BNSF Railway Company v. Alameda County

1 MARGARET R. PRINZING, State Bar No. 209482 BENJAMIN J. HORWICH, State Bar No. 249090 ROBIN B. JOHANSEN, State Bar No. 79084 GABRIEL M. BRONSHTEYN, State Bar No. 338011 2 OLSON REMCHO, LLP MUNGER, TOLLES & OLSON LLP 1901 Harrison Street, Suite 1550 560 Mission Street, Twenty-Seventh Floor 3 Oakland, CA 94612 San Francisco, California 94105 Telephone: (510) 346-6200 Telephone: (415) 512-4000 4 Facsimile: (510) 574-7061 Facsimile: (415) 512-4077 Email: mprinzing@olsonremcho.com Email: ben.horwich@mto.com 5 Email: rjohansen@olsonremcho.com Attorneys for Plaintiff BNSF Railway Company 6 Attorneys for Defendants County of Alameda, County of Contra Costa, County of Fresno, LAURA E. BLOME, State Bar No. 302859 7 County of Kern, County of Madera, County of Senior Deputy County Counsel Merced, County of Orange, County of Plumas, Office of County Counsel, San Diego County 8 County of Riverside, County of San Bernardino, 1600 Pacific Highway, Room 355 County of San Joaquin, County of Stanislaus, San Diego, CA 92101 9 and County of Tulare Telephone: (619) 531-5801 Email: laura.blome@sdcounty.ca.gov — 10 — Attorneys for Defendant County of San Diego — 11 — UNITED STATES DISTRICT COURT — 12 — NORTHERN DISTRICT OF CALIFORNIA — 13 — (OAKLAND DIVISION) — 14 — BNSF RAILWAY COMPANY, No.: Case No. 4:19-cv-07230-HSG — 15 — Plaintiff, STIPULATION FOR ENTRY OF — 16 — JUDGMENT AND FINAL JUDGMENT AS vs. TO ALAMEDA, CONTRA COSTA, — 17 — FRESNO, KERN, MADERA, MERCED, ALAMEDA COUNTY, CALIFORNIA, et al., ORANGE, PLUMAS, RIVERSIDE, SAN — 18 — BERNARDINO, Defendants. SAN DIEGO, SAN JOAQUIN, — 19 — STANISLAUS, AND TULARE COUNTIES — 20 — Judge: Hon. Haywood S. Gilliam, Jr. — 21 — — 22 — — 23 — — 24 — — 25 — — 26 — — 27 — 1 STIPULATION FOR ENTRY OF JUDGMENT 2 WHEREAS, on November 1, 2019, the BNSF Railway Company (“BNSF”) filed this 3 action against the Defendants Alameda, Contra Costa, Fresno, Kern, Kings, Madera, Merced, Orange, 4 Plumas, Riverside, San Bernardino, San Diego, San Joaquin, Stanislaus, and Tulare Counties asserting 5 a violation of Section 306 of the federal Railroad Revitalization and Regulatory Reform Act of 1976 6 ( 49 U.S.C. § 11501 ) (“section 11501”) in connection with the rate of ad valorem property taxation 7 levied on BNSF’s unitary property by the Defendant Counties in their respective jurisdictions; and 8 WHEREAS, on April 8, 2020, after finding reasonable cause to believe that a violation 9 of section 11501(b)(3) had been, or was about to be, committed, this Court granted BNSF’s Motion 10 for a Preliminary Injunction to enjoin the Defendant Counties “through the pendency of this litigation 11 until entry of a final judgment from levying or collecting ad valorem property taxes from Plaintiff on 12 its unitary property based on a tax rate higher than the annual average tax rate of general property 13 taxation calculated and reported for each county by the California State Board of Equalization under — 14 — Cal. Rev. & Tax Code § 11403 .” (BNSF Railway Co. v. Alameda County, 445 F. Supp. 3d 201 , 211-12 15 (N.D. Cal. 2020)); and 16 WHEREAS, on September 29, 2020, the Court entered a Final Judgment with respect to 17 Kings County pursuant to a Stipulation for Entry of Judgment between BNSF and Kings County; and 18 WHEREAS, on August 5, 2021, the United States Court of Appeals for the Ninth 19 Circuit issued an opinion affirming this Court’s Order granting BNSF’s Motion for a Preliminary 20 Injunction (BNSF Railway Co. v. County of Alameda, et al., 7 F.4th 874 (9th Cir. 2021)); and 21 WHEREAS, in