CSX Transportation, Inc. v. Alabama Department of Revenue

(Slip Opinion) OCTOBER TERM, 2010 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
CSX TRANSPORTATION, INC. v. ALABAMA DEPART-
MENT OF REVENUE ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE ELEVENTH CIRCUIT
No. 09–520. Argued November 10, 2010—Decided February 22, 2011
Petitioner (CSX) is an interstate rail carrier that operates, and pays
taxes, in Alabama. The State imposes sales and use taxes on rail
roads when they purchase or consume diesel fuel, but exempts their
main competitors—interstate motor and water carriers. CSX sued
respondents, the Alabama Department of Revenue and its Commis
sioner (Alabama), claiming that this tax scheme discriminates
against railroads in violation of the Railroad Revitalization and
Regulatory Reform Act of 1976 (4–R Act or Act), which bars four
forms of discriminatory taxation, 49 U. S. C. §11501(b). Three of the
delineated prohibitions deal with property taxes, §§11501(b)(1)–(3),
and the fourth is a catch-all provision that forbids a State to
“[i]mpose another tax that discriminates against a rail carrier,”
§11501(b)(4). The District Court dismissed CSX’s suit as not cogni
zable under the 4–R Act on the basis of this Court’s decision in De
partment of Revenue of Ore. v. ACF Industries, Inc., 510 U. S. 332,
and the Eleventh Circuit affirmed.
Held: CSX may challenge Alabama’s sales and use taxes under
§11501(b)(4). Pp. 5–19.
(a) CSX is challenging “another tax” within subsection (b)(4)’s plain
meaning. The Act does not define “tax.” Thus, this Court looks to the
word’s ordinary definition, which is expansive. A State seeking to
raise revenue may choose among multiple forms of taxation on prop
erty, income, transactions, or activities. “[A]nother tax” is thus best
understood to encompass any tax a State might impose, on any asset
or transaction, except the property taxes already addressed in sub
sections (b)(1)–(3). There is no reason to interpret subsection (b)(4)
as applying only to the gross-receipts taxes that some States imposed
2 CSX TRANSPORTATION, INC. v. ALABAMA DEPT. OF
REVENUE
Syllabus
in lieu of property taxes at the time of the Act’s passage. Moreover,
CSX’s complaint, contrary to the Eleventh Circuit’s apparent view,
does protest Alabama’s imposition of taxes on its fuel. The exemp
tions the State has given may play a central role in CSX’s argument,
but the complaint’s essential subject remains the taxes imposed.
The key question thus becomes whether a tax might be said to “dis
criminate” against a railroad under subsection (b)(4) where the State
has granted exemptions from the tax to other entities (here, the rail
road’s competitors). Because the statute does not define “discrimi
nates,” the Court again looks to the term’s ordinary meaning, which
is to fail to treat all persons equally when no reasonable distinction
can be found between those favored and those not favored. To charge
one group of taxpayers a 2% rate and another group a 4% rate, if the
groups are the same in all relevant respects, is to discriminate
against the latter. That discrimination continues if the favored
group’s rate goes down to 0%, which is all an exemption is. To say
that such a tax does not “discriminate” is to adopt a definition at odds
with the word’s natural meaning. This Court has repeatedly recog
nized that tax schemes with exemptions may be discriminatory. See,
e.g., Davis v. Michigan Department of Treasury, 489 U. S. 803. And
even Department of Revenue of Ore. v. ACF Industries, Inc., 510 U. S.
332, on which the Eleventh Circuit heavily relied in dismissing CSX’s
suit, made clear that tax exemptions “could be a variant of tax dis
crimination.” Id., at 343. In addition, the statute’s prohibition of dis
crimination applies regardless whether the favored entities are inter
state or local. The distinctions drawn in the statute are not between
interstate and local actors, as Alabama suggests, but between rail
roads and all other actors, whether interstate or local. Pp. 5–10.
