansas-Best Freight System,

Inc. v. Cochran, supra.

Consequently, since the provisions of TEFRA apply to

the assessments here, the district court erred in affirming the

decision of the BAA which denied the airlines’ claims for

abatement and refund.

The judgment is reversed and the cause is remanded for

further proceedings consistent with the views expressed in

this opinion.

JUDGE PIERCE and JUDGE KELLY concur.

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APPENDIX C

DISTRICT COURT, CITY AND COUNTY OF

DENVER, COLORADO

Civil Actions 84CV4505 through

84CV4515 & 84CV6469

Court Room 2

COURT’S RULING

AMERICAN AIRLINES, INC., et al.,

Plaintiffs-Petitioners,

VS.

BOARD OF ASSESSMENT APPEALS OF THE

STATE OF COLORADO, et al.,

Defendants-Respondents.

This matter came on to be heard pursuant to a complaint

and petition for review from a decision of the Board of

Assessment Appeals of the State of Colorado.

The plaintiffs were represented by Mr. Alan Poe and

Mr. Gregory B. Cairns and the defendants’ interests were

represented by the City Attorney in and for the City and

County of Denver, by and through Assistant City Attorney,

Mr. Robert Strenski.

The court, now having reviewed the complaint, the tran-

script of the record, including the exhibits admitted therein,

the briefs of counsel and statements and arguments of coun-

sel, enters the following decision.

This case involves the valuation of the various airlines’

property for the 1982 tax year. The airlines who are plaintiffs

herein are included within the definition of “public utility” as

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set forth in the Colorado statutes. Thus the valuation of air-

lines’ property in Colorado for the 1982 tax year is governed

by the provisions of C.R.S. 39-4-101. et seq.

In Colorado the valuation of the airlines’ property

throughout the State is centrally determined by the Colorado

Property Tax Administrator. For the 1982 tax year, the Prop-

erty Tax Administrator valued the various airlines’ property

pursuant to the provisions of Section 39-4-106(6) of the Colo-

rado Revised Statutes.

The airlines were duly notified of the valuation on or

before June Ist of 1982. Five of the airlines, namely, Frontier,

Texas International, Continental, United and Trans-World,

protested the 1982 valuations, pursuant to the provisions of

the statutes in such case made and provided, in July of 1982

and the remaining airlines apparently accepted the valuations

determined by the Property Tax Administrator.

The Property Tax Administrator decided the cases for

the five protesting airlines on or before August |, 1982. The

remaining airlines apparently were satisfied with the valua-

tions by the Property Tax Administrator, in that they did not

pursue the statutory procedures which were available to them

and did not follow the procedures for appealing any decision

of the Property Tax Administrator within the 30 days allotted

them.

Thereafter, the airlines made no further appeal of the

1982 valuations of the Property Tax Administrator.

Whereupon, the Property Tax Administrator appor-

tioned the valuation of the airlines’ property among the sev-

eral counties in the State in which the airlines’ property was

located. The Property Tax Administrator notified the coun-

ties, which, of course, included Denver, of the valuation

apportioned to each for purposes of levying the property tax.

The Property Tax Administrator duly notified Denver of

its portion of the airlines’ property valuation on or before

July 30, 1982, and the airlines did, in fact, pay the property

A-35

tax based upon the 1982 valuations determined by the Prop-

erty Tax Administrator.

That on or about July 25, 1983, the airlines filed peti-

tions for refund of the 1982 property taxes with the Denver

Board of County Commissioners, claiming that the valuation

of their personal property was too high and requested a

refund for the tax on the excess valuation.

The basis of the claim was that on September 3, 1982,

President Reagan signed the Tax Equity and Fiscal Responsi-

bility Act, more specifically, Section 49 U.S.C. § 1513(d),

prohibiting the airlines’ property from being valued in excess

of other comparable commercial and industrial property.

The above-mentioned petitions were denied by the Den-

ver Board of County Commissioners.

Whereupon, the airlines appealed the Board of County

Commissioners’ decision to the Board of Assessment

Appeals, requesting a de novo hearing of their claim. The

petitions were consolidated for hearing before the Board of

Assessment Appeals.

