author: Justice Stevens Justice Kennedy, Justice Scalia,

text:
    ABF FREIGHT SYSTEM, INC. v. NATIONAL LABOR RELATIONS BOARD
    No. 92-1550.
    Argued December 1, 1993
    Decided January 24, 1994

      Stevens, J., delivered the opinion of the Court, in which Rehnquist, C. J., and Blackmun, Kennedy, Souter, Thomas, and Ginsburg, JJ., joined. Kennedy, J., filed a concurring opinion, post, p. 325. Scalia, J., filed an opinion concurring in the judgment, in which O’Connor, J., joined, post, p. 326.

      John V. Jansonius argued the cause for petitioner. With him on the briefs were Jill J. Weinberg and Alan Wright.

      Deputy Solicitor General Wallace argued the cause for respondent. With him on the brief were Solicitor General Days, Michael R. Dreeben, Jerry M. Hunter, Nicholas E. Karatinos, Norton J. Come, Linda Sher, and John Emad Arbab.

        James D. Holzhauer, Timothy S. Bishop, and Daniel R. Barney filed a brief for the American Trucking Associations as amicus curiae urging reversal.
      Briefs of amici curiae urging affirmance were filed for the American Federation of Labor and Congress of Industrial Organizations by Marsha S. Berzon and Laurence Gold; for the Lawyers’ Committee for Civil Rights Under Law et al. by Herbert M. Wacktell, William H. Brown III, Norman Redlich, Thomas J. Henderson, Richard T. Seymour, Sharon R. Vinick, Mitchell Rogovin, Randal S. Milch, Robert C. Bell, Jr., and Donna R. Lenhoff.

        E. Carl Uehlein, Jr., Joseph E. Santucci, Jr., Stephen A Bokat, Robin S. Conrad, and Mona C. Zeiberg filed a brief for the Chamber of Commerce of the United States et al. as amici curiae.

   Justice Stevens

delivered the opinion of the Court.

Michael Manso gave his employer a false excuse for being late to work and repeated that falsehood while testifying under oath before an Administrative Law Judge (ALJ). Notwithstanding Manso’s dishonesty, the National Labor Relations Board (Board) ordered Manso’s former employer to reinstate him with backpay. Our interest in preserving the integrity of administrative proceedings prompted us to grant certiorari to consider whether Manso’s misconduct should have precluded the Board from granting him that relief.

h — i

Manso worked as a casual dockworker at petitioner ABF Freight System, Inc.’s (ABF’s) trucking terminal in Albuquerque, New Mexico, from the summer of 1987 to August 1989. He was fired three times. The first time, Manso was 1 of 12 employees discharged in June 1988 in a dispute over a contractual provision relating to so-called “preferential casual” dockworkers. The grievance Manso’s union filed eventually secured his reinstatement; Manso also filed an unfair labor practice charge against ABF over the incident.

Manso’s return to work was short lived. Three supervisors warned him of likely retaliation from top management— alerting him, for example, that ABF was “gunning” for him, App. 96, and that “the higher echelon was after [him],” id., at 96-97. See also ABF Freight System, Inc., 304 N. L. R. B. 685, 592, 597 (1991). Within six weeks ABF discharged Manso for a second time on pretextual grounds— ostensibly for failing to respond to a call .to work made under a stringent verification procedure ABF had recently imposed upon preferential casuals. Once again, a grievance panel ordered Manso reinstated.

Manso’s third discharge came less than two months later. On August 11, 1989, Manso arrived four minutes late for the 5 a.m. shift. At the time, ABF had no policy regarding lateness. After Manso was late to work, however, ABF decided to discharge preferential casuals — though not other employees — who were late twice without good cause. Six days later Manso triggered the policy’s first application when he arrived at work nearly an hour late for the same shift. Manso telephoned at 5:25 a.m. to explain that he was having car trouble on the highway, and repeated that excuse when he arrived. ABF conducted a prompt investigation, ascertained that he was lying, and fired him for tardiness under its new policy on lateness.

Manso filed a second unfair labor practice charge. In the hearing before the ALJ, Manso repeated his story about the car trouble that preceded his third discharge. The ALJ credited most of his testimony about events surrounding his dismissals, but expressly concluded that Manso lied when he told ABF that car trouble made him late to work. Id., at 600. Accordingly, although the ALJ decided that ABF had illegally discharged Manso the second time because he was a party to the earlier union grievance, the AU denied Manso relief for the third discharge based on his finding that ABF had dismissed Manso for cause. Ibid.

The Board affirmed the ALJ’s finding that Manso’s second discharge was unlawful, but reversed with respect to the third discharge. Id., at 591. Acknowledging that Manso lied to his employer and that ABF presumably could have discharged him for that dishonesty, id., at 590, n. 13, the Board nevertheless emphasized that ABF did not in fact discharge him for lying and that the ALJ’s conclusion to the contrary was “a plainly erroneous factual statement of [ABFj’s asserted reasons.” Instead, Manso’s lie “established only that he did not have a legitimate excuse for the August 17 lateness.” Id., at 589. The Board focused primarily on ABF’s retroactive application of its lateness policy to include Manso’s first time late to work, holding that ABF had “seized upon” Manso’s tardiness “as a pretext to discharge him again and for the same unlawful reasons it discharged him on June 19.” In addition, though the Board deemed Manso’s discharge unlawful even assuming the validity of ABF’s general disciplinary treatment of preferential casuals, it observed that ABF’s disciplinary approach and lack of uniform rules for all dockworkers “raise[dj more questions than they resolve[dj.” Id., at 590. The Board ordered ABF to reinstate Manso with backpay. Id., at 591.

The Court of Appeals enforced the Board’s, order. Miera v. NLRB, 982 F. 2d 441 (CA10 1992). Its review of the record revealed “abundant evidence of antiunion animus in ABF’s conduct towards Manso,” id., at 446, including “ample evidence” that Manso’s third discharge was not for cause, ibid. The court regarded as important the testimony in the record confirming that Manso would not have been discharged under ABF’s new tardiness policy had he provided a legitimate excuse. Ibid. The court also rejected ABF’s argument that awarding reinstatement and backpay to an employee who lied to his employer and to the ALJ violated public policy. Noting that “Manso’s original misrepresentation was made to his employer in an attempt to avoid being fired under a policy the application of which the Board found to be the result of antiunion animus,” the court reasoned that the Board had wide discretion to ascertain what remedy best furthered the policies of the National Labor Relations Act (Act). Id., at 447.

II

The question we granted certiorari to review is a narrow one. We assume that the Board correctly found that ABF discharged Manso unlawfully in August 1989. We also assume, more importantly, that the Board did not abuse its discretion in ordering reinstatement even though Manso gave ABF a false reason for being late to work. We are concerned only with the ramifications of Manso’s false testimony under oath in a formal proceeding before the AU. We recognize that the Board might have decided that such misconduct disqualified Manso from profiting from the proceeding, or it might even have adopted a flat rule precluding reinstatement when a former employee so testifies. As the case comes to us, however, the issue is not whether the Board might adopt such a rule, but whether it must do so.

False testimony in a formal proceeding is intolerable. We must neither reward nor condone such a “flagrant affront” to the truth-seeking function of adversary proceedings. See United States v. Mandujano, 425 U. S. 564, 576-577 (1976). See also United States v. Knox, 396 U. S. 77 (1969); Bryson v. United States, 396 U. S. 64 (1969); Dennis v. United States, 384 U. S. 855 (1966); Kay v. United States, 303 U. S. 1 (1938); United States v. Kapp, 302 U. S. 214 (1937); Glickstein v. United States, 222 U. S. 139, 141-142 (1911). If knowingly exploited by a criminal prosecutor, such wrongdoing is so “inconsistent with the rudimentary demands of justice” that it can vitiate a judgment even after it has become final. Mooney v. Holohan, 294 U. S. 103, 112 (1935). In any proceeding, whether judicial or administrative, deliberate falsehoods “well may affect the dearest concerns of the parties before a tribunal,” United States v. Norris, 300 U. S. 564, 574 (1937), and may put the factfinder and parties “to the disadvantage, hindrance, and delay of ultimately extracting the truth by cross examination, by extraneous investigation or other collateral means.” Ibid. Perjury should be severely sanctioned in appropriate eases.

