Alabama Dept. of Revenue v. CSX Transp., Inc.

(Slip Opinion) OCTOBER TERM, 2014 1
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
ALABAMA DEPARTMENT OF REVENUE ET AL. v. CSX
TRANSPORTATION, INC.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE ELEVENTH CIRCUIT
No. 13–553. Argued December 9, 2014—Decided March 4, 2015
Alabama imposes sales and use taxes on railroads when they purchase
or consume diesel fuel, but exempts from those taxes trucking
transport companies (motor carriers) and companies that transport
goods interstate through navigable waters (water carriers), both rail-
road competitors. Motor carriers pay an alternative fuel-excise tax
on diesel, but water carriers pay neither the sales tax nor the excise
tax. Respondent (CSX), an interstate rail carrier that operates in Al-
abama, sought to enjoin state officers from collecting sales tax on its
diesel fuel purchases, claiming that the State’s asymmetrical tax
treatment “discriminates against a rail carrier” in violation of the
Railroad Revitalization and Regulation Reform Act of 1976, or 4–R
Act, 49 U. S. C. §11501(b)(4). This Court held that a tax “discrimi-
nates” under subsection (b)(4) when it treats “groups [that] are simi-
larly situated” differently without sufficient “justification for the dif-
ference in treatment,” CSX Transp. v. Ala. Dept. of Revenue, 562
U. S. 277, 287 (CSX I). On remand, the District Court rejected CSX’s
claim. Reversing, the Eleventh Circuit held that CSX could establish
discrimination by showing that Alabama taxed rail carriers different-
ly than their competitors, but rejected Alabama’s argument that im-
posing a fuel-excise tax on motor carriers, but not rail carriers, justi-
fied imposing the sales tax on rail carriers, but not motor carriers.
Held:
1. The Eleventh Circuit properly concluded that CSX’s competitors
are an appropriate comparison class for its subsection (b)(4) claim.
All general and commercial taxpayers may be an appropriate com-
parison class for a subsection (b)(4) claim, but it is not the only one.
Nothing in the ordinary meaning of the word “discrimination” sug-
2 ALABAMA DEPT. OF REVENUE v. CSX TRANSP., INC.
Syllabus
gests that it occurs only when the victim is singled out relative to the
population at large. Context confirms this reading. The 4–R Act is
an “asymmetrical statute.” CSX I, supra, at 296. In subsections
(b)(1) to (b)(3)—which specify prohibitions directed toward property
taxes—the comparison class is limited to commercial and industrial
property in the same assessment jurisdiction. But subsection (b)(4)
contains no such limitation, so the comparison class is to be deter-
mined based on the theory of discrimination alleged in the claim.
Thus, when a railroad alleges that a tax disadvantages it compared
to its transportation industry competitors, its competitors in that ju-
risdiction are the comparison class. Because subsection (b)(4) re-
quires a showing of discrimination, however, the comparison class
must consist of individuals similarly situated to the claimant.
Subsection (b)(4) would be deprived of all real-world effect if “simi-
larly situated” were given the same narrow construction the concept
has in the Equal Protection Clause context, where it would be per-
missible for a State to tax a rail carrier more than a motor carrier,
despite their seemingly similar lines of business. The category of
“similarly situated” (b)(4) comparison classes must at least include
the commercial and industrial taxpayers specified in the other sub-
sections. But it also can include a railroad’s competitors. Discrimi-
nation in favor of that class both falls within the ordinary meaning of
“discrimination” and frustrates the 4–R Act’s purpose of “restor[ing]
the financial stability of the [Nation’s] railway system” while “fos-
ter[ing] competition among all carriers by railroad and other modes
of transportation,” 90 Stat. 33. Contrary to Alabama’s argument,
normal rules of interpretation would say that the explicit limitation
to “commercial and industrial” in the first three provisions, and its
absence in the fourth, suggests that no such limitation applies to the
fourth. Alabama’s additional arguments are also unavailing. Pp. 4–
8.
2. The Eleventh Circuit erred in refusing to consider whether Ala-
bama 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 dis-
criminated 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 al-
ternative, roughly equivalent tax is one possible justification that
renders a tax disparity non-discriminatory. CSX’s counterarguments
Cite as: 575 U. S. ____ (2015) 3
Syllabus
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 de-
fense with respect to its water carrier exemption, the court should al-
so examine whether any of the State’s alternative rationales justify
that exemption. Pp. 8–10.
720 F. 3d 863, reversed and remanded.
SCALIA, J., delivered the opinion of the Court, in which ROBERTS,
C. J., and KENNEDY, BREYER, ALITO, SOTOMAYOR, and KAGAN, JJ.,
joined. THOMAS, J., filed a dissenting opinion, in which GINSBURG, J.,
joined.
