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levied against common and contract carrier property by State and local taxing authorities. With the removal of certain repetitive language, the bill would be identical to S. 927, 90th Congress, second session, as amended and reported to the Senate by your committee on July 29, 1968, Calendar No. 1467, Report No. 1483. It appears that the language beginning with "pursuant" in line 9, page 2, and ending with "property" in line 17, page 2, is the result of a printing error and should be omitted.

S. 2289 is restricted in scope to "transportation property" (see lines 8 and 9, lines 20 and 21, p. 2, and line 1, p. 3 of the bill), as was S. 927. We suggest, as we did in connection with S. 927, that it might be advisable to define "transportation property," at least in general terms, in the bill to reduce possible controversy over its meaning at a later date. For example, a clause could be placed after the term "transportation property," reading "as defined in the regulations of the Interstate Commerce Commission."

The subject matter of this bill is one of policy for determination by the Congress; it is not related to our functions and operations. Except for the above suggestions, therefore, we have no recommendation to make as to its consideration by your committee.

Sincerely yours,

ROBERT F. KELLER,

For the Comptroller General of the United States.

INTERSTATE COMMERCE COMMISSION,
Washington, D.C., July 29, 1969.

Hon. WARREN G. MAGNUSON,
Chairman, Committee on Commerce,
U.S. Senate, Washington, D.C.

DEAR CHAIRMAN MAGNUSON: This responds to your request for the views of the Interstate Commerce Commission on S. 2289, a bill to amend the Interstate Commerce Act, as amended, in order to make unlawful, as unreasonable and unjust discrimination against and an undue burden upon interstate commerce, certain property tax assessments of common and contract carrier property, and for other purposes.

S. 2289 adds a new paragraph, designated as section 25a, to the Interstate Commerce Act. Section 1 of this new provision declares that the following action by a State or any subdivision or agency thereof with respect to the taxation of the real or personal property of any common or contract carrier subject to economic regulation under the Interstate Commerce Act shall constitute an unreasonable and unjust discrimination against and an undue burden upon interstate commerce and therefore be forbidden and unlawful:

(a) the assessment (but only to the extent of any portion based on excessive values as hereinafter described), for the purposes of a property tax levied by any taxing district, of transportation property owned by or used by any common or contract carrier subject to this act engaged in transportation of persons or property in interstate commerce at a value which bears a higher ratio to the true market value of such transportation property than the assessed value of all

other property in the taxing district subject to a property tax levy bears to the true market value of all such other property;

(b) the collection of any tax on the portion of said assessment so declared to be unlawful; or

(c) the collection of any ad valorem property tax on such transportation property at a tax rate higher than tax rates applicable to any other property in the taxing district.

Section 2 of the proposed new section 25a provides that the district courts in the United States shall have jurisdiction to issue writs of injunction as may be necessary to restrain any State or political subdivision from assessing property in violation of paragraph 1, notwithstanding the provisions of section 1341 of the Judicial Code, 28 United States Code section 1341. It also provides that such jurisdiction granted the district courts of the United States shall not be exclusive of that which any Federal or State court may otherwise have. This section also provides that it will not become effective for 3 years after the date of the enactment of S. 2289.

Legislation similar to S. 2289 has been considered by Congress in the past, most recently in the 90th Congress as S. 927. S. 927 was the subject of hearings before the Subcommittee on Surface Transportation and was reported favorably by your committee with certain amendments designed to bring Commission-regulated contract carriers, as well as common carriers included in S. 927 as introduced, within the provisions of the bill and to stay the effective date of the enforcement of S. 927 for 3 years from the date of its enactment. In all material respects, S. 2289 is identical to S. 927 as reported by your committee.