The Board of Assessment Appeals denied the airlines’

claim, which, in effect, affirmed the 1982 valuations deter-

mined by the Property Tax Administrator which was appor-

tioned to Denver. The several airlines appealed the decision

to this court.

This court affirms the findings and conclusions of the

Board of Assessment Appeals and in doing so specifically

finds that the statute which was adopted by Congress and

signed into law September 3, 1982. namely Section

1513(d) (1) (A), does not have retroactive application.

The court concludes that there is a presumption that all

statutes which are adopted should be given prospective appli-

cation, unless there is a clear intent that the statute should be

given retroactive effect.

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The court further cor ides that since the taxes for 1982

were valued in accordance with the then existing Colorado

law, the valuations were valid and according to the provisions

relating to Section 1513(d) (1) (A), which provides that no

State or subdivision of the State may assess air carrier trans-

portation property at a value that has a higher ratio to the true

market value of the air carrier transportation property than

the ratio that the assessed value of other commercial and

industrial property of the same type in the same assessment

jurisdiction has to the true market value of the other commer-

cial and industrial property, and said statute has no applica-

tion for property valued prior to its adoption.

The plaintiffs contend that Section 1 513(d)(1)(B) makes

it unlawful to levy or collect a tax on an assessment that may

not be made under subparagraph (A). It is clear from the

record that the valuations were complete prior to the effective

date of Section 1513(d) and that assessment was valid for all

intents and purposes.

Accordingly, the court concludes that Section

1513(d) (1) (B) is inapplicable herein.

Accordingly, the court finding no error, the judgment of

the Colorado Board of Assessment Appeals is affirmed.

DONE at Denver, Colorado, this 14th day of May, 1985.

BY THE COURT:

/s/ EDWARD E. CARELLI

EDWARD E. CARELLI

District Judge

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APPENDIX D

DISTRICT COURT, CITY AND COUNTY OF

DENVER, COLORADO

Civil Action Nos 84CV4505 through

84CV4515 & 84CV6469

Court Room 2

AMENDMENT OF COURT'S RULING

AMERICAN AIRLINES, INC., et al.,

Plaintiffs-Petitioners,

VS.

BOARD OF ASSESSMENT APPEALS OF THE

STATE OF COLORADO, et al.,

Defendants-Respondents.

This matter comes before the court pursuant to a motion

filed on behalf of the plaintiffs-petitioners for amendment of

the court’s ruling.

The court, now having reviewed same, orders that the

ruling be amended to state that the plaintiffs-petitioners were

represented by William E. Murane and John R. Maxfield.

It is further ordered that its ruling and judgment be

amended as follows: The court finds that the opinions of the

members of the Colorado Board of Assessment Appeals did

not, in effect, enter judgment. However, the effect of the same

was to affirm the decision of the County Board in denying the

petitions’ request for abatement or refund of taxes.

The decision previously rendered will remain in effect as

to all other matters contained therein.

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DONE at Denver, Colorado, this 6th day of June, 1985.

BY THE CourRT:

/s/ EDWARD E. CARELLI

EDWARD E. CARELLI

District Judge

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APPENDIX E

BOARD OF ASSESSMENT APPEALS

STATE OF COLORADO

Docket Numbers 4668 through 4680

AMERICAN AIRLINES, INC., )

WESTERN AIRLINES, INC., )

UNITED AIRLINES, INC., )

TRANSWORLD AIRLINES, INC., )

REPUBLIC AIRLINES, INC., )

PIEDMONT AVIATION, INC. )

d/b/a PIEDMONT AIRLINES,

OZARK AIR LINES, INC., )

FRONTIER AIRLINES, INC., ) MEMBER SHRIVER’S

EASTERN AIRLINES, INC., ) OPINION

DELTA AIR LINES, INC., )

TEXAS INTERNATIONAL AIRLINES, _ )

INC., and )

CONTINENTAL AIRLINES, INC., )

Petitioners, )

VS. )

DENVER COUNTY BOARD OF )

COMMISSIONERS, )

Respondent. )

THIS MATTER coming on to be heard before the Board

of Assessment Appeals on March 16 and April 9, 1984, and

Henry F. Shriver and F. William Beier being in attendance

and having received evidence and heard statements of coun-

sel, and being fully advised in the premises,

MEMBER SHRIVER FINDS:

1. This matter has been properly brought before this

Board on the petitions of Petitioners.