Cite as: 575 U. S. ____ (2015) 1
Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
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that corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
_________________
No. 13–553
_________________
ALABAMA DEPARTMENT OF REVENUE, ET AL.,
PETITIONERS v. CSX TRANSPORTATION, INC.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE ELEVENTH CIRCUIT
[March 4, 2015]
JUSTICE SCALIA delivered the opinion of the Court.
Federal law prohibits States from imposing taxes that
“discriminat[e] against a rail carrier.” 49 U. S. C.
§11501(b)(4). We are asked to decide whether a State
violates this prohibition by taxing diesel fuel purchases
made by a rail carrier while exempting similar purchases
made by its competitors; and if so, whether the violation is
eliminated when other tax provisions offset the challenged
treatment of railroads.
I
Alabama taxes businesses and individuals for the pur­
chase or use of personal property. Ala. Code §§40–23–2(1),
40–23–61(a) (2011). Alabama law sets the general tax
rate at 4% of the value of the property purchased or used.
Ibid.The State applies the tax, at the usual 4% rate, to rail­
roads’ purchase or use of diesel fuel for their rail opera­
tions. But it exempts from the tax purchases and uses of
diesel fuel made by trucking transport companies (whom
we will call motor carriers) and companies that transport
goods interstate through navigable waters (water carri­
2 ALABAMA DEPT. OF REVENUE v. CSX TRANSP., INC.
Opinion of the Court
ers). Motor carriers instead pay a 19-cent-per-gallon fuel-
excise tax on diesel; water carriers pay neither the sales
nor fuel-excise tax on their diesel. §40–17–325(a)(2), and
(b); §40–23–4(a)(10) (2014 Cum. Supp.). The parties stipu­
late that rail carriers, motor carriers, and water carriers
compete.
Respondent CSX Transportation, a rail carrier operating
in Alabama and other States, believes this asymmetrical
tax treatment “discriminates against a rail carrier” in
violation of the alliterative Railroad Revitalization and
Regulation Reform Act of 1976, or 4–R Act. 49 U. S. C.
§11501(b)(4). It sought to enjoin petitioners, the Alabama
Department of Revenue and its Commissioner (Alabama
or State), from collecting sales tax on its diesel fuel
purchases.
At first, the District Court and Eleventh Circuit both
rejected CSX’s complaint. CSX Transp., Inc. v. Alabama
Dept. of Revenue, 350 Fed. Appx. 318 (2009). On this
lawsuit’s first trip here, we reversed. We rejected the
State’s argument that sales-and-use tax exemptions can­
not “discriminate” within the meaning of subsection (b)(4),
and remanded the case for further proceedings. CSX
Transp., Inc. v. Alabama Dept. of Revenue, 562 U. S. 277,
296–297 (2011) (CSX I).
On remand, the District Court rejected CSX’s claim
after a trial. 892 F. Supp. 2d 1300 (ND Ala. 2012). The
Eleventh Circuit reversed. 720 F. 3d 863 (2013). It held
that, on CSX’s challenge, CSX could establish discrimina­
tion by showing the State taxed rail carriers differently
than their competitors—which, by stipulation, included
motor carriers and water carriers. But it rejected Ala­
bama’s argument that the fuel-excise taxes offset the sales
taxes—in other words, that because it imposed its fuel-
excise tax on motor carriers, but not rail carriers, it was
justified in imposing the sales tax on rail carriers, but not
motor carriers. Ibid.Cite as: 575 U. S. ____ (2015) 3
Opinion of the Court
We granted certiorari to resolve whether the Eleventh
Circuit properly regarded CSX’s competitors as an appro­
priate comparison class for its subsection (b)(4) claim. 573
U. S. ___ (2014). We also directed the parties to address
whether, when resolving a claim of unlawful tax discrimi­
nation, a court should consider aspects of a State’s tax
scheme apart from the challenged provision. Ibid.II
The 4–R Act provides:
“(b) The following acts unreasonably burden and
discriminate against interstate commerce, and a
State, subdivision of a State, or authority acting for a
State or subdivision of a State may not do any of
them:
“(1) Assess rail transportation property at a value
that has a higher ratio to the true market value of the
rail transportation property than the ratio that the
assessed value of other commercial and industrial
property in the same assessment jurisdiction has to
the true market value of the other commercial and in­
dustrial property.
“(2) Levy or collect a tax that may not be made un­
der paragraph (1) of this subsection.
“(3) Levy or collect an ad valorem property tax at a
tax rate that exceeds the tax rate applicable to com­
mercial and industrial property in the same assess­
ment jurisdiction.
“(4) Impose another tax that discriminates against a
rail carrier providing transportation subject to the
jurisdiction of the Board under this part.” §11501(b)
(1)–(4).
In our last opinion in this case, we held that “discrimi­
nates” in subsection (b)(4) carries its ordinary meaning,
and that a tax discriminates under subsection (b)(4) when
4 ALABAMA DEPT. OF REVENUE v. CSX TRANSP., INC.
Opinion of the Court
it treats “groups [that] are similarly situated” differently
without sufficient “justification for the difference in treat­
ment.” CSX I, supra, at 287. Here, we address the mean­
ing of these two quoted phrases.