ABF submits that the false testimony of a former employee who was the victim of an unfair labor practice should always preclude him from winning reinstatement with back-pay. That contention, though not inconsistent with our appraisal of his misconduct, raises countervailing concerns. Most important is Congress’ decision to delegate to the Board the primary responsibility for making remedial decisions that best effectuate the policies of the Act when it has substantiated an unfair labor practice. The Act expressly authorizes the Board “to take such affirmative action including reinstatement of employees with or without back pay, as will effectuate the policies of [the Act].” 29 U. S. C. § 160(c). Only in cases of discharge for cause does the statute restrict the Board’s authority to order reinstatement. This is not such a case.

When Congress expressly delegates to an administrative agency the authority to make specific policy determinations, courts must give the agency’s decision controlling weight unless it is “arbitrary, capricious, or manifestly contrary to the statute.” Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837, 844 (1984). Because this case involves that kind of express delegation, the Board’s views merit the greatest deference. This has been our consistent appraisal of the Board’s remedial authority throughout its long history of administering the Act. As we explained over a half century ago:

“Because the relation of remedy to policy is peculiarly a matter for administrative competence, courts must not enter the allowable area of the Board’s discretion and must guard against the danger of sliding unconsciously from the narrow confines of law into the more spacious domain of policy.” Phelps Dodge Corp. v. NLRB, 313 U. S. 177, 194 (1941).

Notwithstanding our concern about the seriousness of Manso’s ill-advised decision to repeat under oath his false excuse for tardiness, we cannot say that the Board’s remedial order in this case was an abuse of its broad discretion or that it was obligated to adopt a rigid rule that would foreclose relief in all comparable cases. Nor can we fault the Board’s conclusions that Manso’s reason for being late to work was ultimately irrelevant to whether antiunion animus actually motivated his discharge and that ordering effective relief in a case of this character promotes a vital public interest.

Notably, the ALJ refused to credit the testimony of several ABF witnesses, see, e. g., 304 N. L. R. B., at 598, and the Board affirmed those credibility findings, id., at 585. The unfairness of sanctioning Manso while indirectly rewarding those witnesses’ lack of candor is obvious. Moreover, the rule ABF advocates might force the Board to divert its attention from its primary mission and devote unnecessary time and energy to resolving collateral disputes about credibility. Its decision to rely on “other civil and criminal remedies” for false testimony, cf. St. Mary’s Honor Center v. Hicks, 509 U. S. 502, 521 (1993), rather than a categorical exception to the familiar remedy of reinstatement is well within its broad discretion.

The judgment of the Court of Appeals is affirmed.

It is so ordered.

Justice Kennedy,

concurring.

I join the opinion of the Court and agree as well with the concerns expressed by Justice & alia. Our law must not become so caught up in procedural niceties that it fails to sort out simple instances of right from wrong and give some redress for the latter. At the very least, when we proceed on the assumption that perjury was committed, the Government ought not to suggest, as it seemed to do here, that one who violates his testimonial oath is no worse than the student who claims the dog ate his homework. See Tr. of Oral Arg. 42.

The Board’s opinions show that it can become quite exercised about trial-related misconduct that obstructs its own processes. See Lear-Siegler Management Service Corp., 306 N. L. R. B. 393, 394 (1992) (tolling the backpay award of an employee who threatened a witness, because such manipulation undermined “[t]he integrity of the Board’s judicial process”). The Board seems more blithe, however, about the potential for dishonesty to disrupt the workplace. See Owens Illinois, Inc., 290 N. L. R. B. 1193 (1988) (reinstating and awarding backpay to an employee who lied under oath, because the employer “failed to meet its burden of establishing that [the employee] is unfit for further employment”). True, the gravest consequence of lying under oath is the affront to the law itself. But both employer and employee have reason to insist upon honesty in the resolution of disputes within the workplace itself. And this interest, too, is not beyond the Board’s discretion to take into account in fashioning appropriate relief.

Justice Scalia,

with whom Justice O’Connor joins, concurring in the judgment.

It is ordinarily no proper concern of the judge how the Executive chooses to exercise discretion, so long as it be within the scope of what the law allows. For that reason, judicial dicta criticizing unintelligent (but nonetheless lawful) executive action are almost always inappropriate. The context changes, however, when the exercise of discretion relates to the integrity of the unitary adjudicative process that begins in an administrative hearing before a federal administrative law judge and ends in a judgment of this or some other federal court. Agency action or inaction that undermines and dishonors that process undermines and dishonors the legal system — undermines and dishonors the courts. Judges may properly protest, no matter how lawful (and hence unreversible) the agency action or inaction may be. Such a protest is called for in the present case, in which the Board has displayed — from its initial decision through its defense of that decision in this Court — an unseemly toleration of perjury in the course of adjudicative proceedings.

Michael Manso, the employee to whom the Board awarded backpay and reinstatement, testified in this case before Administrative Law Judge Walter H. Maloney the week of January 8,1990. He was placed under oath — presumably standing up, his right hand raised, to respond to the form of oath set forth in the NLRB Judges’ Manual § 17008 (1984):

“Do you solemnly swear that the testimony which you will give in this proceeding will be the truth, the whole truth, and nothing but the truth, so help you God?”

He then proceeded to lie to the administrative tribunal, as he had earlier lied to his employer, concerning the reason he reported an hour late for work on August 17,1989. He said that his car had broken down; that he called his wife, who came in her pajamas to pick him up; that he drove the rest of the way to work, with his wife, and was stopped for speeding along the way. The employer produced the officer that stopped him, who testified with assurance that Manso was all alone; that Manso mentioned no car trouble as an excuse for his speeding, but simply that he was late for work; and that the officer himself observed no car trouble. Hearsay evidence admitted (without objection) at the hearing showed that an ABF official, after Manso told his breakdown story on August 17, drove out to the portion of the highway where Manso said he had left the disabled vehicle, and found it not to be there. Administrative Law Judge Maloney found that “Manso was lying to the Respondent when he reported that his car had overheated and that he was late for work because of car trouble” — which meant, of course that he was also lying under oath when he repeated that story. ABF Freight System, Inc., 304 N. L. R. B. 585, 600 (1991). The ALJ did not punish the false testimony, but his finding that the dismissal on August 17 was for cause had something of that effect, depriving Manso of reinstatement.

The Board itself accepted the ALJ’s finding that the car-breakdown story was a lie, but since it found that the real reason for the August 17 dismissal was neither Manso’s lateness nor his dishonesty, but rather retaliation for'his filing of an earlier unfair-labor-practice complaint, it ordered Manso’s reinstatement. In stark contrast to today’s opinion for the Court, the Board’s opinion did not carefully weigh the pros and cons of using the Board’s discretion in the conferral of relief to protect the integrity of its proceedings. It weighed those pros and cons not at all. Indeed, it mentioned the apparent perjury not at all, as though that is just part of the accepted background of Board proceedings, in no way worthy of note. That insouciance persisted even through the filing of the Board’s brief in this Court, which makes the astounding statement that, in light of his “history of mistreatment,” Manso’s lying under oath, “though unjustifiable, is understandable.” Brief for Respondent 22, n. 15. (In that context, of course, the plain meaning of “to understand” is “[t]o know and be tolerant or sympathetic toward.” American Heritage Dictionary 1948 (3d ed. 1992).)