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2. Proper notice has been given to all parties concerned.

Petitioners were represented by Alan Poe, Esq.

4. Respondent was represented by Robert F. Strenski,

Esq.

5. Subject properties are described as set forth in Attach-

ment |.

6. Counsel for the Respondent, Mr. Robert F. Strenski,

moved for dismissal of the appeals on the grounds that the

case involves 1982 valuations which were placed on the

respective properties by the Property Tax Administrator

prior to June 1, 1982.

7. He stated that five of the Petitioners had appealed dur-

ing the statutory time frame, and the remaining Petitioners

did not. The Property Tax Administrator made adjustments

on the valuations which were appealed to her, and those

Petitioners carried their appeals no further until they filed for

refunds under C.R.S. 39-1-113 and 39-10-114 in July 1983.

The resulting mill levies were laid, the taxes were collected,

and those revenues were distributed.

8. Mr. Strenski stated that, as a result of the hearings held

by the Denver County Board of Commissioners on the

requests for refunds, that board determined the issue to be

one of valuation and, because all administrative remedies

were not timely exhausted by the Petitioners, the board of

county commissioners denied the appeals.

9. Hecontended that, as a result of the board of commis-

sioner’s action, this Board lacked authority to accept jurisdic-

tion in the matter, and should dismiss the petitions.

10. Counsel for the Petitioners, Mr. Alan Poe, stated that

federal legislation (TEFRA) was enacted September 3, 1982,

which prohibited the levying or collection of taxes on airline

properties that were valued differently than other commercial

and industrial properties in the area.

A-41

1). He stated that the assessments or valuations were

arrived at by using a different assessment ratio than that used

for railroad properties.

12. Mr. Poe stated that the Petitioners were unaware of

the federal legislation during the statutory time frame for

appeals of valuations, and cited Modular Communities, Inc.

v. Allan R. McKnight, 550 P.2d 866 (1976), in support of this

argument.

13. He further stated that the assessment procedures were

not completed until the State Board of Equalization certified

the abstract on September 14, 1982, which was subsequent to

the enactment of the federal legislation.

14. The Board denied the Respondent’s motion, and

accepted jurisdiction under C.R.S. 39-2-125(F).

15. Counsel for the Petitioners contended that the federal

legislation which was enacted on September 3, 1982, was

effective as of that date and must be properly considered in

the valuation of airline properties for tax year 1982.

16. Counsel for the Respondent argued that this federal

legislation was effective for tax year 1983 and subsequent to

that time, but not for tax year 1982, in the valuation of airline

properties.

17. Ms. Mary Anne Maurer, Property Tax Administrator,

testified that in valuing the subject properties for tax year

1982, she used a 93 percent factor to roll back the values to

tax year 1981, and then applied a 30 percent factor to arrive

at the assessed valuations.

18. She stated that five of the Petitioners appealed their

valuations during the protest period of July 1982, and were

given adjustments; they appealed no further. The remaining

eight Petitioners did not appeal to her in July 1982.

19. Ms. Maurer stated that it was her determination that

TEFRA did prohibit discriminatory valuations, and that it

was applicable for the valuations of airline properties for tax

A-42

year 1983, but not for tax year 1982. She also stated that she

received an informal opinion from the Attorney General’s

Office, but that it did not directly address the issue.

20. Mr. Max P. Arnold, president of Max P. Arnold Asso-

ciates, was accepted by the Board as an expert witness in the

field of appraisals. He testified that he was commissioned to

make a study of the 1979, 1980, and 1981 sales ratio to

determine the proper procedures to use in valuing railroad

properties. He included all 63 counties in the State of Colo-

rado in his study. The commercial and industrial real proper-

ties were the main source of his study. By factoring these

forward, he arrived at the 1982 value, and the resulting stan-

dards were adopted by the Property Tax Administrator and

the railroad companies to determine the ratio to be used for

valuing the railroad properties.