A
The first question in this case is who is the “comparison
class” for purposes of a subsection (b)(4) claim. Alabama
argues that the only appropriate comparison class for a
subsection (b)(4) claim is all general commercial and
industrial taxpayers. We disagree. While all general and
commercial taxpayers is an appropriate comparison class,
it is not the only one.
Nothing in the ordinary meaning of the word “discrimi­
nation” suggests that it occurs only when the victim is
singled out relative to the population at large. If, for
example, a State offers free college education to all return­
ing combat veterans, but arbitrarily excepts those who
served in the Marines, we would say that Marines have
experienced discrimination. That would remain the case
even though the Marines are treated the same way as
members of the general public, who have to pay for their
education.
Context confirms that the comparison class for subsec­
tion (b)(4) is not limited as Alabama suggests. The 4–R
Act is an “asymmetrical statute.” Id., at 296. Subsections
(b)(1) to (b)(3) contain three specific prohibitions directed
towards property taxes. Each requires comparison of
railroad property to commercial and industrial property in
the same assessment jurisdiction. The Act therefore limits
the comparison class for challenges under those provi­
sions. Even if the jurisdiction treats railroads less favor-
ably than residential property, no violation of these subsec­
tions has occurred. Subsection (b)(4) contains no such
limitation, leaving the comparison class to be determined
as it is normally determined with respect to discrimination
Cite as: 575 U. S. ____ (2015) 5
Opinion of the Court
claims. And we think that depends on the theory of dis­
crimination alleged in the claim. When a railroad alleges
that a tax targets it for worse treatment than local busi­
nesses, all other commercial and industrial taxpayers are
the comparison class. When a railroad alleges that a tax
disadvantages it compared to its competitors in the trans­
portation industry, the railroad’s competitors in that
jurisdiction are the comparison class.
So, picking a comparison class is extraordinarily easy.
Unlike under subsections (b)(1)–(3), the railroad is not
limited to all commercial and industrial taxpayers; all the
world, or at least all the world within the taxing jurisdic­
tion, is its comparison-class oyster. But that is not as
generous a concession as might seem. What subsection
(b)(4) requires, and subsections (b)(1)–(3) do not, is a
showing of discrimination—of a failure to treat similarly
situated persons alike. A comparison class will thus sup­
port a discrimination claim only if it consists of individuals
similarly situated to the claimant.
That raises the question of when a proposed comparison
class qualifies as similarly situated. In the Equal Protec­
tion Clause context, very few taxpayers are regarded as
similarly situated and thus entitled to equal treatment.
There, a State may tax different lines of businesses differ­
ently with near-impunity, even if they are apparently
similar. We have upheld or approved of distinctions be­
tween utilities—including a railroad—and other corpora­
tions, New York Rapid Transit Corp. v. City of New York,
303 U. S. 573, 579 (1938), between wholesalers and retail­
ers in goods, Caskey Baking Co. v. Virginia, 313 U. S. 117,
120–121 (1941), between chain retail stores and independ­
ent retail stores, State Bd. of Tax Comm’rs of Ind. v. Jack-
son, 283 U. S. 527, 535, 541–542 (1931), between anthra­
cite coal mines and bituminous coal mines, Heisler v.
Thomas Colliery Co., 260 U. S. 245, 254, 257 (1922), and
between sellers of coal oil and sellers of coal, Southwestern
6 ALABAMA DEPT. OF REVENUE v. CSX TRANSP., INC.
Opinion of the Court
Oil Co. v. Texas, 217 U. S. 114, 121 (1910). As one treatise
has observed, we recognize a “wide latitude state legisla­
tures enjoy in drawing tax classifications under the Equal
Protection Clause.” 1 J. Hellerstein & W. Hellerstein,
State Taxation ¶3.03[1], p. 3–5 (3d ed. 2001–2005). This
includes the power to impose “widely different taxes on
various trades or professions.” Id., at 3–5 to 3–6. It would
be permissible—as far as the Equal Protection Clause is
concerned—for a State to tax a rail carrier more than a
motor carrier, despite the seeming similarity in their lines
of business.
The concept of “similarly situated” individuals cannot be
so narrow here. That would deprive subsection (b)(4) of all
real-world effect, providing protection that the Equal
Protection Clause already provides. Moreover, the cate-
gory of “similarly situated” (b)(4) comparison classes must
include commercial and industrial taxpayers. There is no
conceivable reason why the statute would forbid property
taxes higher than what that class enjoys (or suffers), but
permit other taxes that discriminate in favor of that class
vis-à-vis railroads. And we think the competitors of rail­
roads can be another “similarly situated” comparison
class, since discrimination in favor of that class most
obviously frustrates the purpose of the 4–R Act, which was
to “restore the financial stability of the railway system of
the United States,” §101(a), 90 Stat. 33, while “foster[ing]
competition among all carriers by railroad and other
modes of transportation,” §101(b)(2). We need not, and
thus do not, express any opinion on what other comparison
classes may qualify. Sufficient unto the day is the evil
thereof.