its decision, the Ninth Circuit acknowledged that section 11501(b)(3), 22 which prohibits a county from levying or collecting “an ad valorem property tax on rail transportation 23 property at a tax rate that exceeds the tax rate applicable to commercial and industrial property in the 24 same assessment jurisdiction,” is difficult to apply in California because the State does not have a 25 specific tax rate for commercial and industrial property against which to compare the rate applied to 26 railroad property (BNSF Railway Co., 7 F.4th at 885); and — 27 — STIP. FOR ENTRY OF JUDG. & FINAL 1 1 WHEREAS, the Ninth Circuit had previously ruled in another case presenting a 2 challenge under section 11501(b)(3) that, because a specific rate generally applicable to commercial 3 and industrial property in California is not readily apparent, the court in that case should use either the 4 tax rate applicable to the tax roll that contains the majority of commercial and industrial property (i.e., 5 either the secured or unsecured roll), or “the average tax rate for all property.” Trailer Train Co. v. 6 State Board of Equalization, 697 F.2d 860, 867 (9th Cir. 1983); and 7 WHEREAS, the Ninth Circuit affirmed this Court’s decision to analyze BNSF’s tax rate 8 under the Trailer Train framework, pursuant to which this Court determined that as an alternative to 9 the tax rate for commercial and industrial property, it is appropriate to use as the basis for comparison 10 the average tax rate for property in each County because there is no single identifiable tax rate 11 applicable to the secured or unsecured rolls (BNSF Railway Co., 7 F.4th at 886, 888; BNSF Railway 12 Co., 445 F. Supp. 3d at 208, 212); and 13 WHEREAS, the Ninth Circuit stated, as had this Court, that the average tax rate for all 14 property in each County is calculated each year by the State Board of Equalization pursuant to 15 California Revenue and Taxation Code section 11403 (BNSF Railway Co., 7 F.4th at 883); and 16 WHEREAS, pursuant to these rulings, the Counties have been preliminarily enjoined 17 from levying or collecting an ad valorem property tax on BNSF’s unitary property at the rate otherwise 18 required for state-assessed property under California Revenue and Taxation Code section 100(b) if that 19 tax rate exceeds the annual average tax rate imposed on all property in each County as calculated and 20 reported by the State Board of Equalization pursuant to California Revenue and Taxation Code 21 section 11403 (BNSF Railway Co., 7 F.4th at 882-83); and 22 WHEREAS, in order to meet the requirements of federal law but avoid the associated 23 costs and other burdens of further litigation in this matter, BNSF and the remaining Defendants 24 Alameda, Contra Costa, Fresno, Kern, Madera, Merced, Orange, Plumas, Riverside, San Bernardino, 25 San Diego, San Joaquin, Stanislaus, and Tulare Counties have agreed to enter into a Stipulation for 26 Entry of Judgment under the terms set forth in the attached [Proposed] Judgment; and — 27 — STIP. FOR ENTRY OF JUDG. & FINAL 2 1 WHEREAS, the Counties have faced certain administrative challenges in implementing 2 the Preliminary Injunction that they have worked cooperatively with BNSF to address, and which the 3 Counties expect to continue to face in implementing the [Proposed] Judgment; 4 NOW THEREFORE, BNSF and Defendants Alameda, Contra Costa, Fresno, Kern, 5 Madera, Merced, Orange, Plumas, Riverside, San Bernardino, San Diego, San Joaquin, Stanislaus, and 6 Tulare Counties (collectively, “the Parties”) stipulate as follows: 7 1. The Court has jurisdiction to enter judgment in this action. 