Well, I am not understanding of lying under oath, whatever the motivation for it, and I do not believe that any law enforcement agency of the United States ought to be. Title 18 U. S. C. § 1621 provides:

“Whoever—
“... having taken an oath before a competent tribunal, officer, or person, in any case in which a law of the United States authorizes an oath to be administered, that he will testify . . . truly, . . . willfully and contrary to such oath states . . . any material matter which he does not believe to be true ...
“is guilty of perjury and shall... be fined not more than $2,000 or imprisoned not more than five years, or both....”

United States Attorneys doubtless cannot prosecute perjury indictments for all the lies told in the Nation’s federal proceedings — not even, perhaps, for all the lies so cleanly nailed as was the one here. Not only, however, did the Board not refer the matter for prosecution, it did not impose, indeed did not even explicitly consider imposing, another sanction available to it (and not generally available to federal judges): denying discretionary relief because of the intentional subversion of the Board’s processes.

While the Court is correct that we have no power to compel the Board to apply such a sanction, nor even, perhaps, to require that the Board’s opinion explicitly consider it, neither was the Board’s action in this case as eminently reasonable as the Court makes it out to be. Nor does it deserve the characterization of being “well within [the Board’s] broad discretion,” ante, at 325 (emphasis added). In my estimation, it is at the very precipice of the tolerable, particularly as concerns the Board’s failure even to consider and discuss the desirability of limiting its discretionary relief.

Denying reinstatement would not, as the Court contends, involve the “unfairness of sanctioning Manso while indirectly rewarding [ABF] witnesses’ lack of candor.” Ibid. First of all, no “indirect reward” comes to ABF, which receives nothing from the Board. There is a world of difference between the mere inaction of failing to punish ABF for lying (which is the “indirect reward” that the Court fears) and the beneficence of conferring a nonmandated award upon Manso despite his lying (which is the much greater evil that the Court embraces). The principle that a perjurer should not be rewarded with a judgment — even a judgment otherwise deserved — where there is discretion to deny it, has a long and sensible tradition in the common law. The “unclean hands” doctrine “closes the door of a court of equity to one tainted with inequitableness or bad faith relative to the matter in which he seeks relief, however improper may have been the behavior of the defendant.” Precision Instrument Mfg. Co. v. Automotive Maintenance Machinery Co., 324 U. S. 806, 814 (1945) (denying relief because of perjury). See H. McClintock, Principles of Equity § 26, p. 63, and n. 75 (2d ed. 1948). And the Board itself has sometimes applied this sanction in the past. See, e. g., D. V. Copying & Printing, Inc., 240 N. L. R. B. 1276 (1979); O’Donnell’s Sea Grill, 55 N. L. R. B. 828 (1944). In any case, there is no realistic comparison between the ABF managers’ disbelieved testimony concerning motivations for firing and Manso’s crystal-clear lie that he was where he was not. The latter is the stuff of perjury prosecutions; the former is not.

The Court is correct that an absolute rule requiring the denial of discretionary relief for perjury “might force the Board to divert its attention from its primary mission and devote unnecessary time and energy to resolving collateral disputes about credibility.” Ante, at 325. But intelligent and conscientious application of the Board’s supposed rule permitting denial of discretionary relief for perjury would not have that effect — and such application should probably have occurred, and should surely have been considered, in an obvious case such as this. Nor am I as impressed as the Court is by the Board’s assertion that “ordering effective relief in a case of this character promotes a vital public interest.” Ibid. Assuredly it does, but plenty of effective relief was ordered here without adding Manso’s reinstatement, including (1) the entry of a cease-and-desist order subjecting ABF to severe sanctions if it commits similar unfair labor practices in the future, (2) the award of backpay to Manso for the period from his unlawful discharge on June 19, 1989, to the date of his subsequent reinstatement, and (3) the posting of a notice on ABF’s premises, reciting its commitments under the cease-and-desist order, and its commitment to give Manso backpay. All of this would have made it clear enough to ABF and to ABF’s employees that violating the National Labor Relations Act does not pay. Had the posted notice also included, instead of ABF’s commitment to reinstate Manso (which is what the Board ordered), a statement to the effect that Manso’s reinstatement would have been ordered but for his false testimony, then it also would have been made clear to ABF and to ABF’s employees that perjury does not pay.

I would have felt no need to write separately if I thought that, as the Court puts it, the Board has simply decided “to rely on ‘other civil and criminal remedies’ for false testimony.” Ibid. My impression, however, from the Board’s opinion and from its presentation to this Court, is that it is really not very much concerned about false testimony. I concur in the judgment of the Court that the NLRB did nothing against the law, and regret that it missed an opportunity to do something for the law.

       ABF at this time had three dockworker classifications: those on the regular seniority list, nonpreferential casuals, and preferential casuals. ABF Freight System, Inc., 304 N. L. R. B. 585, 589, n. 10 (1991). A supplemental labor agreement ABF negotiated with the union in April 1988 created the preferential casual dockworker classification with certain seniority rights. Id., at 585-586.

       The policy required preferential casuals — though not other dockworkers — to be available by phone prior to a shift in case a foreman needed them to work. A worker who did not respond risked disciplinary action for failing to “protect his shift”; two such failures authorized ABF to discharge the worker. Id., at 597. ABF issued a written warning to Manso on May 6,1989, after he failed to respond to such a call. On June 19, a supervisor again asked a regular dockworker to summon Manso to work just prior to 6 a.m. for the 8:30 a.m. shift. When Manso did not answer, the employee who had dialed his number asked to dial it again, fearing he had misdialed. The supervisor denied permission and instead had the employee sign a form verifying that Manso had not responded. Manso was then discharged. The ALJ found that the special call policy discriminated against preferential casual dockworkers as a class, id., at 598, 600; both the AU and the Board concluded that it was discriminatorily applied to Manso, id., at 600, 589, n. 11.

       Manso told ABF management that his car had overheated on the highway, that he had to phone his wife to pick him up and take him to work. Manso also said a deputy sheriff stopped him for speeding in his ensuing rush. A plant manager who looked for Manso’s overheated car on the highway found nothing, however, and the officer who Manso said issued him a warning for speeding told ABF officials — and later the AU — that Manso had been alone in the car.

         Specifically, the ALJ held that the dismissal violated §§ 8(a)(1), (3), and (4) of the National Labor Relations Act, 49 Stat. 452, as amended, 29 U. S. C. §§ 158(a)(1), (3), and (4).

       304 N. L. R. B., at 590. The Board found that the record in this case unequivocally established that ABF did not treat Manso’s dishonesty “in and of itself as an independent basis for discharge or any other disciplinary action.” Ibid.

        Id., at 591. The Board also noted that the supervisors’ threats of retaliation and the earlier unlawful discharge under the verification policy provided “strong evidence” of unlawful motivation regarding Manso’s third discharge. Id., at 590.

       ABF’s public policy argument relies on several decisions refusing to enforce reinstatement orders where the employee had engaged in serious misconduct. See, e. g., Precision Window Mfg. v. NLRB, 963 F. 2d 1105, 1110 (CA8 1992) (employee lied about extent of union activities and threatened to kill supervisor); NLRB v. Magnusen, 523 F. 2d 643, 646 (CA9 1975) (employee padded time card and lied about it under oath); NLRB v. Commonwealth Foods, Inc., 506 F. 2d 1065, 1068 (CA4 1974) (employees engaged in theft from employer); NLRB v. Breitling, 378 F. 2d 663, 664 (CA10 1967) (employee confessed to stealing from employer).

       We limited our grant of certiorari to the third question in the petition: “Does an employee forfeit the remedy of reinstatement with backpay after the Administrative Law Judge finds that he purposefully testified falsely during the administrative hearing?” Pet. for Cert. i.

