United States Supreme Court

In this case, plaintiff, an interstate rail carrier that operates in Alabama, sought to enjoin state officers from collecting sales tax on its diesel fuel purchases, claiming that the State's asymmetrical tax treatment (in which railroads are taxed on purchase of diesel fuel, but motor carriers and water carriers are not) discriminates against rail carriers in violation of the Railroad Revitalization and Regulation Reform Act, or 49 U.S.C. section 11501(b)(4). The district court rejected plaintiff's claim, but the Eleventh Circuit reversed, holding that plaintiff could establish discrimination by showing that Alabama taxed rail carriers differently than their competitors. The judgment of the Eleventh Circuit is reversed and the case is remanded, where: 1) plaintiff's competitors are an appropriate comparison class for its section 11501(b)(4) claim; 2) the Eleventh Circuit erred in refusing to consider whether Alabama could justify its decision to exempt motor carriers from its sales and use taxes through its decision to subject motor carriers to a fuel-excise tax; 3) a tax does not discriminate against a rail carrier if a rival who is exempt from that tax must pay another comparable tax from which the rail carrier is exempt, since both competitors could then claim to be discriminated against relative to each other; 4) an alternative, roughly equivalent fuel-excise tax is one possible justification that renders the tax disparity non-discriminatory; and 5) on remand the Eleventh Circuit must consider whether the fuel-excise tax is the rough equivalent of the sales tax as applied to diesel fuel.

Appellate Information

• Decided 03/04/2015
• Published 03/04/2015

Judges

• Scalia

Court

• United States Supreme Court

Counsel