8 2. The Parties consent to the Court having continuing jurisdiction for purposes of 9 enforcing the Judgment, and the Parties irrevocably and fully waive and relinquish any argument that 10 venue or jurisdiction by this Court is improper or inconvenient. 11 3. In making this stipulation, no Party admits to any conclusions of law or 12 concedes any arguments or defenses, except as expressly stated herein. 13 4. The Parties request that the Court enter the [Proposed] Judgment attached 14 hereto. 15 5. The Parties waive notice of entry of the Judgment and notice and service of the 16 entered Judgment. 17 6. The Parties waive their right to appeal the Judgment. 18 7. The Parties acknowledge and agree that changes in facts or law could render 19 obsolete in whole or in part the basis for the [Proposed] Judgment, and that such changes could justify 20 vacating or modifying the [Proposed] Judgment pursuant to Rule 60(b) of the Federal Rules of Civil 21 Procedure. Such a change could include, but is not limited to, the State of California enacting into law 22 a material change to section 100(b) of the California Revenue and Taxation Code; a material change to 23 the requirement that railroad property be assigned to a county-wide tax rate area; or a material change 24 to the requirements for calculating and/or levying the ad valorem property tax rate on locally assessed 25 property. 26 8. The parties agree that, except as necessary to implement the [Proposed] 27 Judgment, the [Proposed] Judgment does not affect the application of the procedures of California law STIP. FOR ENTRY OF JUDG. & FINAL 3 1 regarding the ad valorem property taxation of BNSF’s unitary property, including but not limited to 2 Part 9 (commencing with Section 4801) of Division 1 of the California Revenue and Taxation Code, 3 relating to corrections, cancellations, and refunds of property taxes. 4 9. BNSF has separately entered into a Memorandum of Understanding with some 5 of the Counties to address the administrative challenges the Counties expect to face in implementing 6 the [Proposed] Judgment. 7 IT IS SO STIPULATED. 8 Respectfully submitted, 9 Dated: April 19, 2022 APPROVED AS TO FORM: 10 OLSON REMCHO, LLP — 11 — By: /S/ Margaret R. Prinzing 12 MARGARET R. PRINZING (State Bar No. 209482) 13 1901 Harrison Street, Suite 1550 Oakland, CA 94612 14 Telephone: (510) 346-6200 Email: mprinzing@olsonremcho.com — 15 — Attorneys for Defendants County of Alameda, 16 County of Contra Costa, County of Fresno, County of Kern, County of Madera, County of Merced, 17 County of Orange, County of Plumas, County of Riverside, County of San Bernardino, County of 18 San Joaquin, County of Stanislaus, and County of Tulare — 19 — — 20 — — 21 — — 22 — — 23 — — 24 — — 25 — — 26 — — 27 — STIP. FOR ENTRY OF JUDG. & FINAL 4 1 Dated: April 19, 2022 APPROVED AS TO FORM: 2 OFFICE OF THE COUNTY COUNSEL — 3 — By: /S/ Laure E. Blome 4 LAURA E. BLOME, Senior Deputy County Counsel 5 (State Bar No. 302859) 1600 Pacific Highway, Suite 355 6 San Diego, CA 92101 Telephone: (619) 531-5801 7 Email: laura.blome@sdcounty.ca.gov 8 Attorney for Defendant County of San Diego — 9 — 10 Dated: April 19, 2022 APPROVED AS TO FORM: 11 MUNGER, TOLLES & OLSON LLP — 12 — By: /S/ Benjamin J. Horwich 13 BENJAMIN J. HORWICH (State Bar No. 249090) 14 560 Mission Street, Twenty-Seventh Floor San Francisco, CA 94105 15 Telephone: (415) 512-4000 Email: ben.horwich@mto.com — 16 — Attorneys for Plaintiff BNSF Railway Company — 17 — — 18 — Dated: April 19, 2022 