Transportation – Railroads

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U.S. Supreme Court

Civil

Transportation – Railroads

The Eleventh Circuit erred in refusing to consider whether a state 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.

It does not accord with ordinary English usage to say that a tax discriminates 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. The Court’s negative Commerce Clause cases endorse the proposition that an additional tax on third parties may justify an otherwise discriminatory tax. Gregg Dyeing Co. v. Query, 286 U. S. 472, 479–480. Similarly, an alternative, roughly equivalent tax is one possible justification that renders a tax disparity non-discriminatory. CSX’s counterarguments are rejected. On remand, the Eleventh Circuit is to consider whether Alabama’s fuel-excise tax is the rough equivalent of Alabama’s sales tax as applied to diesel fuel, and therefore justifies the motor carrier sales-tax exemption. Although the State cannot offer a similar defense with respect to its water carrier exemption, the court should also examine whether any of the State’s alternative rationales justify that exemption.

720 F. 3d 863, reversed and remanded.

13-533 Alabama Department of Revenue v. CSX Transportation, Inc.

Scalia, J.; Thomas, J., dissenting.

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