       “No order of the Board shall require the reinstatement of any individual as an employee who has been suspended or discharged, or the payment to him of any back pay, if such individual was suspended or discharged for cause.” 29 U. S. C. § 160(c).

       See Virginia Elec. & Power Co. v. NLRB, 319 U. S. 533, 539-540 (1943). We stated in Virginia Electric that such administrative determinations should stand “unless it can be shown that the order is a patent attempt to achieve ends other than those which can fairly be said to effectuate the policies of the Act.” Id., at 540.


source: Caselaw Access Project

author: Justice Kennedy Justice Stevens,

license: Public Domain

text:
    DEPARTMENT OF REVENUE OF OREGON v. ACF INDUSTRIES, INC., et al.
    No. 92-74.
    Argued November 8,1993
    Decided January 24, 1994

      Kennedy, J., delivered the opinion of the Court, in which Rehnquist, C. J., and Blackmun, O’Connor, Scalia, Souter, Thomas, and Ginsburg, JJ., joined. Stevens, J., filed a dissenting opinion, post, p. 348.

      Virginia L. Linder, Solicitor General of Oregon, argued the cause for petitioner. With her on the briefs were Theodore R. Kulongoski, Attorney General, Thomas A. Balmer,
      Deputy Attorney General, and Robert M. Atkinson, Assistant Attorney General.

      Kent L. Jones argued the cause for the United States as amicus curiae urging reversal. With him on the brief were Solicitor General Days, Acting Assistant Attorney General Paup, Deputy Solicitor General Wallace, Gary R. Allen, Paul M. Geier, Dale C. Andrews, S. Mark Lindsey, and G. Joseph King.

      Carter G. Phillips argued the cause for respondents. With him on the brief was James W. McBride.

      Briefs of amici curiae urging reversal were filed for the State of Iowa by Bonnie J. Campbell, Attorney General, and C. A Daw; for the State of Washington et al. by Christine O. Gregoire, Attorney General of Washington, and by the Attorneys General for their respective States as follows: Grant Woods of Arizona, Daniel E. Lungren of California, Robert A Butterworth of Florida, Larry EchoHawk of Idaho, Chris Gorman of Kentucky, Hubert H. Humphrey III of Minnesota, Mike Moore of Mississippi, Jeremiah W. (Jay) Nixon of Missouri, Joseph P. Mazurek of Montana, Don Stenberg of Nebraska, Tom Udall of New Mexico, Robert Abrams of New York, Michael F. Easley of North Carolina, Heidi Heitkamp of North Dakota, Lee Fisher of Ohio, Susan B. Loving of Oklahoma, T. Travis Medlock of South Carolina, Charles W Burson of Tennessee, Jan Graham of Utah, Jeffrey L. Amestoy of Vermont, Stephen D. Rosenthal of Virginia, James E. Doyle of Wisconsin, and Joseph B. Meyer of Wyoming; and for the National Conference of State Legislatures et al. by Richard Ruda and Richard G. Taranto.

        Richard A Malm and Thomas W. Andrews filed a brief for the Railway Progress Institute et al. as amici curiae urging affirmance.
      Briefs of amici curiae were filed for the State of California by Daniel E. Lungren, Attorney General, Timothy G. Laddish, Assistant Attorney General, Richard F. Finn, Supervising Deputy Attorney General, and Robert E. Murphy and Marguerite C. Stricklin, Deputy Attorneys General; for the Association of American Railroads by Betty Jo Christian, Timothy M. Walsh, Jerald S. Howe, Jr., Robert W. Blanchette, and Kenneth P. Kolson; and for Interstate Air Carriers by Jay R. Martin, Peter W. Davis, and John E. Carne.

   Justice Kennedy

delivered the opinion of the Court.

The power of state and local governments to impose ad valorem property taxes upon railroads and other interstate carriers has been the source of recurrent litigation under the Commerce Clause and the Due Process Clause. See, e.g., Central R. Co. of Pa. v. Pennsylvania, 370 U. S. 607 (1962); Braniff Airways, Inc. v. Nebraska Bd. of Equalization and Assessment, 347 U. S. 590 (1954); Morgan v. Parham, 16 Wall. 471 (1873). In the case before us, a state property tax is challenged under a federal statute, the Railroad Revitalization and Regulatory Reform Act of 1976 (4-R Act). Pub. L. 94-210, 90 Stat. 31.

The question presented is whether the State of Oregon violated the statute by imposing an ad valorem tax upon railroad property while exempting various other, but not all, classes of commercial and industrial property. We hold that a State may grant exemptions from a generally applicable ad valorem property tax without subjecting the taxation of railroad property to challenge under the relevant provision of the 4-R Act, §306(l)(d), 49 U. S. C. § 11503(b)(4).

I

Oregon imposes an ad valorem tax upon all real and personal property within its jurisdiction, except property granted an express exemption. Ore. Rev. Stat. §307.030 (1991). Various classes of business personal property are exempt, including agricultural machinery and equipment; nonfarm business inventories; livestock; poultry; bees; fur-bearing animals; and agricultural products in the possession of farmers. §§307.325,307.400. Standing timber is also exempt, but is subject to a severance tax when harvested. §321.272. Oregon, like many other States, exempts motor vehicles as well, instead levying upon them a modest annual registration fee. §§ 803.585, 803.420(1).

Respondents, called the “Carlines” in this litigation, are eight companies that lease railroad cars to railroads and shippers. The railroad cars are considered “tangible personal property” under Oregon law, §307.030, and are not exempt from taxation. The Carlines brought suit in United States District Court under §306(l)(d) of the 4-R Act, seeking declaratory and injunctive relief against the assessment, levy, and collection of the State’s property tax upon their railroad cars..

Congress enacted the 4-R Act in part to “restore the financial stability of the railway system of the United States.” § 101(a), 90 Stat. 33. When drafting the legislation, Congress was aware that the railroads “ ‘are easy prey for State and local tax assessors’ in that they are ‘nonvoting, often nonresident, targets for local taxation,’ who cannot easily remove themselves from the locality.” Western Air Lines, Inc. v. Board of Equalization of S. D., 480 U. S. 123, 131 (1987) (quoting S. Rep. No. 91-630, p. 3 (1969)). Section 306 of the 4-R Act, now codified at 49 U. S. C. § 11503, addresses this concern by prohibiting the States (and their subdivisions) from enacting certain taxation schemes that discriminate against railroads. See Burlington Northern R. Co. v. Oklahoma Tax Comm’n, 481 U. S. 454, 457 (1987).

The relevant provisions of § 11503 are contained in subsection (b), which states:

“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.
“(2) levy or collect a tax on an assessment that may not be made under clause (1) of this subsection.
“(3) levy or collect an ad valorem property tax on rail transportation property at a tax rate that exceeds the tax rate applicable to commercial and industrial property in the same assessment jurisdiction.
“(4) impose another tax that discriminates against a rail carrier providing transportation ...

The reach of subsections (b)(l)-(3) is straightforward: These provisions forbid the imposition of higher assessment ratios or tax rates upon rail transportation property than upon “other commercial and industrial property.” The scope of subsection (b)(4), which forbids the imposition of “another tax that discriminates against a rail carrier providing transportation,” is not as clear.

The Carlines do not challenge Oregon’s ad valorem property tax under subsections (b)(l)-(3). We attribute this choice to the fact that the State subjects all nonexempt property “to assessment and taxation in equal and ratable proportion.” Ore. Rev. Stat. §307.030 (1991). Rather, it is the Carlines’ contention that Oregon’s tax should be considered “another tax that discriminates against a rail carrier,” in violation of subsection (b)(4), because it exempts certain classes of commercial and industrial property while taxing railroad cars in full.

