Acf Industries, Incorporated v. The State of Arizona and Arizona Department of Revenue

Eleven companies that own and lease railroad cars to operating carriers (the “Carlines”) appeal a district court decision 561 F.Supp. 595 which upheld' the State of Arizona in an action challenging Arizona’s assessment of ad valorem taxes. We affirm.

The Carlines and Arizona agree that 49 U.S.C. § 11503 (b)(1) forbids assessing Car-lines’ property at an assessment ratio exceeding the “average assessment ratio” applicable to all “other commercial and industrial property in the assessment jurisdiction.” They disagree about what this language means.

The Carlines’ first claim is that the state ought to include in its calculation of commercial property all the business inventories in the state (which are categorically exempt from ad valorem taxes) in determining the assessment ratio. This claim has nothing to commend it but a careful lawyer’s desire to leave no possible theory unexplored. We find no authority requiring untaxed property to be included in an average of assessed value for taxed property.

The Carlines’ next contention is that leased residential property must be considered “commercial and industrial” property for the purposes of § 11503(b)(1). This contention fails…