Alabama claims that because subsections (b)(1) and
(b)(3) (and (b)(2) through reference to (b)(1)) establish a
comparison class of “commercial and industrial property,”
subsection (b)(4) must establish a comparison class of
“general commercial and industrial taxpayers.” This
Cite as: 575 U. S. ____ (2015) 7
Opinion of the Court
inverts normal rules of interpretation, which would say
that the explicit limitation to “commercial and industrial”
in the first three provisions, and the absence of such a
limitation in the fourth, suggests that no such limitation
applies to the fourth. Moreover, Alabama’s interpretation
would require us to dragoon the modifier “commercial and
industrial”—but not the noun “property”—from the first
three provisions, append “general” in front of it and “tax­
payers” after, both words foreign to the preceding subsec­
tions. We might also have to strip away the restrictions in
the definition of “commercial and industrial property,”
which excludes land primarily used for agricultural pur­
poses and timber growing. 49 U. S. C. §11501(a)(4). This
is not our concept of fidelity to a statute’s text.
Alabama responds that the introductory clause of
§11501(b)—which declares that the “following acts unrea­
sonably burden and discriminate against interstate com-
merce,”—“binds its four subsections together,” Brief for
Petitioners 23 (emphasis deleted), and gives them a com­
mon object and scope. The last time this case appeared
before us, Alabama made a similar argument in support of
the claim that, because subsections (b)(1)–(3) cover only
property taxes, so too does subsection (b)(4). See Brief for
Respondents in CSX Transp., Inc. v. Alabama Dept. of
Revenue, O. T. 2010, No. 09–520, p. 25–26. We rejected
this argument then, and we reject it again now.
Alabama persists that a case-specific inquiry allows a
railroad to “hand-pick [its] comparison class,” Brief for
Petitioners 41, which would be unfair—a “windfall” to
railroads. Ibid. As we have described above, picking a
class is easy, but it is not easy to establish that the selected
class is “similarly situated” for purposes of discrimina­
tion in taxation. The Eleventh Circuit properly concluded
that, in light of CSX Transportation’s complaint and the
parties’ stipulation, a comparison class of competitors
consisting of motor carriers and water carriers was appro­
8 ALABAMA DEPT. OF REVENUE v. CSX TRANSP., INC.
Opinion of the Court
priate, and differential treatment vis-à-vis that class
would constitute discrimination. We therefore turn to
the court’s refusal to consider Alabama’s alternative tax
justifications.
B
A State’s tax discriminates only where the State cannot
sufficiently justify differences in treatment between simi­
larly situated taxpayers. As we have discussed above, a
rail carrier and its competitors can be considered similarly
situated for purposes of this provision. But what about
the claim that those competitors are subject to other taxes
that the railroads avoid? We think Alabama can justify its
decision to exempt motor carriers from its sales and use
tax 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. If that were
true, both competitors could claim to be disfavored—
discriminated against—relative to each other. Our nega­
tive 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 (1932). We think that an alternative, roughly
equivalent tax is one possible justification that renders
a tax disparity nondiscriminatory.
CSX claims that because the statutory prohibition for­
bids “impos[ing] another tax that discriminates against a
rail carrier,” 49 U. S. C. §11501(b)(4)—“tax” in the singu­
lar—the appropriate inquiry is whether the challenged tax
discriminates, not whether the tax code as a whole does so.
It is undoubtedly correct that the “tax” (singular) must
discriminate—but it does not discriminate unless it treats
railroads differently from other similarly situated taxpay­
Cite as: 575 U. S. ____ (2015) 9
Opinion of the Court
ers without sufficient justification. A comparable tax
levied on a competitor may justify not extending that
competitor’s exemption from a general tax to a railroad. It
is easy to display the error of CSX’s single-tax-provision
approach. Under that model, the following tax would
violate the 4–R Act: “(1) All railroads shall pay a 4% sales
tax. (2) All other individuals shall also pay a 4% sales
tax.”
CSX would undoubtedly object that not every case will
be so easy, and that federal courts are ill qualified to
explore the vagaries of state tax law. We are inclined to
agree, but that cannot carry the day. Congress assigned
this task to the courts by drafting an antidiscrimination
command in such sweeping terms. There is simply no
discrimination when there are roughly comparable taxes.
If the task of determining when that is so is “Sisyphean,”
as the Eleventh Circuit called it, 720 F. 3d, at 871, it is a
Sisyphean task that the statute imposes. We therefore
cannot approve of the Eleventh Circuit’s refusal to consider
Alabama’s tax-based justification, and remand for that
court 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.
C
While the State argues that the existence of a fuel-
excise tax justifies its decision to exempt motor carriers
from the sales and use tax, it cannot offer a similar de­
fense with respect to its exemption for water carriers.