Although the provision of this bill apply to Commission-regulated carriers of all modes, it is well recognized that the basic purpose of. this legislation is to provide a solution to a longstanding and deeply rooted problem, the practice of many State or local governments taxing authorities setting inequitable and discriminatory assessments and tax levels on the property of the Nation's railroads. The variety and extent of discriminatory treatment in the assessing and taxing of the railroads' properties by State and local governments is well docu-. mented in the Doyle report 2 which also suggested remedial legisla-. tion along the lines of S. 22893 to alleviate this problem. Although the Doyle report's discussion of this subject was directed to discriminatory State and local tax policies against railroads because of their large private investment in taxable rights-of-way and other property, it is apparent that carriers of other modes which make use of publicly provided transportation facilities confront many of the same problems. Cf. Alterman Transport Lines, Inc., v. Public Service Commission of Tennessee, 259 F. Supp. 486 (M.D.D. Tenn. 1966), involving the issue of discriminatory property taxation against motor carriers.

In essence, the provisions of section 1 are designed to put an end to the widespread practice of treating for tax purposes the property of common and contract carriers on a different basis than other property

1 "Discriminatory State Taxation of Interstate Carriers," Sen. Rept. No. 1483 (90th Cong., 2d sess. 1968).

2 "National Transportation Policy," report prepared for the Committee on Interstate and Foreign Commerce, U.S. Senate, by the Special Study Group on Transportation Policies in the United States (1961), pp. 445-491.

3 Id. at pp. 465-466.

S. Rept. 91-630- -3

in the same taxing district. In describing the extent of discriminatory tax treatment by State and local governments, the Doyle report states that "despite State laws requiring uniform tax treatment, railroads and pipelines are discriminated against as compared to other property taxpayers in the same jurisdiction, due in large measure to outdated procedures (which are sometimes deliberately retained) for assessment of property," and went on to state that [the committee] had information "showing the extent of overpayment of railroad ad valorem taxes resulting from the assessment of railroad property at a percent of its value that is higher than the percent for the assessment of other taxpayer property is to the value of such other property"; and that "This confirmed the findings of this committee that there is a studied and deliberate practice of assessing railroad property at a proportion of full value substantially higher than other property subject to the same tax rates." 4

The Commission itself has had occasion to note in its report in the Railroad Passenger Train Deficit proceeding, 306 ICC 417, that the existence of inequitable State and local property assessments and tax policies has served to jeopardize the continued existence of essential rail passenger service and recommended that State and local governments take steps to effect a greater degree of equity with respect to the tax burdens imposed on railroad properties as compared to that borne by taxpayers generally.

It is our understanding that this bill will forbid discriminatory. property taxation of common and contract carrier property whether (1) such discrimination is expressly sanctioned by State law or constitutional provision, or (2) whether, despite existence of State laws or constitutional provisions requiring uniform property assessment of property and tax treatment, it is simply the administrative practice or custom to levy discriminatory levels of assessment of taxation. In the years since the Doyle report's findings were published in 1961, several State courts, acting under their own laws or constitutional provisions, and Federal district courts, acting under the "equal protection" clause of the 14th amendment to the Constitution, have voided discriminatory assessments and tax levies on carrier property to the extent such practices were in conflict with the applicable State laws or constitutional provisions. In this regard, see Louisville and Nashville R. Co. v Public Service Commission of Tennessee, 249 F. Supp. 894 (M.D.D. Tenn. 1966); People v. Belt Ry. Co. of Chicago, 226 N.Ë. 2d 265 (1967) and cases cited therein. These decisions have not, as yet, touched upon the power of State or local authorities to levy discriminatory assessments or tax rates against carriers where the express provisions of State law or a State Constitution permit such discriminatory treatment. This is most often accomplished by classifying carrier property in a separate class from all other taxable property in the same district, a practice which has been approved by the Supreme Court in Nashville, Chattanooga & St. L. Ry. v. Browning. 310 U.S. 362 (1940) against a claim that such classification is violative of the "equal protection" clause of the 14th amendment. This and other aspects of the constitutional issues connected with this legislation are discussed in detail in your committee's report on S. 927.5

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In the years since the issuance of the Doyle report, steps have been taken by either State legislatures or local taxing authorities to alleviate discriminatory tax burdens on regulated carriers. While a number of States have reformed their property taxing and assessment practices to insure a greater degree of equity in the treatment of carriers, nevertheless, the testimony presented on S. 927, as summarized in your committee's report, indicates that there are still serious problems which require the establishment of a uniform national policy in this area. Since section 2 of S. 2289 provides that the injunctive remedy for violations of the provisions of section 1 will not become effective for 3 years after the date of enactment of S. 2289, State and local governments will be afforded ample time to implement this national policy on their own initiative.