21. Mr. Arnold stated that public utility property was not

included in his study unless it was locally-assessed and sold;

in his opinion, it should not have been used or included in the

standards. The approximate factor used in assessing railroad

properties in 1982 was 14 percent. As a result of his study,

Mr. Arnold determined that this factor should have been

10.91 percent; one of the principal reasons for the difference

was the fact that Mr. Arnold did not include public utility

property, which the Division of Property Taxation did

include.

22. Counsel for the Respondent again moved for dismis-

sal on the grounds that the Petitioners had failed to meet the

burden of proof in accordance with the Board’s Rule 14. He

also Yenewed his contention that the Board lacked

jurisdiction.

23. Counsel for the Petitioners repeated several of his

remarks made in response to the previous motion, together

with the fact that Mr. Arnold’s testimony had proven the

correct sales ratio which should have been used in valuing the

subject properties for tax year 1982 at 10.91 percent.

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24. The Board denied the Respondent’s motion.

25. Ms. Maurer testified that public utilities have the

right to appeal their valuations to her during July of each

year, and her decisions to the Board of Assessment Appeals

within 30 days of that date. None of the 13 Petitioners in the

instant case appealed her decision within the 30-day time

frame. She knows of no statutory authority permitting her to

change a valuation subsequent to the last working day in July,

unless ordered to do so by a higher authority.

FINDINGS:

The subject properties were valued for tax year 1982 by

the use of the same methodology and procedures as were used

to value all other public utilities, with the exception of rail-

road properties.

The formula used in valuing the subject properties was a

93 percent factor to roll back the value to tax year 1981, and

then a 30 percent factor to determine the assessed valuations.

In the instance of railroad properties, a 14 percent factor of

the tax year 1982 level of value resulted in the assessed

valuations.

CONCLUSIONS:

The first issue to be resolved was to determine if TEFRA

was to be considered as applicable to tax year 1982.

As of the September 3, 1982 date in which TEFRA was

signed into law, the Respondent had neither levied the tax,

nor had the tax been collected from the Petitioners. The State

Board of Equalization certified the abstract on September 1 4,

1982.

The Assessment date for public utility properties, such

as the subject properties, was January | of the assessment

year. Should TEFRA be determined to be applicable to tax

year 1982, it would be applied retroactively. No mention in

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the Act, which was a part of Respondent’s Exhibit I, showed

the legislation to be effective as of January 1, 1982.

Section 532(b) of the Tax Equity and Financial Respon-

sibility Act (TEFRA) of 1982 should not be used in the valua-

tion of the subject properties for tax year 1982.

Member Shriver moved that the action of the Respon-

dent be affirmed and the petitions be denied. Because the

motion was not seconded, the motion was lost.

ORDER:

In accordance with C.R.S. 39-2-127(2), since there was

not a majority decision of the Board, the Petitioners’ appeals

cannot be granted.

DATED this 13th day of April, 1984.

BOARD OF ASSESSMENT

APPEALS

/s/ HENRY F. SHRIVER

Henry F. Shriver, Chairman

A-45

APPENDIX F

BOARD OF ASSESSMENT APPEALS

STATE OF COLORADO

Docket Numbers 4668 through 4680

AMERICAN AIRLINES, INC.,

WESTERN AIRLINES, INC.,

UNITED AIRLINES, INC.,

TRANSWORLD AIRLINES, INC.,

REPUBLIC AIRLINES, INC.,

PIEDMONT AVIATION, INC.

D/B/A PIEDMONT AIRLINES,

OZARK AIR LINES, INC.,

)

FRONTIER AIRLINES, INC., MEMBER BEIER’S

)

EASTERN AIRLINES, INC., OPINION

DELTA AIR LINES, INC.,

TEXAS INTERNATIONAL AIRLINES,

INC., and

CONTINENTAL AIRLINES, INC..,

Petitioners,

VS.