Water carriers pay neither tax.
The State, however, offers other justifications for the
water carrier exemption—for example, that such an ex­
emption is compelled by federal law. The Eleventh Circuit
failed to examine these justifications, asserting that the
water carriers were the beneficiaries of a discriminatory
10 ALABAMA DEPT. OF REVENUE v. CSX TRANSP., INC.
Opinion of the Court
tax regime. We do not consider whether Alabama’s alter­
native rationales justify its exemption, but leave that
question for the Eleventh Circuit on remand.
* * *
The judgment of the Eleventh Circuit is reversed, and
the case is remanded for further proceedings consistent
with this opinion.
It is so ordered.
Cite as: 575 U. S. ____ (2015) 1
THOMAS, J., dissenting
SUPREME COURT OF THE UNITED STATES
_________________
No. 13–553
_________________
ALABAMA DEPARTMENT OF REVENUE, ET AL.,
PETITIONERS v. CSX TRANSPORTATION, INC.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE ELEVENTH CIRCUIT
[March 4, 2015]
JUSTICE THOMAS, with whom JUSTICE GINSBURG joins,
dissenting.
In order to violate 49 U. S. C. §11501(b)(4), “a tax ex­
emption scheme must target or single out railroads by
comparison to general commercial and industrial taxpay­
ers.” CSX Transp., Inc. v. Alabama Dept. of Revenue (CSX
I ), 562 U. S. 277, 297–298 (2011) (THOMAS, J., dissenting).
Because CSX cannot prove facts that would satisfy that
standard, I would reverse the judgment below and remand
for the entry of judgment in favor of the Alabama Depart­
ment of Revenue.
I
A
Last time this case was before the Court, I explained in
detail my reasons for interpreting “another tax that dis­
criminates against a rail carrier” in §11501(b)(4) to refer to
a tax “that targets or singles out railroads as compared to
other commercial and industrial taxpayers.” Id., at 298. I
briefly summarize that reasoning here.
Because the meaning of “discriminates” is ambiguous at
first glance, I look to the term’s context to resolve this
uncertainty. Id., at 298–299. Both the structure and
background of the statute indicate that subsection (b)(4)
prohibits only taxes that single out railroads as compared
2 ALABAMA DEPT. OF REVENUE v. CSX TRANSP., INC.
THOMAS, J., dissenting
to other commercial and industrial taxpayers.
Subsection (b)(4) is a residual clause, the meaning of
which is best understood by reference to the provisions
that precede it. Subsection (b) begins by announcing that
“[t]he following acts . . . discriminate against interstate
commerce” and are prohibited. §11501(b). Subsections
(b)(1) through (3) then list three tax-related actions that
single out rail carriers by treating rail property differently
from all other commercial and industrial property.
§§11501(b)(1)–(3); id., at 300. Subsections (b)(1) and (b)(3)
explicitly identify “commercial and industrial property” as
the comparison class, and subsection (b)(2) incorporates
that comparison class by reference. §11501(b); id., at 300.
Subsection (b)(4) refers back to these provisions when it
forbids “[i]mpos[ing] another tax that discriminates
against a rail carrier.” §11501(b)(4) (emphasis added); id.,
at 300). The statutory structure therefore supports the
conclusion that a tax “discriminates against a rail carrier”
within the meaning of subsection (b)(4) if it singles out
railroads for unfavorable treatment as compared to the
general class of commercial and industrial taxpayers. Id.,
at 300–301.
The statutory background supports the same conclusion.
When Congress enacted the 4–R Act, it was apparent that
railroads were “easy prey for State and local tax assessors
in that they are nonvoting, often nonresident, targets for
local taxation, who cannot easily remove themselves from
the locality.” Id., at 301 (internal quotation marks omit­
ted). Subsections (b)(1) through (3) thus “establish a
political check” by preventing States from imposing exces­
sive property taxes on railroads “without imposing the
same taxes more generally on voting, resident local busi­
nesses.” Ibid. Subsection (b)(4) is best understood as
addressing the same problem in the same way. Id., at
301–302.
Cite as: 575 U. S. ____ (2015) 3
THOMAS, J., dissenting
B
Alabama’s tax scheme cannot be said to “discriminat[e]
against a rail carrier.” Id., at 302. To begin, the scheme
does not single out rail carriers. Although one would not
know it from the majority opinion, the tax is not directed
at rail carriers, their property, their activity, or goods
uniquely consumed by them. It is instead a generally
applicable sales tax. It applies (with other exemptions not
at issue here) to all goods purchased, used, or stored in the
State of Alabama. Ala. Code §§40–23–2(1), 40–23–61(a)
(2011). The only relevant good exempted from the tax is
diesel on which the motor fuel tax has been paid, §40–17–
325(b), and no provision of law prevents rail carriers from
buying such diesel. See Brief for Respondent 46, n. 13
(acknowledging that CSX pays the motor fuel tax on the
diesel fuel it uses in trucks and other on-road vehic-
les). Water carriers, it is true, enjoy a special carve-out
from this sales tax, §40–23–4(a)(10) (Cum. Supp. 2014),
but that exemption singles out water carriers, not rail
carriers.