For the reasons expressed above, we fully support the enactment of S. 2289.

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DEAR SENATOR: This is in response to your request for the views of the Department of Justice on S. 2289, a bill to amend the Interstate Commerce Act, as amended, in order to make unlawful, as unreasonable and unjust discrimination against and an undue burden upon interstate commerce, certain property tax assessments of common and contract carrier property, and for other purposes.

The Department of Justice reported on S. 2988, 89th Congress, on April 18, 1966, and on S. 927, 90th Congress, on August 25, 1967, both of which were substantially similar bills. The Department's position was that whether that legislation should be enacted involves policy considerations as to which the Department made no recommendation. The Department adheres to that position.

The report on S. 927 noted favorably the resolution of an ambiguity which occurred in S. 2988. Both reports pointed out that provisions in the bills, identical with those in the instant bill, which vest jurisdiction in the courts to restrain any State from discriminatorily assessing property for tax purposes or from collecting such prohibited taxes, do not make clear whether it is intended to authorize the courts to assess or levy a tax in which case they would be brought within the proscription of Moses Lake Homes Inc., et al. v. Grant County, 365 U.S. 744 (1961). While the courts may not assess or levy taxes, they may be authorized to enjoin the collection of an unlawful tax in its entirety, or issue other appropriate process with respect to it. It was therefore suggested that the committee may want to consider amending the legislation to make clear that the courts would be authorized to deal with the tax in its entirety.

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We note the addition of a proviso to new section 25a (2) which would delay the effective date for jurisdiction of the courts for 3 years after the date of enactment. We understand that the proviso is the means of acceding to the request of the States to be given more time to take care of eliminating discriminatory State taxation themselves; 115 Congressional Record S5806 (May 29, 1969).

We call your attention to an error in the print of the bill we have examined which we understand has not been corrected by a subsequent printing. On page 2 the text, beginning with the word "pursuant" and continuing through the word "property" on line 17, is a repetition of the wording beginning on line 1 and continuing through the word "property" on line 9.

The Bureau of the Budget has advised that there is no objection to the submission of this report from the standpoint of the administration's program.

Sincerely,

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OFFICE OF THE SECRETARY OF TRANSPORTATION,
Washington, D.C., December 8, 1969.

Hon. WARREN G. MAGNUSON,
Chairman, Committee on Commerce, Senate, Washington, D.C.
DEAR MR. CHAIRMAN: This letter is in reply to your request for the
views of this Department with respect to S. 2289, a bill to amend the
Interstate Commerce Act, as amended, in order to make unlawful, as
unreasonable and unjust discrimination against and an undue burden.
upon interstate commerce, certain property tax assessments of com-
mon and contract carrier property, and for other purposes.

S. 2289 would make it unlawful as a burden upon interstate commerce for a State or locality to assess, collect, or impose a higher rate of property tax on interstate carriers than on other similarly situated taxpayers. It would allow an aggrieved interstate carrier to bring suit in a Federal district court to challenge the excessive portion of a State or local transportation property tax. Also, it would allow the States 3 years after enactment within which the States may adjust their practices and laws. Our comments will also touch upon the version of this bill as ordered reported out in amended form on November 4, 1969.

BACKGROUND

S. 2289 is the latest in a series of bills which have been introduced in several Congresses to deal with a major grievance of regulated surface transportation carriers-that of discriminatory taxes and assessments on their real and personal property by State and local governments. This legislation has been a lively subject ever since the issuance of the so-called Doyle report1 in 1961 which discussed, at some length, the various practices of the States and local governments in setting both the assessments and the rates of tax on railroad property. In general, these were (and are) either (1) the assessment of railroad

1 "National Transportation Policy," a preliminary draft of a report prepared for the Senate Committee on Interstate and Foreign Commerce by the Special Study Group on Transportation Policies in the United States (1961), pp. 445-491.

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