(b) ACF Industries does not require a different result. There, the
Court held that railroads could not contest property tax exemptions
under subsection (b)(4), reasoning that it would be illogical to permit
such a challenge when subsections (b)(1)–(3)—the §11501 provisions
specifically addressing property taxes—permitted States to grant
property tax exemptions. Such a reading would “subvert the statu
tory plan” and “contravene the ‘elementary canon of construction that
a statute should be interpreted so as not to render one part inopera
tive.’ ” 510 U. S., at 340. Contrary to Alabama’s argument, this
structural analysis does not apply here. Subsections (b)(1)–(3) spe
cifically allow property tax exemptions, but neither they nor any
other provision of the Act speaks to non-property exemptions like
those at issue here. Because Congress has expressed no intent to
“allo[w] the States to grant” non-property exemptions, id., at 343,
reading subsection (b)(4) to encompass them poses no danger of “nul
lify[ing]” a congressional policy choice or otherwise “subverting the
Cite as: 562 U. S. ____ (2011) 3
Syllabus
statutory plan,” id., at 340, 343. Alabama’s other efforts to borrow
from ACF Industries’ analysis similarly fail. Also unavailing is Ala
bama’s argument that, even if ACF Industries’ reasoning is limited to
property tax exemptions, its holding must extend to non-property tax
exemptions in order to prevent inconsistent or anomalous results in
the treatment of property and non-property taxes. Pp. 11–18.
350 Fed. Appx. 318, reversed and remanded.
KAGAN, J., delivered the opinion of the Court, in which ROBERTS,
C. J., and SCALIA, KENNEDY, BREYER, ALITO, and SOTOMAYOR, JJ.,
joined. THOMAS, J., filed a dissenting opinion, in which GINSBURG, J.,
joined.
Cite as: 562 U. S. ____ (2011) 1
Opinion of the Court
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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. 09–520
_________________
CSX TRANSPORTATION, INC., PETITIONER v.
ALABAMA DEPARTMENT OF REVENUE
ET AL.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE ELEVENTH CIRCUIT
[February 22, 2011]
JUSTICE KAGAN delivered the opinion of the Court.
The Railroad Revitalization and Regulatory Reform Act
of 1976 restricts the ability of state and local governments
to levy discriminatory taxes on rail carriers. We consider
here whether a railroad may invoke this statute to chal­
lenge sales and use taxes that apply to rail carriers
(among others), but exempt their competitors in the
transportation industry. We conclude that the railroad
may do so.
I
A
Congress enacted the Railroad Revitalization and Regu­
latory Reform Act of 1976 (Act or 4–R Act) to “restore the
financial stability of the railway system of the United
States,” among other purposes. §101(a), 90 Stat. 33. To
help achieve this goal, Congress targeted state and local
taxation schemes that discriminate against rail carriers.
Burlington Northern R. Co. v. Oklahoma Tax Comm’n, 481
U. S. 454, 457 (1987). The provision of the Act at issue
2 CSX TRANSPORTATION, INC. v. ALABAMA DEPT. OF
REVENUE
Opinion of the Court
here, now codified at 49 U. S. C. §11501,1 bars States and
localities from engaging in four forms of discriminatory
taxation. 90 Stat. 54.
Section 11501(b) describes the prohibited practices. It
begins with three provisions addressed specifically to prop-
erty taxes; it concludes with a catch-all provision con­
cerning other taxes. According to §11501(b), States (or
their subdivisions) “may not”:
“(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 as­
sessed value of other commercial and industrial prop­
erty in the same assessment jurisdiction has to the
true market value of the other commercial and indus­
trial property.
“(2) Levy or collect a tax on an assessment that may
not be made under paragraph (1) of this subsection.
“(3) Levy or collect an ad valorem property tax on rail
transportation property at a tax rate that exceeds the
tax rate applicable to commercial and industrial prop­
erty in the same assessment jurisdiction.
“(4) Impose another tax that discriminates against a
rail carrier.”
The following subsection confers jurisdiction on federal
courts to “prevent a violation” of §11501(b) notwithstand­
ing the Tax Injunction Act, 28 U. S. C. §1341, which ordi­
narily prohibits federal courts from enjoining the collec­
tion of state taxes when a remedy is available in state
——————
1 This provision was originally codified at 49 U. S. C. §26c (1976 ed.).
In 1978, Congress recodified it at §11503 (1976 ed., Supp. II), with
slightly altered language but “without substantive change,” §3(a), 92
Stat. 1466. In 1995, Congress again recodified the section without
substantive change, this time at 49 U. S. C. §11501. This opinion refers
to the statute’s current text.