Even if this constellation of exemptions to Alabama’s
sales tax could be said to single out rail carriers from the
general class of their interstate competitors, the tax surely
does not single out rail carriers as compared to commercial
and industrial taxpayers. Those taxpayers are subject to
exactly the same generally applicable sales and use tax
regime as are rail carriers.
II
A
The Court started off on the wrong track in CSX I when
it relied on a generic dictionary definition of “discrimi­
nates” in the face of a statutory context suggesting a more
specific definition. See 562 U. S., at 304. Today’s decision
continues that error.
The Court uncritically accepts the conclusion that the
4 ALABAMA DEPT. OF REVENUE v. CSX TRANSP., INC.
THOMAS, J., dissenting
“discriminat[ion]” addressed by the statute encompasses
any distinction between rail carriers and their comparison
class, ante, at 4, as opposed to mere “singling out” or some­
thing in between, even though the word “discriminates”
is ambiguous in that way. CSX I, supra, at 299. The
Court’s usual practice has not been to treat the meaning
of “discriminates” so casually. See generally Guardians
Assn. v. Civil Serv. Comm’n of New York City, 463 U. S.
582, 590–593 (1983) (opinion of White, J.) (discussing
the Court’s shifting definition of the ambiguous term
“discrimination”).
Today’s decision compounds this error by holding that a
rail carrier may make out a claim of discrimination using
any comparison class so long as that class consists of
“individuals similarly situated to the claimant” rail carrier.
Ante, at 5. The majority purports to derive this limita-
tion from the dictionary, but then finds itself unable to
proceed: After all, Black’s Law Dictionary contains no
entry defining what it means to be “similarly situated” for
the purpose of subsection (b)(4). Forced finally to turn to
the statutory context, the majority rejects the statutorily
defined competitor class of commercial and industrial
taxpayers in favor of a shifting comparison class of its own
creation.
B
The majority disregards the commercial and industrial
property comparison class identified in subsections (b)(1)
through (3) because subsection (b)(4) does not explicitly
include language from those provisions. See ante, at 4–5,
6–7. It asserts that defining the comparison class for the
purpose of subsection (b)(4) by reference to the comparison
class identified in subsections (b)(1) through (b)(3) “would
require us to dragoon the modifier ‘commercial and indus­
trial’—but not the noun ‘property’—from the first three
provisions, append ‘general’ in front of it and ‘taxpayers’
Cite as: 575 U. S. ____ (2015) 5
THOMAS, J., dissenting
after, both words foreign to the preceding subsections.”
Ante, at 7.
The majority’s accusation of grammatical conscription
misses the point. Subsection (b)(4) is a residual clause,
explicitly marked as such by the use of the word “another.”
See Washington State Dept. of Social and Health Servs. v.
Guardianship Estate of Keffeler, 537 U. S. 371, 384 (2003).
Like other residual clauses, it need not use the same
language as the clauses it follows to derive meaning from
those clauses. See, e.g., Sossamon v. Texas, 563 U. S. 277,
___ (2011) (slip op., at 13); James v. United States, 550
U. S. 192, 217–218 (2007) (SCALIA, J., dissenting). Where,
as here, a residual clause includes an ambiguous word like
“discriminates,” we must look to the clauses that precede
it to guide our understanding of its scope.
In some sense, my task in giving meaning to the statu­
tory term “discriminates” is no different from the major­
ity’s: to determine what type of differential treatment the
statute forbids. The first three clauses provide important
clues that the statute forbids singling out rail carriers
from other commercial and industrial taxpayers because
commercial and industrial taxpayers are the ones who pay
taxes on “commercial and industrial property.” The major­
ity pursues the same logical train of thought when it
opines that “the category of ‘similarly situated’ (b)(4)
comparison classes must include commercial and indus-
trial taxpayers” because “[t]here is no conceivable reason
why the statute would forbid property taxes higher than
what that class enjoys (or suffers), but permit other taxes
that discriminate in favor of that class vis-à-vis railroads.”
Ante, at 6. Where we part ways is in the inferences we
draw from the statutory context.
Treating subsection (b)(4) as a residual clause does not
require the grammatical distortions that the majority
alleges. The word “discriminates” in subsection (b)(4) is
not a referential phrase whose antecedent is uncertain. If
6 ALABAMA DEPT. OF REVENUE v. CSX TRANSP., INC.
THOMAS, J., dissenting
it were, then it would be necessary to select an antecedent
that would fit grammatically in place of “discriminates.”
Instead, I look to (b)(1) to (3) merely to clarify an ambigu-
ity in the meaning of “discriminates,” a task that does not
require me to “dragoon” the language of the prior clauses
into subsection (b)(4).
