CSX Transportation, Inc. v. Alabama Department of Revenue
131 S. Ct. 1101
| SCOTUS | 2011Background
- Railroad Revitalization and Regulatory Reform Act of 1976 (4-R Act) §11501(b)(4) prohibits any “other tax” that discriminates against a rail carrier.
- CSX Transportation challenged Alabama sales and use taxes on diesel fuel that railroads pay but which its interstate competitors generally exempt from.
- CSX filed suit in federal court alleging discrimination under §11501(b)(4); district court dismissed, Eleventh Circuit affirmed.
- Supreme Court granted certiorari to reverse the Eleventh Circuit’s ruling and address the scope of §11501(b)(4).
- Court held that “another tax” includes non-property taxes like sales/use taxes and that discriminatory exemptions can render such taxes unlawful under §11501(b)(4).
- Decision is limited to whether CSX may challenge Alabama’s taxes as discriminatory; remand for factual discrimination merits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does §11501(b)(4) cover non-property taxes like sales/use taxes? | CSX asserts non-property taxes fall within (b)(4) as “another tax.” | Alabama contends (b)(4) does not reach non-property taxes; relies on property-tax structure. | Yes, it covers non-property taxes. |
| Can a tax be discriminatory under (b)(4) by exempting competitors from the tax? | Exemptions for competitors show discrimination against railroads. | Exemptions do not necessarily render a generally applicable tax discriminatory. | Yes, exemptions can render a tax discriminatory under (b)(4). |
| Does ACF Industries control CSX’s ability to challenge exemptions under (b)(4)? | ACF Industries barred challenges to non-property exemptions under (b)(4). | ACF Industries applies to property taxes and should govern here. | No, (b)(4) covers non-property exemptions; CSX may proceed on remand. |
| Should the scope of (b)(4) mirror (b)(1)-(3) or be read broadly as a catch-all? | Treat (b)(4) as a broad catch-all aligned with (b)(1)-(3). | Maintain a structural, limited reading consistent with property-tax framework. | Court reads (b)(4) broadly as a catch-all beyond (b)(1)-(3). |
| Will CSX’s ultimate success depend on proving discrimination given exemptions? | If discrimination proven, relief follows. | Discrimination proof requires justification by the State; may be complex. | Remanded for factual discoνεry on discrimination merits. |
Key Cases Cited
- Burlington Northern R. Co. v. Oklahoma Tax Comm’n, 481 U.S. 454 (1987) (upholds that rail taxes must be non-discriminatory)
- ACF Industries, Inc. v. Department of Revenue of Ore., 510 U.S. 332 (1994) (structural analysis of §11501(b) (property taxes) limiting (b)(4) scope)
- Davis v. Michigan Dept. of Treasury, 489 U.S. 803 (1989) (exempts state retirement benefits; discrimination against out-of-state or non-home entities)
- West Lynn Creamery, Inc. v. Healy, 512 U.S. 186 (1994) (exemption-based discrimination discussed in tax context)
- Norfolk Southern R. Co. v. Alabama Dept. of Revenue, 550 F.3d 1306 (11th Cir. 2008) ( Eleventh Circuit prior decision on (b)(4) scope)
- Kansas City Southern R. Co. v. McNamara, 817 F.2d 368 (5th Cir. 1987) (structural rationale for §11501(b) overview)
- Atchison, Topeka & Santa Fe Ry. Co. v. Arizona, 78 F.3d 438 (9th Cir. 1996) (non-property tax challenge context under rail taxation statute)
- Burlington Northern R. Co. v. Superior, 932 F.2d 1185 (CA7 1991) (interpretation of (b)(4) as to preventing tax discrimination)