Arkansas v. Farm Credit Services of Central Arkansas

The Court decided that Production Credit Associations cannot sue on their own in federal court to stop state taxes. The United States must join the case for the federal-instrumentality exception to apply.

Justice Kennedy wrote the 9–0 opinion, joined by Justices Rehnquist, Stevens, O'Connor, Scalia, Souter, Thomas, Ginsburg, and Breyer.

The Court ruled 9-0, with Justice Kennedy writing the majority opinion. Chief Justice Rehnquist and Justices Stevens, O'Connor, Scalia, Kennedy, Souter, Thomas, Ginsburg, and Breyer joined.

“Production Credit Associations are not included within the judicial exception to the Act by virtue of their status alone.”

Production Credit Associations seeking to challenge a state tax cannot bypass state tax procedures by filing alone in federal court. For example, an association disputing an Arkansas tax would need the United States as a co-plaintiff.

The Court has finished this case. Production Credit Associations challenging state taxes must proceed through the appropriate state process unless the United States joins them in federal court.

The Court ruled that Production Credit Associations cannot sue alone in federal court to block state taxes under the federal-instrumentality exception.

Production Credit Associations are affected when they challenge state taxes. They need the United States as a co-plaintiff to use this federal-court exception.

The case is finished. Future tax challenges by these associations must use state procedures unless the United States joins a federal lawsuit.