DENVER COUNTY BOARD OF

COMMISSIONERS,

Respondent.

THIS MATTER coming on to be heard before the Board

of Assessment Appeals on March 16 and April 9, 1984, and

Henry F. Shriver and F. William Beier being in attendance

and having received evidence and heard statements of coun-

sel, and being fully advised in the premises,

MEMBER BEIER FINDS:

1. This matter has been properly brought before this

Board on the petitions of Petitioners.

A-46

2. Proper notice has been given to all parties concerned.

Petitioners were represented by Alan Poe, Esq.

4. Respondent was represented by Robert F. Strenski,

Esq.

5. Subject properties are described as set forth in Attach-

ment 1.

6. Counsel for the Respondent moved to dismiss the

appeals on the grounds that the Petitioners had failed to

exhaust their administrative remedies within the time period

provided by statute under C.R.S. 39-4-108(1) and

39-4-108(4).

7. Counsel for the Respondent contended that the Board

of Assessment Appeals is without jurisdiction, as the Peti-

tioners have lost their right of appeal. The Property Tax

Administrator adjusted valuations for the five protesting air-

lines, but they were appealed no further. In July 1983, the

Denver County Board of Commissioners denied the request

for review for lack of jurisdiction.

8. The Petitioners contend the applicability of Section

532(b) of the TEFRA Act. The Attorney General’s opinion of

April 13, 1983, deemed it inappropriate for the Attorney

General to issue a formal opinion, because this would be an

encroachment upon the duties of the county board of

commissioners.

9. Counsel for the Petitioners defined the issue as the

applicability of TEFRA, effective September 3. 1982. which

was the date TEFRA was enacted.

A-47

10. Counsel for the Respondent contends that the valua-

tions by the Property. Tax Administrator were correct. The

question is purely a valuation question; there is nothing to

support illegal assessments of the subject properties. The pro-

test involves a timely protest, and it is too late for a valuation

review. The Respondent’s motion to dismiss was denied by

the Board.

11. Counsel for the Petitioners stated that 12 airlines filed

with the county board of equalization on November 21, 1983.

The Property Tax Administrator used the 1973 level of value

in accordance with C.R.S. 39-1-104(12)(c), which is not

applicable to public utilities. The 1981 level of value, in

accordance with C.R.S. 39-4-101(2.5), is applicable to

airlines.

12. Counsel for the Petitioners contends that on Septem-

ber 3, 1982, Section 532(b) of the TEFRA Act, extended

protection to airline companies. The state’s last authority was

as of that date. The Act gives airlines treatment under the Act

for tax year 1982.

13. Ms. Mary Anne Maurer, Property Tax Administrator,

testified that the airlines were valued as public utilities. She

rolled back the tax year 1981 level of value, with a 93 percent

rollback. The assessment ratio was 30 percent. The work-

sheets of the Property Tax Administrator’s valuations, dated

June 1, 1982, do reflect that adjusted assessments were made

during July 1982. Section 532(1)(B) of the TEFRA Act pro-

vides treatment at a ratio no higher than commercial and

industrial properties, applicable for tax year 1983.

14. Oncross-examination, Ms. Maurer testified that Peti-

tioners’ Exhibits A-1 through A-11 involves flight property

and personal property, engines, and situs property (real).

Exhibit A-3, involving United Airline’s detailed personal and

real property, indicated that 90 percent of the airline’s prop-

erty is personal. In her opinion, the TEFRA Act does not

apply to tax year 1982.

A-48

15. Mr. Max Arnold, president of Max Arnold and Asso-

ciates, was admitted as an expert witness. His involvement in

the Quad R Act in Colorado started in 1980, 1981, and 1982.

A study was done based on sales data furnished by the Prop-

erty Tax Administrator for tax year 1980. In 1981, the study

was expanded to 63 counties from the original 47 counties. A

study of 1981 property sales for the sales ratio was submitted

as Petitioner’s Exhibit P, and included both commercial and

industrial property, as well as real property. The methods

used included sales from the assessors’ records and sales doc-

uments, and review of the properties. He did use some 1979

and 1980 sales. The study was paid for by railroad compa-

nies, and has been made annually as ordered by the Legisla-

ture. Included in the study were at least 12 sales from each

county.