Cite as: 562 U. S. ____ (2011) 3
Opinion of the Court
court. §11501(c).2
B
Petitioner CSX Transportation, Inc. (CSX) is an inter­
state rail carrier that operates in Alabama and pays taxes
there. Alabama imposes a sales tax of 4% on the gross
receipts of retail businesses, Ala. Code §40–23–2(1) (2010
Cum. Supp.), and a use tax of 4% on the storage, use, or
consumption of tangible personal property, §40–23–61(a)
(2003). Railroads pay these taxes when they purchase or
consume diesel fuel. But railroads’ main competitors—
interstate motor and water carriers—are generally exempt
from paying sales and use taxes on their fuel (although
fuel for motor carriers is subject to a separate excise tax).3
Alleging that Alabama’s tax scheme discriminates
against railroads in violation of §11501(b)(4) of the 4–R
Act, CSX sued respondents, the Alabama Department of
Revenue and its Commissioner (Alabama or State), in
Federal District Court. In particular, CSX complained
that the State could not impose sales and use taxes on
railroads’ purchase and consumption of diesel fuel while
——————
2 The first sentence of subsection (c) provides: “Notwithstanding sec­
tion 1341 of title 28 . . . a district court of the United States has
jurisdiction . . . to prevent a violation of subsection (b) of this section.”
The next sentence concerns the relief available for violations of
§§11501(b)(1) and (2): “Relief may be granted under this subsection
only if the ratio of assessed value to true market value of rail transpor­
tation property exceeds by at least 5 percent the ratio of assessed value
to true market value of other commercial and industrial property in the
same assessment jurisdiction.”
3 State law provides that motor carriers need not pay sales or use
taxes on diesel fuel so long as they pay a different excise tax of $0.19
per gallon. Ala. Code §40–17–2(1) (2003) (primary tax of $0.13 per
gallon); §40–17–220(e) (2010 Cum. Supp.) (additional tax of $0.06 per
gallon). State law wholly exempts interstate water carriers from sales
and use taxes on diesel fuel. §40–23–4(a)(10); §40–23–62(12). Nor do
these water carriers pay any other tax on the fuel they purchase or
consume. Brief for Respondents 16.
4 CSX TRANSPORTATION, INC. v. ALABAMA DEPT. OF
REVENUE
Opinion of the Court
exempting motor and water carriers from those taxes.
App. 22 (Complaint ¶26).
The District Court dismissed CSX’s suit as not cogniza­
ble under the 4–R Act, and the United States Court of
Appeals for the Eleventh Circuit affirmed in a brief per
curiam decision. 350 Fed. Appx. 318 (2009). The Elev­
enth Circuit rested on its earlier decision in Norfolk
Southern R. Co. v. Alabama Dept. of Revenue, 550 F. 3d
1306 (2008), which involved a nearly identical challenge to
the application of Alabama’s sales and use taxes.
In Norfolk Southern, the Eleventh Circuit rejected the
plaintiff railroad’s challenge, principally in reliance on this
Court’s decision in Department of Revenue of Ore. v. ACF
Industries, Inc., 510 U. S. 332 (1994). In that case, we
held that a railroad could not invoke §11501(b)(4) to chal­
lenge a generally applicable property tax on the basis that
certain non-railroad property was exempt from the tax.
Id., at 335. The Eleventh Circuit recognized that the case
before it involved sales and use taxes—not property taxes,
which the statutory scheme separately addresses. Norfolk
Southern, 550 F. 3d, at 1314. The court concluded, how­
ever, that this difference was immaterial, and accordingly
held that a railroad could not object to Alabama’s sales
and use taxes simply because the State provides exemp­
tions from them. Id., at 1316.
