July 31, 2020

BNSF Railway Co. Victorious in Tax Litigation Against Oregon Department of Revenue

BNSF Railway Co. was victorious in its case against the State of Oregon regarding the state’s attempt to significantly increase BNSF Railway’s property tax burden, by arguing that Berkshire Hathaway’s accounting treatment of its acquisition of BNSF added some $14 billion to BNSF’s value.

In 2017, on behalf of BNSF, Munger, Tolles &  Olson challenged this action as forbidden by a federal law prohibiting discriminatory taxation of railroads, on the ground that almost no other taxpayer in Oregon could be subject to similar treatment under Oregon law.

The District Court granted summary judgment in BNSF’s favor, and in July 2020, the Ninth Circuit affirmed in all respects. As a result, BNSF has established an important rule limiting its tax liability in Oregon, and the other six states in the Ninth Circuit in which it operates. In the spring of 2020, the argument before the Ninth Circuit was one of the first virtual appellate arguments for Munger Tolles.

The Munger Tolles team who handled this case was led by Ben Horwich who argued the case three times – before the magistrate judge, the district judge and the Ninth Circuit. Jessica Reich Baril led the complaint and early motion papers. Teresa Reed Dippo led the briefing before the magistrate judge, district judge, and Ninth Circuit.