The opinion of the court was delivered by: Brieant, J.
By motion filed on April 30, 2001 in this federal question railroad tax
discrimination litigation, State Defendants New York State Office of Real
Property Services, Thomas G. Griffen, Ifigenia T. Brown, Frank B.
Cemese, and John Bacheler move for an Order granting judgment on the
pleadings in the first above entitled action pursuant to Rule 12(c) of the
Federal Rules of Civil Procedure on the grounds that the relief sought in
the Complaint is barred by the Eleventh Amendment, and also that the
lawsuit as against the individual Defendants must be dismissed because
jurisdiction under the doctrine of Ex Parte Young is unavailable in this
case. Plaintiff filed Opposition papers on May 11, 2001. State Defendants
filed Reply papers on May 22, 2001. This Court heard oral argument on May
30, 2001. By Stipulation dated June 25, 2001, this motion was extended to
encompass the companion case of Norfolk Southern Railway Company v. New
York State Office of Real Property Services, et. al., 01 Civ. 4752(CLB),
filed on June 1, 2001.
This Court concludes that Congress validly abrogated the States'
sovereign immunity when it passed the Railroad Revitalization and
Regulatory Reform Act, which is also known as the "4-R Act," and which is
codified at Sections 11501 and following of Title 49, United States
Code. Congress did so after compiling a substantial legislative record
evidencing the States' discriminatory taxation of the railroads'
transportation property over many years, which violates the Equal
Protection Clause. The Court also concludes that the doctrine of Ex Parte
Young is available in this litigation to provide a jurisdictional basis
on which to enjoin the individual State Defendants because of their
pivotal connection to fixing and enforcing the allegedly unlawful
assessments at issue in this case.
The claims of Plaintiffs CSX Transportation, Inc. ("CSXT") and Norfolk
Southern Railway Company in this litigation are virtually identical to
those asserted in Consolidated Rail Corporation v. State Board of
Equalization and Assessment of the State of New York, et. al., 93 Civ.
6548(CLB), aff'd sub nom. Consolidated Rail Corporation v. Town of Hyde
Park, et. al., 47 F.3d 473 (2d Cir. 1995) ("the Conrail case"), which was
filed in this Court on September 20, 1993. The New York State Office of
Real Property Services is the successor by statute of The State Board of
Equalization and Assessment of the State of New York, a Defendant in the
1993 litigation and has the same statutory powers. See N.Y. Real Property
Tax Law § 200(McKinney 2000). The railroad properties are also
substantially the same. CSXT is now the operator and responsible for the
taxes on approximately 60% of the former Consolidated Rail Corporation
("Conrail") transportation property in New York State, while Norfolk
Southern Railway Company ("Norfolk Southern") operates the balance.
In the 1993 litigation, Conrail sought to enjoin the Defendants in that
case from imposing allegedly discriminatory taxes on Conrail's rail
transportation real property, now operated by Plaintiffs, for the 1993
tax year, on the ground that to assess those taxes would be in violation
of the 4-R Act, which seeks to eliminate discriminatory taxation by
States with respect to interstate rail transportation property.
Familiarity of the reader with the entirety of that Act is assumed. For
the convenience of the reader, in pertinent part, the Act provides:
"(b) The following acts unreasonably burden and
discriminate against interstate commerce, and a
State, subdivision of a State, or authority acting for
a State or subdivision of a State may not do any of
them: 1) Assess rail transportation property at a
value that has a higher ratio to the true market value
of the rail transportation property than the ratio
that the assessed value of other commercial and
industrial property in the same assessment
jurisdiction has to the true market value of the other
commercial and industrial property. (c) ... Relief may
be granted under this subsection only if the ratio of
assessed value to true market value of rail
transportation property exceeds
by at least 5 percent
the ratio of assessed value to true market value of
other commercial and industrial property in the same
assessment jurisdiction." 49 U.S.C. § 11501.
Conrail filed similar suits complaining of discriminatory taxation for
tax years 1994, 1995 and 1996. In 1997, following extensive settlement
negotiations, the parties compromised Conrail's claims for tax years 1993
through 2000, and a settlement in the case was approved by this Court on
June 17, 1997. The Conrail Settlement has now expired for most tax
jurisdictions, except for the City of Buffalo, which remains subject to
Plaintiffs are now faced with New York State tax assessments or
potential assessments for the year 2001 that it alleges are in violation
of the 4-R Act.
The State Defendants determine and certify railroad taxation ceilings
prior to the annual tax status date for each of more than 400 assessing
authorities in New York State which have such interstate railroad
property. These ceilings set the maximum valuations at which each locality
may assess railroad real property within its boundaries for tax
purposes. As of April 30, 2001, the State Board and the Office of Real
Property services had determined one final and five tentative railroad
ceilings. Finalization of the five tentative railroad ceilings had been
suspended by agreement until June 4, 2001, and this Court preserved the
status quo by issuing on May 30, 2001 a Temporary Restraining Order in
effect until September 6, 2001, on which date the Court will hear
Plaintiff's Order to Show Cause why the issuance of the ceilings should
not be preliminarily enjoined.
In deciding a Rule 12(c) motion for judgment on the pleadings, the
Court accepts Plaintiffs' allegations as true and views the facts in the
light most favorable to Plaintiffs. Rivera v. Heyman, 157 F.3d 101, 103
(2d Cir. 1998). The motion will be granted only if it "appears beyond
doubt that the plaintiff can prove no set of facts in support of [its]
claim which would entitle [it] to relief." Id.
The motion, on its face, would seem barred implicitly by the decision
of our Court of Appeals in the Conrail case. However, the State
Defendants contend that as a result of recent evolution in the doctrine
of Seminole Tribe of Florida v. Florida, 517 U.S. 44 (1996), and
subsequent cases interpreting Seminole Tribe, Congress' limited
abrogation of the States' sovereign immunity as set forth in the 4-R Act
was an invalid act of Congress. The 4-R Act cites the Commerce Clause as
the source of its power, and specifically ...