FOR THE COUNTY OF ALAMEDA: — 19 — 20 By: /S/ Farand C. Kan DONNA ZIEGLER, County Counsel 21 FARAND C. KAN, Deputy County Counsel (State Bar No. 203980) 22 1221 Oak Street, Suite 450 Oakland, CA 94612 23 Telephone: (510) 272-6700 Email: farand.kan@acgov.org — 24 — — 25 — — 26 — — 27 — STIP. FOR ENTRY OF JUDG. & FINAL 5 1 Dated: April 19, 2022 FOR THE COUNTY OF CONTRA COSTA: — 2 — By: /S/ Rebecca Hooley 3 MARY ANN MCNETT, County Counsel REBECCA HOOLEY, Assistant County Counsel 4 (State Bar No. 212881) 1025 Escobar Street, Third Floor 5 Martinez, CA 94553 Telephone: (925) 655-2254 6 Email: rebecca.hooley@cc.cccounty.us — 7 — 8 Dated: April 19, 2022 FOR THE COUNTY OF FRESNO: — 9 — By: /S/ Daniel C. Cederborg 10 DANIEL C. CEDERBORG, County Counsel (State Bar No. 124260) 11 2220 Tulare Street, Suite 500 Fresno, CA 93721 12 Telephone: (559) 600-3479 Email: dcederborg@fresnocountyca.gov — 13 — — 14 — Dated: April 19, 2022 FOR THE COUNTY OF KERN: — 15 — 16 By: /S/ Jeremy S. McNutt MARGO A. RAISON, County Counsel 17 JEREMY S. MCNUTT, Deputy County Counsel (State Bar No. 320723) 18 1115 Truxtun Avenue, 4th Floor Bakersfield, CA 93301 19 Telephone: (661) 868-3879 Email: jsmcnutt@kerncounty.com — 20 — — 21 — Dated: April 19, 2022 FOR THE COUNTY OF MADERA: — 22 — 23 By: /S/ Tom Wheeler TOM WHEELER, Chairman of the Board 24 200 West 4th Street Madera, CA 93637 25 Phone: (559) 662-6050 Email: tom.wheeler@maderacounty.com — 26 — — 27 — STIP. FOR ENTRY OF JUDG. & FINAL 6 1 Dated: April 19, 2022 FOR THE COUNTY OF MERCED: — 2 — By: /S/ Jared Christensen 3 FORREST W. HANSEN, County Counsel JARED CHRISTENSEN, Deputy County Counsel 4 (State Bar No. 300603) 2222 M Street, Room 309 5 Merced, CA 95340 Telephone: (209) 385-7564 6 Email: jared.christensen@countyofmerced.com — 7 — 8 Dated: April 19, 2022 FOR THE COUNTY OF ORANGE: — 9 — By: /S/ Leon Page 10 LEON PAGE, County Counsel (State Bar No. 208587) 11 P.O. Box 1379 Santa Ana, CA 92702 12 Telephone: (714) 834-3303 Email: leon.page@coco.ocgov.com — 13 — — 14 — Dated: April 19, 2022 FOR THE COUNTY OF PLUMAS: — 15 — 16 By: /S/ Kevin Goss KEVIN GOSS, Chairman of the Board 17 520 Main Street, Room 309 Quincy, CA 95971 18 Telephone: (530) 283-6170 Email: kevingoss@countyofplumas.com — 19 — — 20 — Dated: April 19, 2022 FOR THE COUNTY OF RIVERSIDE: — 21 — 22 By: /S/ Ronak N. Patel RONAK N. PATEL, Acting County Counsel 23 (State Bar No. 249982) 3960 Orange Street, Suite 500 24 Riverside, CA 92501 Telephone: (951) 955-3600 25 Email: rpatel@rivco.org — 26 — — 27 — STIP. FOR ENTRY OF JUDG. & FINAL 7 1 Dated: April 19, 2022 FOR THE COUNTY OF SAN BERNARDINO: — 2 — By: /S/ Thomas D. Bunton 3 THOMAS D. BUNTON, County Counsel (State Bar No. 193560) 4 385 North Arrowhead Avenue, Floor 4 San Bernardino, CA 92415 5 Telephone: (909) 387-5455 Email: tom.bunton@cc.sbcounty.gov — 6 — — 7 — Dated: April 19, 2022 FOR THE COUNTY OF SAN DIEGO: — 8 — 9 By: /S/ Laura E. Blome LAURA E. BLOME, Senior Deputy 10 County Counsel (State Bar No. 302859) 11 1600 Pacific Highway, Suite 355 San Diego, CA 92101 12 Telephone: (619) 531-5801 Email: laura.blome@sdcounty.ca.gov — 13 — — 14 — Dated: April 19, 2022 FOR THE COUNTY OF SAN JOAQUIN: — 15 — 16 By: /S/ Kristen M. Hegge J.MARK MYLES, County Counsel 17 KRISTEN M. HEGGE, Chief Deputy County Counsel 18 (State Bar No. 125210) 44 North San Joaquin Street, Suite 679 19 Stockton, CA 95202 Telephone: (209) 468-2980 20 Email: khegge@sjgov.org — 21 — — 22 — — 23 — — 24 — — 25 — — 26 — — 27 — STIP. FOR ENTRY OF JUDG. & FINAL 8 1 Dated: April 19, 2022 FOR THE COUNTY OF STANISLAUS: — 2 — By: /S/ Todd E. James 3 THOMAS BOZE, County Counsel TODD E. JAMES, Deputy County Counsel 4 (State Bar No. 279339) 1010 10th Street, Suite 6400 5 Modesto, CA 95354 Telephone: (209) 525-6376 6 Email: jamest@stancounty.com — 7 — 8 Dated: April 19, 2022 FOR THE COUNTY OF TULARE: — 9 — By: /S/ Eddie Valero 10 EDDIE VALERO, Chairman of the Board 2800 West Burrel Avenue 11 Visalia, CA 93291 Telephone: (559) 636-5000 12 Email: evalero@tularecounty.ca.gov — 13 — 14 Dated: April 19, 2022 FOR BNSF RAILWAY COMPANY: — 15 — By: /S/ Mark Liniado 16 MARK LINIADO Vice President of Taxes and General Tax Counsel 17 2301 Lou Menk Drive, GOB 3W Fort Worth, TX 76131 18 Telephone: (817) 352-3400 Email: mark.liniado@bnsf.com — 19 — — 20 — — 21 — 22 FILER’S ATTESTATION 23 Pursuant to Local Rule 5-1(i), the filer attests that concurrence in the filing of this 24 document has been obtained from each of the above signatories. 25 Dated: April 19, 2022 By: /S/ Margaret R. Prinzing — 26 — — 27 — STIP. FOR ENTRY OF JUDG. & FINAL 9 1 FINAL JUDGMENT AS TO DEFENDANTS ALAMEDA, CONTRA COSTA, FRESNO, KERN, MADERA, MERCED, ORANGE, PLUMAS, RIVERSIDE, — 2 — SAN BERNARDINO, SAN DIEGO, SAN JOAQUIN, STANISLAUS, 3 AND TULARE COUNTIES Pursuant to the Stipulation for Entry of Judgment filed concurrently herewith, and for — 4 — good cause shown, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED as follows: — 5 — Definitions — 6 — For purposes of this Judgment, the following definitions apply: — 7 — (a) “BNSF” means the Plaintiff, BNSF Railway Company. — 8 — (b) “Benchmark Rate” means, with respect to a county and a tax year, the average — 9 — tax rate of general property taxation calculated and reported for the county for the preceding tax year — 10 — by the State Board of Equalization pursuant to California Revenue and Taxation Code section 11403. — 11 — (c) “County” or “Counties” means any or all of the Defendant Counties of — 12 — Alameda, Contra Costa, Fresno, Kern, Madera, Merced, Orange, Plumas, Riverside, San Bernardino, — 13 — San Diego, San Joaquin, Stanislaus, and Tulare. — 14 — (d) “Preliminary Injunction Order” means this Court’s Order Granting Plaintiff’s — 15 — Motion for Preliminary Injunction, issued on April 8, 2020, amended on April 22, 2020, pursuant to a — 16 — stipulated request of the parties, and as affirmed by the decision of the United States Court of Appeals — 17 — for the Ninth Circuit on August 5, 2021. — 18 — (e) “Unitary property” means the property of a railway company that is valued for — 19 — purposes of property tax assessment using the unit valuation method, within the meaning of California — 20 — Revenue and Taxation Code sections 723 and 723.1. — 21 — Maximum Property Tax Rate — 22 — 1. It is the final judgment of the Court that, for the reasons set forth in the — 23 — Preliminary Injunction Order, the Counties’ levy or collection of ad valorem property taxes on BNSF’s — 24 — unitary property in a tax year at the rate specified in California Revenue and Taxation Code — 25 — section 100(b) is unlawful under 49 U.S.C. section 11501 (b)(3), if and to the extent that tax rate is — 26 — higher than the Benchmark Rate for that tax year. — 27 — STIP. FOR ENTRY OF JUDG. & FINAL 10 1 2. The Counties, their boards of supervisors, county auditors, tax collectors, agents, 2 employees, and all those acting in concert or participating with them, are hereby enjoined from levying 3 or collecting ad valorem property taxes on BNSF’s unitary property in a tax year at a rate higher than 4 the Benchmark Rate for that tax year. In any year in which the tax rate specified in state law is higher 5 than the Benchmark Rate for that tax year, a County may take steps that are necessary and appropriate 6 to comply with state law to the extent such steps are not inconsistent with section 11501(b)(3), 7 provided that the County accepts in satisfaction of BNSF’s unitary property tax obligations under state 8 law an amount no greater than the amount computed under the Benchmark Rate applicable to that 9 County. 