Nor does my approach rely on the first three clauses of
§11501(b) to supply a general limitation on the independ­
ent prohibition that appears in subsection (b)(4). See
United States v. Aguilar, 515 U. S. 593, 615 (1995)
(SCALIA, J., concurring in part and dissenting in part)
(criticizing this type of argument). That is what Alabama
sought to do in CSX I when it argued that subsection (b)(4)
is limited to property taxes (or their equivalent “in lieu”
taxes). Ante, at 7; CSX I, 562 U. S., at 285 (majority opin­
ion). I joined the majority in rejecting that argument. Id.,
at 297 (dissenting opinion). But whereas there is no un­
certainty about the meaning of “taxes” in subsection (b)(4)
that would justify importing the property tax limitation
from the three preceding subsections, id., at 284–285
(majority opinion), there is a good deal of uncertainty
about the meaning of “discriminates.” This uncertainty
justifies looking to the three previous clauses to under­
stand the type of differential treatment §11501(b) is
meant to prohibit. Id., at 298–299 (dissenting opinion);
see Harrison v. PPG Industries, Inc., 446 U. S. 578, 588–
589 (1980). And those three previous clauses easily supply
the answer to the comparison class question.
C
Unwilling to so limit the range of available comparison
classes, the majority takes an approach to determining
which individuals are “similarly situated” for purposes of
the statute that “is almost entirely ad hoc,” James, supra,
at 215 (SCALIA, J., dissenting). It asserts that the compar­
ison class will “depen[d] on the theory of discrimination
Cite as: 575 U. S. ____ (2015) 7
THOMAS, J., dissenting
alleged in the claim.” Ante, at 4–5. Sometimes the com­
parison class will be “all other commercial and industrial
taxpayers,” sometimes it will be “the railroad’s competi­
tors” in a particular jurisdiction, and sometimes it may be
some other comparison class entirely. Id., at 5.
The sole evidence on which the majority relies to con­
clude that competitors are similarly situated, and there­
fore qualify as a comparison class, is the professed pur­
poses of the Act: “to ‘restore the financial stability of the
railway system of the United States,’ while ‘foster[ing]
competition among all carriers by railroad and other
modes of transportation.’ ” Ante, at 6 (quoting 90 Stat. 33,
§§101(a), (b)(2)). Interpreting statutory text solely in light
of purpose, absent any reliance on text or structure, is
dangerous business because it places courts in peril of
substituting their policy judgment for that of Congress. In
considering statutory purpose, therefore, we should be
careful that any inferences of purpose are tied to text
rather than instinct.
The majority throws such caution to the wind. Its two-
sentence argument is a perfect illustration of the dangers
of a purely purpose-based approach. The majority cherry-
picks two of a number of stated goals of a complex piece of
legislation over 100 pages long and assumes that this
specific provision was assigned to those specific purposes.
And then it interprets the statute to perform in the man­
ner the majority believes is best designed to “restore . . .
financial stability” and “foster . . . competition.” Ante, at 6
(alteration omitted).
I have no reason to doubt the economic soundness of the
majority’s conclusion that discrimination between rail
carriers and their competitors threatens their financial
stability and impedes competition, but I lack the major-
ity’s certitude that §11501(b)(4) is designed to further those
goals by combatting that evil, at least in the way the ma­
jority asserts. Instead, the first three subsections provide
8 ALABAMA DEPT. OF REVENUE v. CSX TRANSP., INC.
THOMAS, J., dissenting
strong textual evidence that §11501(b) was designed to
stabilize rail carriers by protecting them from discrimina­
tion against interstate commerce. And they provide evi­
dence of Congress’ chosen mechanism for accomplishing
that goal: tying the fate of interstate rail carriers to the
broader class of commercial and industrial taxpayers. See
supra, at 2.
The introductory clause of §11501(b) provides further
evidence that the evil at which subsection (b)(4) is tar-
geted is not discrimination between rail carriers and their
competitors, but “acts [that] unreasonably burden and
discriminate against interstate commerce.” The majority’s
response to this evidence—that the Court rejected a simi­
lar argument when it refused to limit subsection (b)(4) to
property taxes or their kin, ante, at 7—is a non sequitur.
The introductory clause contains no reference to property
taxes that “binds its four subsections together” as prohibi­
tions on discriminatory property taxes. Ibid. (internal
quotation marks omitted). But it does have a reference to
discrimination against interstate commerce, which does
tie the sections together to serve that common statutory
purpose. This, in turn, weighs against the majority’s
inferences about how §11501(b) relates to the stated pur­
poses of the 4–R Act.