The District Court, after reviewing a stipulated record, held that discriminatory property tax exemptions are subject to challenge under subsection (b)(4). On the facts presented, however, the court determined that Oregon’s ad valorem property tax complied with the provision. The court observed that, in other cases, only those state taxes exempting more than 50% of nonrailroad commercial personal property had been found to contravene subsection (b)(4). See Trailer Train Co. v. Leuenberger, 885 F. 2d 415 (CA8 1988), cert. denied, 490 U. S. 1066 (1989); Burlington Northern R. Co. v. Bair, 766 F. 2d 1222 (CA8 1985). Because (according to the court’s calculations) Oregon exempted only 31.4% of nonrailroad commercial personal property from taxation, the court granted judgment to the State.

The Court of Appeals reversed. 961 F. 2d 813 (CA9 1992). In accordance with Circuit precedent, see ACF Industries, Inc. v. Arizona, 714 F. 2d 93, 94 (CA9 1983), the court acknowledged that subsections (b)(1) — (3) do not speak to the question of discriminatory property tax exemptions. Like the District Court, however, the Court of Appeals accepted the Carlines’ contention that property tax exemptions are subject to challenge under subsection (b)(4). The court explained that Congress enacted § 11503 to “ ‘prevent tax discrimination against railroads in any form whatsoever.’” 961 F. 2d, at 820 (emphasis in original) (citing Ogilvie v. State Bd. of Equalization of N. D., 657 F. 2d 204, 210 (CA8), cert. denied, 454 U. S. 1086 (1981)).

Rejecting the District Court’s apparent view that ad valorem tax schemes exempting less than 50% of nonrailroad business property are not proscribed by subsection (b)(4), the Court of Appeals held that the “most natural reading” of the provision dictates that “any exemption given to other taxpayers but not to railroads” is forbidden, with possible room for “a de minimis level of exemption[s].” 961 F. 2d, at 822 (emphasis in original). The court found that Oregon’s property tax, under the calculation most generous to the State, exempted 25% of nonrailroad commercial property, far exceeding any possible de minimis exception. On this ground, the court concluded that the State’s taxation of railroad property violated subsection (b)(4). Id., at 823. Holding that the Carlines “were entitled to the same total exemption preferred property owners enjoyed,” the court enjoined the State from levying any tax upon the Carlines’ railroad property. Ibid.

We granted certiorari, 508 U. S. 905 (1993), and now reverse.

II

Before passing upon the validity of Oregon’s ad valorem property tax under § 11503(b)(4), the Court of Appeals and the District Court addressed a preliminary question: Whether a tax upon railroad property is even subject to challenge under subsection (b)(4) on the ground that certain other classes of commercial and industrial property are exempt. We consider the same question.

Both parties contend that the plain meaning of subsection (b)(4), which prohibits “another tax that discriminates against a rail carrier,” dictates an answer in their favor. In the State’s view, the word “another” means “different from that which precedes it.” Because subsections (b)(1) — (3) address property taxes and only property taxes, it follows that the term “another tax” in subsection (b)(4) must mean “a tax different from a property tax.” The State concludes that subsection (b)(4) does not speak to discriminatory property tax exemptions for the simple reason that the provision does' not speak to property taxes at all.

The Carlines, like the Court of Appeals, take a different view. They understand the phrase “another tax that discriminates against a rail carrier” to be a residual category designed to reach any discriminatory state tax, including discriminatory property taxes, not covered by subsections (b)(1) — (3). It follows that property tax exemptions disfavoring railroad transportation property — exemptions the Car-lines in effect admit fall outside the scope of subsections (b)(1) — (3), see Brief for Respondents 16-17 — are within the ambit of subsection (b)(4). Accord, e. g., Trailer Train Co. v. Leuenberger, 885 F. 2d 415, 417-418 (CA8 1988), cert. denied, 490 U. S. 1066 (1989); Department of Revenue of Fla. v. Trailer Train Co., 830 F. 2d 1567, 1573 (CA11 1987). If Congress had intended to exclude property taxes from the reach of subsection (b)(4), the Carlines contend, it would have drafted the provision to prohibit “any tax other than a property tax,” and not phrased the statute as it did. Brief for Respondents 17.

Both the State’s and the Carlines’ readings are defensible if subsection (b)(4) is read in isolation, cf. Burlington Northern R. Co. v. Oklahoma Tax Comm’n, 481 U. S., at 461 (language of subsection (b)(1) “plainly declares [its] purpose”), and so we must look elsewhere to determine its meaning. The structure of § 11503 as a whole does yield an answer, one adverse to the Carlines’ challenge to Oregon’s property tax. We conclude that a State may grant exemptions from a generally applicable ad valorem property tax without exposing the taxation of railroad property to invalidation under subsection (b)(4).

Subsections (b)(l)-(3) of § 11503, as noted, forbid the imposition of higher property tax rates and assessment ratios upon “rail transportation property” than upon “other commercial and industrial property.” 49 U. S. C. §§ 11503(b)(1)-(3). “Commercial and industrial property,” which serves as the comparison class for measuring unlawful discrimination under those provisions, is defined as “property, other than transportation property and land used primarily for agricultural purposes or timber growing, devoted to a commercial or industrial use and subject to a property tax levy.” § 11503(a)(4).

The interplay between subsections (b)(l)-(3) and the definition of “commercial and industrial property” in subsection (a)(4) is central to the interpretation of subsection (b)(4). For example, the definition of “commercial and industrial property” excludes “land used primarily for agricultural purposes.” The fact that Congress made this particular exclusion demonstrates its intent to permit the States to tax railroad property at a higher rate than agricultural land, notwithstanding subsection (b)(3)’s general prohibition of rate discrimination. One still could maintain, we suppose, that taxing railroad property at a higher rate than agricultural land should be considered “another tax that discriminates against a rail carrier,” and thus forbidden under subsection (b)(4). That interpretation, however, would subvert the statutory plan by reading subsection (b)(4) to prohibit what subsection (b)(3), in conjunction with subsection (a)(4), was designed to allow. The result would contravene the “elementary canon of construction that a statute should be interpreted so as not to render one part inoperative.” Mountain States Telephone & Telegraph Co. v. Pueblo of Santa Ana, 472 U. S. 237, 249 (1985) (internal quotation marks omitted).

Congress qualified the definition of “commercial and industrial property” further, limiting the comparison class to property “subject to a property tax levy.” 49 U. S. C. § 11503(a)(4). The statute does not define this phrase, which on its face could bear one of two interpretations: (1) taxed property; or (2) taxable property, a broader category consisting of the general mass of property within the State’s jurisdiction and power to tax, including property that enjoys a current exemption.

The first interpretation has been the subject of some criticism, see Western Air Lines, Inc. v. Board of Equalization of S. D., 480 U. S., at 135 (White, J., concurring), but we believe it follows from the way Congress used identical language elsewhere in § 11503. Section 11503(c) confers jurisdiction upon United States district courts to enforce the terms of § 11503(b) despite the bar otherwise imposed by the Tax Injunction Act, 28 U. S. C. § 1341. Subsection (c)(1) grants district courts the power (under certain circumstances not pertinent here) to prohibit

“an assessment of the rail transportation property at a value that has a higher ratio to the true market value of the rail transportation property than the assessed value of all other property subject to a property tax levy in the assessment jurisdiction has to the true market value of all other commercial and industrial property.” (Emphasis added.)

In the context of this provision, which concerns the differential assessment of taxed property, the words “property subject to a property tax levy” must mean “taxed property.” Given the “normal rule of statutory construction” that “‘“identical words used in different parts of the same act are intended to have the same meaning,”’” Sorenson v. Secretary of Treasury, 475 U. S. 851, 860 (1986) (quoting Helvering v. Stockholms Enskilda Bank, 293 U. S. 84, 87 (1934) (in turn quoting Atlantic Cleaners & Dyers, Inc. v. United States, 286 U. S. 427, 433 (1932))), that phrase must carry the same meaning in subsection (a)(4), where it qualifies the definition of “commercial and industrial property.”

