Term: 2014
Docket: 13-553
Ala. Dep't Of Revenue v. Csx Transp., Inc.
- Pro
13-553 AL DEPT. OF REVENUE V. CSX TRANSPORTATION, INC. DECISION BELOW: 720 F.3d 863 IN ADDITION TO THE QUESTION PRESENTED BY THE PETITION, THE PARTIES ARE DIRECTED TO BRIEF AND ARGUE THE FOLLOWING QUESTION: “ Whether , in resolving a claim of unlawful tax discrimination under 49 U.S.C. §11501(b)(4), a court should consider other aspects of the State’s tax scheme rather than focusing solely on the challenged tax provision.” CERT. GRANTED 7/1/2014 QUESTION PRESENTED: Three years ago, this Court granted certiorari in this case and held that a railroad could challenge certain state tax exemptions under the Railroad Revitalization and Regulatory Reform Act of 1976, 49 U.S.C. §11501(b)(4). This petition presents a question the Court expressly left open for the courts' consideration on remand. The Eleventh Circuit resolved it in a way that is contrary to the rule Justices Thomas and Ginsburg proposed in their separate opinion, and the circuits are now split 3-2 on this question. The question is as follows: Whether a State "discriminates against a rail carrier" in violation of 49 U.S.C. §11501(b) (4) when the State generally requires commercial and industrial businesses, including rail carriers, to pay a sales-and-use tax but grants exemptions from the tax to the railroads' competitors. LOWER COURT CASE NUMBER: 12-14611
The U.S. Supreme Court case Alabama Department of Revenue v. CSX Transportation, Inc., 2014 revolved around the issue of discriminatory taxation under the Railroad Revitalization and Regulatory Reform Act (the "4-R Act"). The plaintiff, CSX Transportation, a railroad company, argued that it was being unfairly taxed by Alabama in comparison to its competitors who were not rail carriers but used other modes of transport such as trucks or barges for freight transportation. The state imposed sales and use tax on diesel fuel purchased by rail carriers like CSX but exempted trucking companies from this tax. In an earlier ruling in 2011 ("CSX I"), the court had held that differential taxation could be considered discriminatory under certain circumstances; however, it did not provide clear guidelines on how to determine discrimination. In this case ("CSX II"), after several rounds at lower courts where different standards were applied to assess discrimination leading to conflicting outcomes, the matter reached back at Supreme Court which ruled in favor of CSX stating that Alabama's taxing scheme is indeed discriminatory against railroads within meaning of 4-R Act because no justification was provided for why similar entities are treated differently.
In the dissenting opinion for the case between Alabama Department of Revenue and CSX Transportation, Inc., Justice Scalia argued that a tax exemption does not necessarily constitute discrimination. He disagreed with the majority's interpretation of 4-R Act’s prohibition on discriminatory taxation, stating it was incorrect to view exemptions as inherently discriminatory. According to him, if an exemption is available to some entities but not others due to differences in their circumstances or characteristics relevant to the tax policy at hand, then it should not be considered as discrimination. Furthermore, he contended that even if there were instances where railroads were treated less favorably than other commercial and industrial taxpayers overall due to certain exemptions they did not qualify for; this would still fall within acceptable boundaries set by Congress when drafting laws related to railroad taxation.
