Union Pacific Railroad v. State Board of Equalization

In this case we review the methods used by the State Board of Equalization (the Board) to assess railroad operating assets. We conclude, as did the superior court, that the Board’s “composite life” model cannot legally be applied to railroad operating property. We also hold, however, that the superior court erred in finding illegal certain Board techniques for estimating current railroad income.

Several railroad companies (the Railroads) brought these consolidated actions for refund of property taxes paid in 1978, 1979, and 1980. (Cal. Const., art. XIII, § 32; Rev. & Tax. Code, §§ 5140-5148.) Defendants are the Board, which assessed the property, and numerous counties and cities which collected taxes on it. The trial court found the Board had employed an invalid method of valuation and that certain Board procedures had deprived the Railroads of due process. The court remanded for the Board to recalculate the values, employing changes in methodology specified by the court. After a return by the Board the court ordered refunds in amounts drawn from the Railroads’ petitions for reassessment, claims for refund and complaints, because those refunds were smaller than those…