10 3. Nothing in this [Proposed] Judgment shall be construed to prohibit a County 11 from levying or collecting an ad valorem property tax on BNSF’s unitary property in a tax year at the 12 rate specified in state law if and to the extent that such tax rate is lower than the Benchmark Rate for 13 that tax year. 14 4. The Counties’ obligations under this Judgment shall become effective on the 15 date of entry of this Judgment. 16 Release from Escrow Obligations 5. Upon Entry of Judgment, the full balance of the escrow account established by — 17 — this Court’s April 10, 2020, Order Establishing Escrow Account as Security For Preliminary — 18 — Injunction, including any interest that has accrued thereon, shall be released from escrow to BNSF. — 19 — 6. BNSF is released from any continuing obligation to deposit escrow amounts — 20 — attributable to unitary property taxes levied by the Counties. — 21 — 7. Other than the release of funds from the escrow account, the Counties have no — 22 — further liability, for refunds or otherwise, for the 2019-2020 tax year, the 2020-2021 tax year, and the — 23 — 2021-2022 tax year. — 24 — Additional Terms — 25 — 8. The Parties shall bear their own costs and attorney’s fees. — 26 — — 27 — STIP. FOR ENTRY OF JUDG. & FINAL 11 1 9. The Court shall retain continuing jurisdiction over the Parties in this matter for purposes of construing, modifying, and enforcing this Judgment and issuing any other judgment or 3|| order with respect to any other relief requested by the Parties. This Court’s jurisdiction shall include 4|| the power to vacate or modify this Judgment pursuant to Rule 60(b) of the Federal Rules of Civil 5|| Procedure based on any material change in facts or law justifying relief from this Judgment, including 6|| a material change to section 11501(b)(3) or the requirements of California law for calculating and/or 7\| levying the ad valorem property tax rate on railroad property which meets the requirements for levying and collecting ad valorem property taxes on BNSF’s unitary property under section 11501(b)(3). Such a material change in California law could include, but is not limited to, the State of California enacting 10|| into law a material change to section 100(b) of the California Revenue and Taxation Code; a material change to the requirement that railroad property be assigned to a county-wide tax rate area; or a material change to the requirements for calculating and/or levying the ad valorem property tax rate on 13 || locally-assessed property. Such a material change could result in a court-ordered modification to this 14|| Judgment requiring a comparison rate other than the Benchmark Rate. 15 10. This document constitutes a judgment for purposes of Federal Rule of Civil 16|| Procedure 58. 17 11. This Judgment is a full and final resolution of all claims alleged in the 18 || Complaint. 19 IT IS SO ORDERED AND ADJUDGED. — 20 — — 21 — DATED: 4/21/2022 Aberryeedl 3 bl). ONSHAY WOOD S. GILLIAM, J®. 3 UNITED STATES DISTRICT JUDGE 74 |] (00456688-10) — 25 — — 26 — — 27 — 28 || STIP. FOR ENTRY OF JUDG. & FINAL 12 JUDGMENT -— 4:19-cv-07230-HSG