16. He testified that the study was accepted by the Prop-

erty Tax Administrator for 1981 assessments under the Quad

R Act. The sales ratio study for Colorado indicated that the

ratio was 10.91, and for the City and County of Denver was

10.55.

17. Under cross-examination, the witness testified that

commercial and industrial property only were included in the

study, while utility properties were not. Aircrafts were not

included since they were personal property. The Property Tax

Administrator had determined that the ratio to be used was

14 percent.

18. Counsel for the Respondent moved to dismiss on the

grounds that the Petitioners had failed to meet the burden of

proof concerning the valuation of real and personal property.

The motion was denied by the Board. The TEFRA Act was

drafted to avoid differences in valuations of real and personal

property.

FINDINGS:

Member Beier finds that Section 532 of the TEFRA Act,

amended public law, 97-248, Title V, P.532, 96 Stat. 701,

A-49

dated September 3, 1982, is applicable to abatements and

refunds for tax year 1982.

Section B of the Act prohibits the levy or collection of

taxes on the assessments of airlines at a value higher than the

ratio of commercial and industrial properties of the same

type.

The State Board of Equalization approved the abstract

of assessments for the State of Colorado on September 21,

1982. The mill levys of the counties for tax year 1982 were

not actually levied until November or December 1982.

Section C of the Act prohibits the levy or collection of

taxes On air Carrier transportation property at a ratio that

exceeds the ratio applicable to commercial or industrial prop-

erty in the same assessment jurisdiction.

The Property Tax Administrator has determined that

the proper ratio to be used is 14 percent. The Colorado assess-

ments for airlines are discriminatory for the reason that the

Property Tax Administrator follows a different method of

valuing airlines and other utilities as defined in C.R.S.

39-4-101(2.5).

CONCLUSIONS:

The effective date of the TEFRA Act is determined to be

September 3, 1982.

The process of determining actual value, application of

the assessment ratio to actual value, and the “equalization”,

had not been placed on the subject properties.

The Petitioners are entitled to assessments for tax year

1982 at 11 percent.

Member Beier determines that the Petitioners are enti-

tled to a refund of the taxes assessed and paid on the assess-

ments in excess of the 11 percent ratio.

A-50

ORDER:

In accordance with C.R.S. 39-2-127(2), since there was

not a majority decision of the Board, the Petitioner’s appeals

cannot be granted.

DATED this 13th day of April, 1984.

BOARD OF ASSESSMENT

APPEALS

; /s/ F. WILLIAM BEIER -

F. William Beier

A-51

APPENDIX G

BOARD OF COUNTY COMMISSIONERS

CITY AND COUNTY OF DENVER

DENVER, COLORADO

November 22, 1983

Alan Poe

Gregory Cairns

Holland & Hart

Attorneys at Law

555 Seventeenth Street

Suite 2900

Denver, Colorado 80201

Gentlemen:

At a meeting of the Board of County Commissioners of the

City and County of Denver, held November 21, 1983, the

petition you submitted for the abatement of the 1982 per-

sonal property tax on the above mentioned schedule was

presented.

The Board stated that the Colorado Property Tax Adminis-

trator is responsible for the assessed value placed on the

property.

The Assessor’s office reported in its memorandum ‘to the

Board that no opinion has been made by the Attorney Gen-

eral to the Colorado Property Tax Administrator on the

applicability of Section 532(b) of the Tax Equity and Fiscal

Responsibility Act of 1982. The Attorney General has sug-

gested, however, that the application of 532(b) should begin

January 1, 1983. This Act was passed by Congress, effective

September 3, 1983.

A-52

After careful consideration of your petition, and the investi-

gation brought in by the Assessor, the Board felt that they

must uphold this assessment. The petition was, therefore,

denied.