All this bears on the case before us. Because property “subject to a property tax levy” means property that is taxed, the definition of “commercial and industrial property” excludes property that is exempt. Exempt property, then, is not part of the comparison class against which discrimination is measured under subsections (b)(1) — (3), and it follows that railroads may not challenge property tax exemptions under those provisions..

As was the case with agricultural land, we must pay heed to the fact that Congress placed exempt property beyond the reach of subsections (b)(1) — (3). It would be illogical to conclude that Congress, having allowed the States to grant property tax exemptions in subsections (b)(1) — (3), would turn around and nullify its own choice in subsection (b)(4). So the Carlines’ reading of subsection (b)(4), while plausible when viewed in isolation (see supra, at 339), is untenable in light of §11503 as a whole. See Gade v. National Solid Wastes Management Assn., 505 U. S. 88, 99 (1992); see also United Sav. Assn. of Tex. v. Timbers of Inwood Forest Associates, Ltd., 484 U. S. 365, 371 (1988) (“A provision that may seem ambiguous in isolation is often clarified by the remainder of the statutory scheme ... because only one of the permissible meanings produces a substantive effect that is compatible with the rest of the law”). It is true that tax exemptions, as an abstract matter, could be a variant of tax discrimination. See Davis v. Michigan Dept. of Treasury, 489 U. S. 803 (1989). The structure of § 11503, however, warrants the conclusion that subsection (b)(4) does not limit state discretion to levy a tax upon railroad property while exempting various classes of nonrailroad property.

Other considerations reinforce our construction of the statute. In drafting §11503, Congress prohibited discriminatory tax rates and assessment ratios in no uncertain terms, see 49 U. S. C. §§ 11503(b)(l)-(3), and set forth precise standards for judicial scrutiny of challenged rate and assessment practices, see §§ 11503(c)(1) — (2). By contrast, the statute does not speak with any degree of particularity to the question of tax exemptions. Subsection (b)(4), which prohibits the States from “imposing] another tax that discriminates against a rail carrier,” is, at best, vague on the point. Congress did not state whether exemptions are a form of forbidden discrimination against rail carriers, and further did not provide a standard for courts to distinguish valid from invalid exemption schemes.

Had Congress, as a condition of permitting the taxation of railroad property, intended to restrict state power to exempt nonrailroad property, we are confident that it would have spoken with clarity and precision. Property tax exemptions are an important aspect of state and local tax policy. It was common at the time § 11503 was drafted, as it is now, for States with generally applicable ad valorem property taxes to exempt various classes of commercial property. Before 1960, a number of States granted such exemptions. See, e. g., Mo. Rev. Stat. § 150.040 (1949) (exempting unmanufactured articles consigned for sale and held by commission merchants); N. J. Rev. Stat. §54:4-3.20 (1937) (exempting personal property stored in a public warehouse); Vt. Stat. Ann., Tit. 32, § 3802 (1959) (exempting tools and implements possessed by mechanics and farmers, and highway-building equipment); see also Jacobs, Exemption of Tangible Personalty, in Tax Exemptions 141, 146 (1939) (by 1938, 16 States permitted “temporary exemption of newly located or newly constructed plants, and the machinery and equipment in such plants”). By the 1960’s, about 20 States granted real and personal property tax exemptions to pollution control facilities. See McNulty, State Tax Incentives to Fight Pollution, 56 A. B. A. J. 747, 748, and n. 8 (Aug. 1970). By 1971, still well before enactment of the 4-R Act, a majority of the States exempted one or more classes of business personal property, including business inventories, raw materials used in textile manufacturing, manufacturing machinery and allied equipment, and mechanics tools. See Education Commission of the States, Property Assessment and Exemptions: They Need Reform, Table C-l (Mar. 10, 1973). Given the prevalence of property tax exemptions when Congress enacted the 4-R Act, §11503’s silence on the subject — in light of the explicit prohibition of tax rate and assessment ratio discrimination — reflects a determination to permit the States to leave their exemptions in place.

Principles of federalism support, in fact compel, our view. Subsection (b)(4), like the whole of § 11503, sets limits upon the taxation authority of state government, an authority we have recognized as central to state sovereignty. See, e. g., Tully v. Griffin, Inc., 429 U. S. 68, 73 (1976); Railroad Co. v. Peniston, 18 Wall. 5, 29 (1873). When determining the breadth of a federal statute that impinges upon or pre-empts the States’ traditional powers, we are hesitant to extend the statute beyond its evident scope. See Cipollone v. Liggett Group, Inc., 505 U. S. 504, 533 (1992) (“We do not, absent unambiguous evidence, infer a scope of pre-emption beyond that which clearly is mandated by Congress’ language”) (Blackmun, J., concurring); id., at 523 (opinion of Stevens, J.); R. J. Reynolds Tobacco Co. v. Durham County, 479 U. S. 130,140 (1986). We will interpret a statute to pre:empt the traditional state powers only if that result is “the clear and manifest purpose of Congress.” Rice v. Santa Fe Elevator Corp., 331 U. S. 218, 230 (1947). As explained above, neither subsection (b)(4) nor the whole of § 11503 meets this standard with regard to the prohibition of property tax exemptions.

The Carlines contend that the legislative history of § 11503 casts doubt upon our interpretation, but the history — to the extent it has any relevance to our inquiry — affords the Car-lines no comfort. The excerpts from the legislative record cited by the Carlines do nothing more than manifest Congress’ general concern with the discriminatory taxation of rail carriers. See, e. g., S. Rep. No. 94-595, p. 166 (1976) (describing the Senate bill, which the Conference adopted, as prohibiting “the imposition of any other tax which results in the discriminatory treatment of any common or contract carrier”). The Carlines do not point to a single instance in the legislative record suggesting that Congress had any particular concern with property tax exemptions, or that Congress intended to prohibit exemptions in subsection (b)(4). In fact, the available evidence suggests the opposite of what the Carlines would have us believe. See 120 Cong. Rec. 38734 (1974) (providing assurances that subsection (b)(4) would not prevent the States from granting tax exemptions to encourage industrial development) (remarks of Reps. Staggers, Adams, and Kuykendall).

Nor do the Carlines draw our attention to a single instance in the 15-year legislative history of the 4-R Act in which representatives of the railroad industry expressed concern about discriminatory property tax exemptions. In fact, when urging the Senate to adopt subsection (b)(4), industry representatives characterized the provision as prohibiting only discriminatory in lieu taxes and gross receipts taxes; property tax exemptions, in contrast, were not mentioned. See Hearings before the Subcommittee on Surface Transportation of the Senate Committee on Commerce on Legislation Relating to Rail Passenger Service, 94th Cong., 1st Sess., pt. 5, pp. 1837, 1883 (1975). In sum, the Carlines’ argument with respect to legislative history is without foundation.

As a final matter, we address the contention that our interpretation of subsection (b)(4) leads to an anomalous result. The Carlines maintain that it would be nonsensical for Congress to prohibit the States from imposing higher tax rates or assessment ratios upon railroad property than upon other taxed property, while at the same time permitting the States to exempt some or all classes of nonrailroad property altogether. That result, it is argued, prohibits discrimination of a mild form, but permits it in the extreme. We think our interpretation is not at all implausible.