The majority’s conclusion that competitors are a permis­
sible comparison class completely ignores these contextual
clues, permitting subsection (b)(4) to serve different statu­
tory goals by a different mechanism than its three prede­
cessor clauses. And it leads to odd inconsistencies. If we
were to understand the provision as prohibiting only
discrimination between rail carriers and their competitors,
then it might well further the goal of promoting competi­
tion between interstate carriers. But the majority instead
selects a shifting-comparison-class approach, requiring
rail carriers to be treated at least as well as their competi­
tors and any other similarly situated taxpayers. See ante,
Cite as: 575 U. S. ____ (2015) 9
THOMAS, J., dissenting
at 4–5. This most-favored taxpayer status is a position the
competitors do not enjoy, so the majority’s position could
result in tax schemes that impede competition between
interstate carriers rather than promote it.
Identifying “similarly situated” taxpayers by the undis­
ciplined approach the majority endorses could well lead to
other unanticipated consequences. This is why the policy
judgments needed to link statutory mechanisms to statu­
tory purposes are best left to Congress. If this Court is
going to adopt a shifting-comparison-class approach to
§11501(b)(4), then it should at least demand a stronger
textual link between the comparison class a claimant
seeks to import into subsection (b)(4) and any purpose that
the claimant argues it serves.
III
Because the majority adopts an interpretation of
§11501(b)(4) that is not grounded in the text, it should
come as no surprise that this interpretation is difficult to
apply, as this case demonstrates. It is easy to see how,
accepting water carriers as a comparison class, the scheme
treats water carriers and rail carriers differently when it
grants water carriers, but not rail carriers, an exemption
from the sales tax. Ala. Code §40–23–4(a)(10). Identifying
the difference in treatment between rail and motor car-
riers, by contrast, requires a good deal more imagination.
The majority’s approach exhibits that imagination. It
glosses over the general applicability of the provisions that
apply to rail and motor carriers, stating that “[t]he State
applies the [sales or use] tax, at the usual 4% rate, to
railroads’ purchase or use of diesel fuel for their rail oper­
ations,” but “exempts from the tax purchases and uses of
diesel fuel made by [motor carriers].” Ante, at 1. A quick
glimpse at the code reveals that this is not quite the case.
The applicability of the sales and use taxes does not de­
pend on the identity of the purchaser, but on whether the
10 ALABAMA DEPT. OF REVENUE v. CSX TRANSP., INC.
THOMAS, J., dissenting
purchaser pays another excise tax, §40–17–325(b), which
in turn depends on the nature of the product purchased
and its use, §§40–17–328, 40–17–329, which in turn merely
correlates to the carriers’ operations.
As far as I can tell, the rail carriers use dyed diesel that
is exempt from the motor fuel tax—and therefore subject
to the sales and use taxes—as a matter of choice rather
than necessity. Dyed diesel has no special properties that
make it more suitable for use in a train engine; the dye
merely identifies it as exempt from the federal excise tax,
§40–17–322(21). And no law prohibits rail carriers from
using undyed diesel. To the contrary, it is the motor
carriers who are prohibited from using the dyed variant
for on-road use.
Assuming arguendo that state law provides that only
dyed diesel may be used in rail operations, it becomes a
little easier to make an argument that the State treats rail
carriers differently in this case. But the majority still
faces a line-drawing problem. Is it necessary that the good
subject to the challenged tax be the same as the good on
which the competitor enjoys an exemption? Could a rail
carrier that relies on natural gas rather than diesel for
motive power make the same claim of discrimination if
natural gas is not entitled to the same sales-tax exemption
as diesel? Is it necessary that the rail carrier and its
competitor rely on the good for the same purpose? Could a
rail carrier that uses diesel for motive power challenge a
hypothetical provision that exempted from the sales and
use taxes diesel that motor carriers use for refrigeration in
refrigerated trailers?
The majority never answers these questions. “Sufficient
unto the day is the evil thereof,” it intones. Ante, at 6.
“That gets this case off our docket, sure enough. But it
utterly fails to do what this Court is supposed to do: pro­
vide guidance concrete enough to ensure that the” statute
is applied consistently. James, 550 U. S., at 215 (SCALIA,
Cite as: 575 U. S. ____ (2015) 11
THOMAS, J., dissenting
J., dissenting). We have demanded clarity from Congress
when it comes to statutes that “se[t] limits upon the taxa­
tion authority of state government, an authority we have
recognized as central to state sovereignty.” Department of
Revenue of Ore. v. ACF Industries, Inc., 510 U. S. 332,
344–345 (1994). We should demand the same of ourselves
when we interpret those statutes. Yet after today’s deci­
sion, lower courts, soon to be met with an oyster’s shellful
of comparison classes, ante, at 5, will have no idea how to
determine when a tax exemption that is not tied to the
taxpayer’s status constitutes differential treatment of two
taxpayers.
* * *
The majority’s interpretation of §11501(b)(1) derails
ambiguous text from clarifying context. The result it
reaches is predictably unworkable. And it prolongs Ala­
bama’s burden of litigating a baseless claim of discrimina­
tion that should have been dismissed long ago. I respect­
fully dissent.