SINCERELY,

/s/ DOROTHY SILCHAK __

Dorothy Silchack, Secretary

A-53

APPENDIX H

List of Parent Companies, Subsidiaries (Except

Wholly Owned Subsidiaries) and Affiliates

of Petitioners Pursuant to Rule 28.1

Petitioner United Air Lines, Inc.

UAL Corporation

Petitioner Frontier Airlines, Inc.

Frontier Holdings, Inc.

Petitioners Continental Airlines, Inc., Texas International

Airlines, Inc. and Eastern Air Lines, Inc.

Texas Air Corporation

Petitioners Delta Airlines, Inc. and Western Airlines, Inc.

None

Petitioner Republic Airlines, Inc.

Northwest Airlines, Inc.

NWA, Inc.

Petitioners Trans World Airlines, Inc. and Ozark

Airlines, Inc.

TWA Airlines, Inc.

Petitioner American Airlines, Inc.

AMR Corporation

A-54

APPENDIX I

DISTRICT COURT, CITY AND COUNTY OF

DENVER, COLORADO

Action Nos. 84 CV 4505 through

84 CV 4515 & 84 CV 6469

Court Room 2

STIPULATION

AMERICAN AIRLINES, INC., et al.,

Plaintiffs-Petitioners, _

VS.

BOARD OF ASSESSMENT APPEALS OF THE

STATE OF COLORADO, et al.,

Defendants-Respondents.

The plaintiffs and the City and County of Denver

defendants, by counsel, stipulate as follows:

1. The valuation of the property, owned by the plaintiffs

for the 1982 property tax year, by the Colorado Property Tax

Administrator and apportioned to the City and County of

Denver is the following:

/ American Airlines, Inc. $ 111,800

Continental Air Lines, Inc. 3,902,100

Delta Air Lines, Inc. 2,791,400

Eastern Airlines, Inc. 182,300

Frontier Airlines, Inc. 16,138,700

Ozark Air Lines, Inc. 713,000

Republic Airlines, Inc. 2,395,600

Texas International Airlines, Inc. 1,306,200

Trans World Airlines, Inc. 819,600

United Airlines, Inc. 25,663,800

Western Airlines, Inc. 3,634,910

A-55

2. The plaintiffs allege in the above-captioned cases that

Section 532(b) of the Tax Equity and Fiscal Responsibility

Act of 1982 is applicable to the 1982 property-tax year for

Colorado.

3. If Section 532(b) of the Tax Equity and Fiscal Respon-

sibility Act of 1982 is applicable to the 1982 property tax year

in Colorado, then the valuation of the property owned by the

plaintiffs and apportioned to Denver for the 1982 property

tax year would be the following:

American Airlines, Inc. $

Continental Air Lines, Inc.

Delta Air Lines, Inc.

Eastern Airlines, Inc.

Frontier Airlines, Inc.

Ozark Air Lines, Inc.

Republic Airlines, Inc.

Texas International Airlines, Inc.

Trans World Airlines, Inc.

United Airlines, Inc.

Western Airlines, Inc.

56,100

1,958,000

1,400,700

91,500

8,098,300

357,800

1,202,100

655,400

411,300

12,877,900

1,824,000

A-56

4. This stipulation is not intended to have, and shall not

be construed as having, any bearing on whether Sec-

tion 532(b) of the Tax Equity and Fiscal Responsibility Act of

1982 is applicable to the 1982 property tax year in Colorado.

DATED: April 23, 1985.

STEPHEN H. KAPLAN #7826 HOLLAND & HART

City Attorney

Py /s/ ROBERT F. STRENSKI By /s/ JOHN R. MAXFIELD

Robert F. Strenski #5325 Alan Poe #7641

Assistant City Attorney John R. Maxfield #12641

353 City and County Bldg. 555 Seventeenth Street

Denver, Colorado 80202 Suite 2900

Telephone: (303) 575-2334 Post Office Box 8749

Denver, Colorado 80201

Telephone: (303) 295-8000

ATTORNEYS FOR ATTORNEYS FOR

CITY AND COUNTY OF PLAINTIFFS-

DENVER DEFENDANTS PETITIONERS

A-57

APPENDIX J

Excerpt from Petitions for Abatement

or Refund of Taxes filed with Denver,

July 22, 1983 (Exhibits D-1 through D-11

of Board of Assessment Appeals Record)