To begin with, this is not a case in which the railroads— either alone or as part of some isolated and targeted group— are the only commercial entities subject to an ad valorem property tax. Cf. Burlington Northern R. Co. v. Superior, 932 F. 2d 1185 (CA7 1991) (occupation tax on owners and operators of “iron ore concentrates docks,” in practical effect, applied only to docks owned by one particular rail carrier). If such a case were to arise, it might be incorrect to say that the State “exempted” the nontaxed property. Rather, one could say that the State had singled out railroad property for discriminatory treatment. See J. Hellerstein & W. Hellerstein, State and Local Taxation 973 (5th ed. 1988) (the term “exemption” does not mean every exclusion from the reach of a levy, but rather exclusions of “property, persons, transactions . . . which are logically within the tax base”). On the record before us, Oregon’s ad valorem property tax does not single out railroad property in that manner, and we need not decide whether subsection (b)(4) would prohibit a tax of that nature.

In addition, though some may think it unwise to forbid discrimination in tax rates and assessment ratios while permitting exemptions of certain nonrailroad property, the result is not “so bizarre that Congress ‘could not have intended’ ” it. Demarest v. Manspeaker, 498 U. S. 184, 191 (1991) (citing Griffin v. Oceanic Contractors, Inc., 458 U. S. 564, 575 (1982)). About half of the States grant property tax exemptions to encourage investment in air and water pollution control devices. See 1 CCH State Tax Guide 691-692 (1992). And it is standard practice for States to grant exemptions to commercial entities for other beneficial purposes. See, e.g., La. Const., Art. VII, § 21(F) (10-year exemption for any “new manufacturing establishment or [any] addition to an existing manufacturing establishment”); Ore. Rev. Stat. §285.597 (1991) (exemption for business property in an “enterprise zone”); Va. Code Ann. §58.1-3661 (1991) (permitting any county, city, or town to exempt from its property tax “solar energy equipment, facilities or devices” and “recycling equipment, facilities, or devices”). It is within Congress’ sound discretion to weigh the benefit of preserving those exemptions, on the one hand, against the benefit of protecting rail carriers from every tax scheme that favors some nonrailroad property, on the other.

We conclude that § 11503, which expresses Congress’ resolution of the matter, does not limit the States’ discretion to exempt nonrailroad property, but not railroad property, from ad valorem property taxes of general application. We therefore reverse the judgment of the Court of Appeals and remand the case for proceedings consistent with this opinion.

It is so ordered.

Justice Stevens,

dissenting.

Section 306(l)(d) of the Railroad Revitalization and Regulatory Reform Act of 1976 (4-R Act), 90 Stat. 54, as amended, 49 U. S. C. § 11503(b)(4) (subsection (b)(4)), prohibits States from imposing taxes that discriminate against railroads. In my view, a state tax that fell upon railroad property, but from which comparable nonrailroad property was exempt, would clearly implicate that prohibition. The Court errs in holding that such arrangements are not even subject to challenge under subsection (b)(4).

Because subsection (b)(4) by its terms bars any tax that “discriminates” against rail carriers, it is not surprising that the Courts of Appeals have held that the provision applies to revenue measures that discriminate by imposing taxes on railroad property and exempting similar property owned by others. While those courts (and the District Court and Court of Appeals in this case) have differed on precisely how to decide whether a wholesale exemption unlawfully “discriminates” and thus gives rise to liability, none has taken the position accepted by the Court today that a claim predicated on discriminatory exemptions is not cognizable under subsection (b)(4).

As the Court explains, ante, at 343, subsection (b)(4) does not contain a specific prohibition against imposing on railroads an ad valorem tax from which other property owners are exempt. That omission, of course, does not answer the question before us: whether the tax that Oregon has imposed “discriminates against a rail carrier” within the meaning of subsection (b)(4). A State might discriminate against a disfavored class of taxpayers in a variety of ways. The absence in the 4-R Act of a provision specifically addressing exemptions is no more significant than the absence of a provision addressing deductions, credits, methods of collecting or protesting state taxes, or penalties. Surely a state tax law that allowed a substantial tax deduction for all taxpayers except rail carriers would readily be recognized as discriminatory. That conclusion would not be affected by the fact that the antidiscrimination statute does not speak specifically to deductions. Indeed, the Court suggests that an exemption for all taxpayers except rail carriers would make the tax discriminatory. See ante, at 346.

Rather than addressing every means that might be devised to accord discriminatory tax treatment to rail carriers, Congress specified two familiar methods (differential rates and assessments) and then included a general provision designed to block other routes to the same end. In my opinion, it is anomalous to read § 11503(b) to prohibit even minor deviations in rates or assessments, but then to allow States to put manifestly disproportionate tax burdens on railroads by exempting most comparable property. Both the text of subsection (b)(4) and its evident purposes convince me that Congress intended to bar discrimination by any means, including exemptions.

In Davis v. Michigan Dept. of Treasury, 489 U. S. 803 (1989), this Court held that a State’s exemption of a limited class of residents violated a general statutory prohibition against discriminatory taxation (4 U. S. C. § 111) that made no specific reference to exemptions. While I disagreed with the Court’s conclusion that the limited exemption at issue could fairly be characterized as discrimination against the protected class, Davis surely demonstrates that an exemption, even if not expressly prohibited, may support the conclusion that a tax is discriminatory. Indeed, tax exemptions may make a tax unconstitutionally discriminatory. See, e. g., Bacchus Imports, Ltd. v. Dias, 468 U. S. 263, 273 (1984); Armco Inc. v. Hardesty, 467 U. S. 638, 642-646 (1984). I see no reason why they should be totally ignored when Congress has expressly prohibited “discrimination” against a particular kind of interstate enterprise.

The Court puts great stock in the difference between the specific and strict bar against discriminatory tax rates and assessments in subsections (b)(l)-(3) and the open-ended language of subsection (b)(4), which speaks only tersely of “discriminat[ion].” As the Court explains, the definition of “commercial and industrial property” that is applicable to subsections (b)(l)-(3) is best read to embrace only property that is taxed, rather than exempted. If we were to accept the Carlines’ position, the Court reasons, subsection (b)(4) would render the earlier provisions redundant and would “nullify” the limitations Congress placed on the rate and assessment provisions. Ante, at 343. I disagree.

The ban on discriminatory rates and assessments targets two patent and historically common forms of discrimination. In order to find discrimination in rates or assessment ratios, a court need only compare the rates and assessments applicable to railroads to the rates and assessments of other owners of comparable property. That inquiry would be complicated indeed if the courts were required to divine the “rates” and “assessments” governing property that is exempt from tax. It is not surprising, then, that the strict bars against disparate rates and assessments exclude from the comparison class property that is not taxed at all.

Congress’ exclusion of exempted property from the comparison class for purposes of subsections (b)(1) — (3) does not determine the scope of subsection (b)(4), for that provision does not depend on the limited definition of “commercial and industrial property” that governs its neighbors. Reading subsection (b)(4) to require judicial scrutiny of state exemption schemes creates no disharmony with subsections (b)(1) — (3) unless one assumes that the test of “discrimination” under subsection (b)(4), like the per se rules against differential rates and assessments, prohibits all but the most minor differentials in tax treatment between railroad property and owners of similar property. That assumption is unwarranted.

The statute before the Court today (like the statute it construed in Davis) does not contain a definition of the term “discrimination,” but that familiar concept and the policies of the 4-R Act provide guidance. Like the statute at issue in Davis, the 4-R Act protects taxpayers who often have little voice in the policy decisions of the taxing State, and whose situation makes them likely targets for unfavorable treatment. The prohibition of discrimination should be read to give effect to those concerns, but it need not be read more broadly. A sensible test for prohibited discrimination — focusing on whether the protected class is being treated substantially less favorably than most similarly situated persons — would leave the States room to employ exemptions without falling afoul of subsection (b)(4).

