## Facts

- Georgia assessed most commercial and industrial property through local county boards, but assessed “public utilities,” including railroads, through state-level authorities.
- For tax year 2002, the Georgia State Board of Equalization changed the mix of appraisal methodologies used to value CSX Transportation, Inc.’s in-state real property.
- The Board concluded CSX’s Georgia rail property increased 47% in market value from 2001 to 2002, leading to a substantially higher ad valorem tax burden.
- CSX sued in federal district court under the Railroad Revitalization and Regulatory Reform Act of 1976 (4–R Act), 49 U.S.C. § 11501(b)(1) and (c).
- CSX alleged Georgia’s methods overstated the “true market value” of railroad property while other commercial and industrial property was accurately valued, producing an assessed-to-market-value ratio for CSX more than 5% higher than the comparator ratio in the same jurisdictions.

## Issues

1. Whether 49 U.S.C. § 11501(b)(1) requires a federal court to accept a State’s valuation methodology as conclusive when determining “true market value” for the discrimination ratio comparison.
2. Whether a railroad may challenge the State’s valuation methods as part of proving discriminatory assessment ratios under the 4–R Act.

## Decision

- The Supreme Court reversed the Eleventh Circuit and remanded.
- The Court held the 4–R Act allows a railroad to attempt to show that a State’s valuation methods produce a discriminatory determination of “true market value.”
- A federal district court is not required to treat the State’s chosen valuation method as immune from review when performing the statutory ratio comparison.
- The Court did not prescribe any particular valuation methodology or decide whether Georgia’s valuation was in fact discriminatory; it left those factual matters for proceedings on remand.

## Legal Principles

- The 4–R Act prohibits assessing rail transportation property at an assessed-to-true-market-value ratio higher than the ratio applied to other commercial and industrial property in the same jurisdiction. 49 U.S.C. § 11501(b)(1).
- Federal courts may grant relief if the railroad’s assessment ratio exceeds the comparator ratio by at least 5%. 49 U.S.C. § 11501(c).
- Because the statute requires a comparison using “true market value,” a district court must be able to determine that value independently; it may consider and reject state valuation methods if the evidence shows they inflate market value and yield a discriminatory ratio.
- The statute focuses on discriminatory results measured by the ratio comparison, not solely on proving irrational methods or purposeful discrimination.
- Although federal review of state taxation raises federalism concerns, Congress authorized this specific federal remedy for discriminatory railroad property taxation, and courts must apply the statutory standard as written.

## Conclusion

The Court held that § 11501 permits railroads to challenge state valuation methodologies when those methods allegedly inflate “true market value” and cause prohibited assessment-ratio discrimination, requiring federal courts to determine market value without automatic deference to the State’s chosen approach.


CSX Transp., Inc. v. Ga. State Bd. of Equalization, 552 U.S. 9 (2007)