The assessed value of the above-referenced property

determined by the Property Tax Administrator and assigned

to the City and County of Denver is based on the application

of an™assessment ratio of 30%. Section 532(b) of the Tax

Equity and Fiscal Responsibility Act of 1982 prohibits a state

or a subdivision of a state from assessing, levying, or

collecting property taxes against air carrier transportation

property if such property taxes are based upon assessments

that bear a higher ratio to the actual value of such property

than the assessment ratio applied to other commercial and

industrial property within the same assessment jurisdiction.

For tax year 1982, the ratio of the assessed value of other

commercial and industrial property to the actual value of

such property is 11%. Therefore, the assessment ratio applied

to the actual value of the above-referenced property to

determine the assessed value of such property should have

been 11%, rather than the 30% used by the Property Tax

Administrator.

A-58

APPENDIX K

Excerpt from Memorandum attached to Petitions

to Colorado Board of Assessment Appeals,

December 20, 1983

TEFRA was signed into law by the President on Septem-

ber 3, 1982, and, under the general effective date provision of

Title V of TEFRA, Section 532(b) became effective on that

date. TEFRA § 523(b). As of September 3, 1982, the assess-

ment process in Colorado for tax year 1982 had not been

completed, since the State Board of Equalization did not

make the certification required by Section 39-9-105(1), Colo-

rado Revised Statutes 1973, until September 21, 1982. More-

over, property taxes for tax year 1982 had not been (and

could not have been) levied by any county as of September 3,

1982, and the collection of 1982 property taxes in Colorado

will not occur until February 28, 1983 or later. Sections 39-1-

111 and 39-10-104, Colorado Revised Statutes 1973. Under

these circumstances, the clear language of Section 532(b) of

TEFRA prohibits the state and the counties from assessing,

levying, and collecting the discriminatory taxes against the air

carrier transportation property of the airline companies for

tax year 1982 and requires that such taxes be abated or

refunded to the extent that they are discriminatory. This

interpretation of Section 532(b) of TEFRA is supported by

the legislative history of that provision and predecessor acts,

the judicial construction of predecessor acts, and the admin-

istrative construction of Section 532(b) in other states.

A-59

APPENDIX L

Excerpt from Complaints filed by Airlines in the

District Court, City and County of Denver, Colorado

May 9, 1984

7. Section 532(b) of the Tax Equity and Fiscal Responsi-

bility Act of 1982 (Public Law 97-248, 96 Stat. 701), which

was effective on September 3, 1982, prohibits a state, a subdi-

vision of a state, or an authority acting for a state or a subdivi-

sion of a state from assessing, levying, or collecting property

taxes against air carrier transportation property if such prop-

erty taxes are based upon assessments that bear a higher ratio

to the actual value of such property than the assessment ratio

applied to other commercial and industrial property within

the same assessment jurisdiction.

8. Subsequent to September 3, 1982, in contravention of

Section 532(b) of the Tax Equity and Fiscal Responsibility

Act of 1982, various agencies and officials of the State of

Colorado and the City and County of Denver took action to

assess, levy, and coilect property taxes against air carrier

transportation property of [the Airline], which property taxes

were based upon assessments that bear a higher ratio to the

actual value of such property than the assessment ratio

applied to other commercial and industrial property within

the same assessment jurisdiction.

A-60

APPENDIX M

Excerpt from Plaintiffs’-Appellants’

Joint Notice of Appeal, filed in

Colorado Supreme Court, July 18, 1985

II. ADVISORY LISTING OF ISSUES TO BE

RAISED ON APPEAL

2. Whether 49 U.S.C. § 1513(d) precludes the assessment,

levy and collection of discriminatory property taxes on the

property owned by the Airline Companies for tax year 1982

pursuant to Colorado’s statutes.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.