As amicus the Solicitor General suggests, a discrimination standard allows the States to impose disparate tax burdens when the disparity is supported by some legitimate difference between the exempted nonrailroad property and the taxed railroad property. In my view, an exemption for a small minority of the resident taxpayers would not warrant a conclusion that prohibited “discrimination” has occurred. See Davis, 489 U. S., at 819-823 (Stevens, J., dissenting). Because subsection (b)(4) merely protects railroads from discrimination, rather than conferring on them a right to be treated like the most favorably treated taxpayer, a violation would not be established when the tax paid on railroad property is not materially greater than the tax imposed on most comparable property. But surely a tax imposed on rail carriers is not saved from discrimination merely because some other kind of enterprise (e. g., motor carriers) is also subject to taxation.

The evident purpose of this part of the 4-R Act, as the Court recognizes, is to protect a class of interstate enterprises that has traditionally been subject to disproportionately heavy state and local tax burdens. This is an area in which state authority has always been circumscribed, most prominently by the Commerce Clause itself. Subsection (b)(4) plainly requires States to readjust their tax arrangements to the extent those arrangements “discriminate].” I cannot agree that federalism “compels” us to read subsection (b)(4) as inapplicable to exemption arrangements. See ante, at 345.

Federalism concerns would weigh more heavily in favor of Oregon’s position if, as the Court suggests, ante, at 344-345, reading subsection (b)(4) to apply to exemption schemes would require States to choose between exempting railroads or eliminating tax exemptions across the board. But as I have explained, such a reading is by no means required. Because the statutory term “discrimination” permits the States greater flexibility to employ exemptions than do the bans on disparate rates and assessments, the Court’s concerns about imposing onerous choices on States are overstated. Moreover, an exemption that is meaningfully available to railroads — as in the Court’s example of an exemption for funds spent on environmental cleanup — would not make a tax “discriminatory” merely because the exemption may be more useful for some other businesses than it is for railroads. Cf. Burlington Northern R. Co. v. Superior, 932 F. 2d 1185, 1187 (CA7 1991) (invalidating tax “imposed on an activity in which only a railroad or railroads engage”).

The Court appears to hedge against its position that subsection (b)(4) flatly does not apply to taxes and exemption schemes that operate to burden railroads disproportionately. Thus, the Court intimates that the state ad valorem tax must, in order to escape scrutiny under subsection (b)(4), be “generally applicable,” ante, at 335, 340, and that a scheme that taxed railroad property but exempted all nonrailroad property might be unlawful because it would not be a bona fide “exemption.” See ante, at 346-347. If I were convinced that Oregon’s ad valorem property taxes were generally applicable, I would agree with the Court’s disposition of this case. The narrowness or breadth of the exemptions, and correspondingly the evenhanded or discriminatory nature of the tax on railroads, goes to whether a subsection (b)(4) claim has merit, not to whether it is cognizable. The statute provides no basis for prohibiting the exemption of 100 percent of nonrailroad property but allowing the exemption of, for example, 90 percent.

I recognize that application of the statutory “discrimination” standard will sometimes involve problems of line drawing, and that discriminatory exemptions raise special difficulties. But, in my view, the statute requires courts to grapple with those difficulties. I would remand the case to the Court of Appeals to give it an opportunity to resolve the parties’ disputes about the extent of any disparate burdens imposed on rail carriers by Oregon’s ad valorem tax and to review the discrimination issue in accordance with the considerations set forth in this opinion.

Accordingly, I respectfully dissent.

        Western Air Lines, Inc. v. Board of Equalization of S. D. raised the question whether certain property tax exemptions were prohibited under the antidiscrimination provisions of the Airport and Airway Improvement Act of 1982 (AAIA), 49 U. S. C. App. §§ 1513(d)(l)(A)-(C), which are identical for all relevant purposes to analogous provisions under the 4-R Act, 49 U. S. C. §§ 11603(b)(l)-(3). The case was on appeal from the Supreme Court of South Dakota, which had held that such exemptions were not subject to challenge under the AAIA. Western Air Lines, Inc. v. Hughes County, 372 N. W. 2d 106 (1985). The court rested this ruling upon its conclusion that the definition of “commercial and industrial property” in the AAIA, 49 U. S. C. App. § 1513(d)(2)(D) — which, like the parallel definition in 49 U. S. C. § 11503(a)(4), is limited to property “subject to a property tax levy” — included taxed property but not exempt property, 372 N. W. 2d, at 110. Because the comparison class against which tax discrimination was measured under §§ 1513(d)(l)(A)-(C) did not include exempt property, the court reasoned that the AAIA did not prohibit property tax exemptions. We affirmed, but on grounds unrelated to the court’s construction of the terms “commercial and industrial property” and “subject to a property tax levy.” Western Air Lines, Inc. v. Board of Equalization of S. D., 480 U. S., at 129-134. Justice White concurred, but expressed his view that the “ground on which the South Dakota Supreme Court sustained the tax” was “plainly improvident.” Id., at 135; see also Northwest Airlines, Inc. v. North Dakota, 358 N. W. 2d 515, 517 (N. D. 1984).

       As originally enacted, subsection (b)(4) prohibited the States from imposing “any other tax which results in discriminatory treatment of a common carrier by railroad____” 4-R Act, §306(l)(d), 90 Stat. 54. Pursuant to a recodification in 1978, the current version of subsection (b)(4) speaks of “another tax that discriminates against” a rail carrier. Congress specifically provided that the 1978 recodification “may not be construed as making a substantive change in the laws replaced.” 92 Stat. 1466.

       In addition to the Ninth Circuit’s decision in this case, 961 F. 2d 813, 818-820 (1992), see Department of Revenue of Fla. v. Trailer Train Co., 830 F. 2d 1567, 1573 (CA11 1987) (provision targets “discrimination in all its guises” and “requires consideration of tax exemptions in determining whether there has been discriminatory treatment”) (citation and internal quotation marks omitted); Oglivie v. State Bd. of Equalization of N. D, 657 F. 2d 204, 209-210 (CA8) (history of provision demonstrates that “its purpose was to prevent tax discrimination against railroads in any form whatsoever,” including exemption of nonrailroad property), cert. denied, 454 U. S. 1086 (1981). Only the Virginia Supreme Court has reached the contrary conclusion, see Richmond, F. & R R. Co. v. State Corporation Comm’n, 230 Va. 260, 262, 336 S. E. 2d 896, 897 (1985), and it did so on a basis that I do not understand the Court to accept today — that because ad valorem property taxes are treated in the first three subsections, an ad valorem property tax may never be attacked as discriminatory under subsection (b)(4).

       Railroads’ high rates of fixed investment and their immobile assets leave them less able than other interstate enterprises to restrain state taxation by threatening to pull up their stakes and leave. See Burlington Northern R. Co. v. Superior, 932 F. 2d 1185, 1186 (CA7 1991).

       A State might, for example, be able to defend an exemption by showing that the exempted class was subject to an equivalent tax to which railroads were not.

       For similar reasons, the Court of Appeals erred when it held that the remedy for a discriminatory exemption scheme is a refund of the entire tax paid by the railroad. See 961 F. 2d, at 823. To remedy unlawful discrimination under subsection (b)(4), a State need refund only the difference between the tax collected from the railroad and the average tax imposed on owners of comparable property.

       The cases in which exemption schemes have been found unlawful under subsection (b)(4) certainly do not suggest any undue incursions into state fiscal policy. See, e. g., Trailer Train Co. v. Leuenberger, 885 F. 2d 415, 416 (CA8 1988) (violation found because State imposed ad valorem tax on railroad personal property but exempted over 75 percent of comparable property), cert. denied, 490 U. S. 1066 (1989); Burlington Northern R. Co. v. Bair, 766 F. 2d 1222, 1223-1224 (CA8 1985) (tax on railroad personal property coupled with exemption for 95 percent of other personal property violated statute).