CSX petitioned for a writ of certiorari, arguing that the
Eleventh Circuit had misunderstood ACF Industries and
noting a split of authority concerning whether railroads
may bring a challenge under §11501(b)(4) to non-property
taxes from which their competitors are exempt.4 We
——————
4 Compare Norfolk Southern R. Co. v. Alabama Dept. of Revenue, 550
F. 3d 1306, 1316 (CA11 2008), and Atchison, T. & S. F. R. Co. v. Ari­
zona, 78 F. 3d 438, 443 (CA9 1996) (rejecting a railroad’s challenge to a
use tax that exempted motor carriers), with Burlington N., S. F. R. Co.
v. Lohman, 193 F. 3d 984, 986 (CA8 1999) (entertaining a challenge to
a sales and use tax that exempted rail carriers’ competitors), Burling­
Cite as: 562 U. S. ____ (2011) 5
Opinion of the Court
granted certiorari, 560 U. S. ____ (2010), and now reverse.
II
We begin, as in any case of statutory interpretation,
with the language of the statute. Hardt v. Reliance Stan­
dard Life Ins. Co., 560 U. S. ___, ___ (2010) (slip op., at 8).
Section 11501(b)(4) provides that a State may not
“[i]mpose another tax that discriminates against a rail
carrier.” CSX wishes to bring an action under this provi­
sion because rail carriers, but not motor or water carriers,
must pay Alabama’s sales and use taxes on diesel fuel. To
determine whether this suit may go forward, we must
therefore answer two questions. Is CSX challenging “an­
other tax” within the meaning of the statute? And, if so,
might that tax “discriminate” against rail carriers by
exempting their competitors?5
——————
ton No. R. Co. v. Commissioner of Revenue, 606 N. W. 2d 54, 58–59
(Minn. 2000) (same), and Atchison, T. & S. F. R. Co. v. Bair, 338 N. W.
2d 338, 348 (Iowa 1983) (same).
5 We consider here only questions relating to whether CSX can bring
a claim for discrimination based on the State’s pattern of tax exemp­
tions. We do not consider any issues concerning whether these exemp­
tions actually discriminate against CSX. See infra, at 18–19, and n. 8.
Alabama has raised two such issues in this Court. First, Alabama
contends that in deciding CSX’s claim, a federal court must consider
not only the specific taxes challenged, but also the broader tax scheme.
Brief for Respondents 58–60. Second, the State argues that the court
must compare the taxation of CSX not merely to direct competitors
but to other commercial entities as well. Id., at 48, n. 7. Most of the
dissenting opinion is devoted to supporting the State’s argument on
this second question. But we leave these and all other issues relating
to whether Alabama actually has discriminated against CSX to the
trial court on remand to address as and when it wishes. No court in
this case has previously considered these questions, and the parties’
briefs in this Court have only sketchily addressed them. In addition,
the parties dispute whether Alabama waived its claim on the second
issue by initially agreeing that “the comparison class consists of motor
carriers and water carriers,” App. to Pet. for Cert. 12a (internal quota­
tion marks omitted), and proceeding with the litigation on that basis.
6 CSX TRANSPORTATION, INC. v. ALABAMA DEPT. OF
REVENUE
Opinion of the Court
An excise tax, like Alabama’s sales and use tax, is “an­
other tax” under subsection (b)(4).6 The 4–R Act does not
define “tax”; nor does the statute otherwise place any
matters within, or exclude any matters from, the term’s
ambit. In these circumstances, we look to the word’s
ordinary definition, Asgrow Seed Co. v. Winterboer, 513
U. S. 179, 187 (1995), and we note what taxpayers have
long since discovered—that the meaning of “tax” is expan­
sive. A State (or other governmental entity) seeking to
raise revenue may choose among multiple forms of taxa­
tion on property, income, transactions, or activities.
“[A]nother tax,” as used in subsection (b)(4), is best under­
stood to refer to all of these—more precisely, to encompass
any form of tax a State might impose, on any asset or
transaction, except the taxes on property previously ad­
dressed in subsections (b)(1)–(3). See Burlington Northern
R. Co. v. Superior, 932 F. 2d 1185, 1186 (CA7 1991) (Sub­
section (b)(4) includes “an income tax, a gross-receipts tax,
a use tax, an occupation tax . . . —whatever”). The phrase
“another tax” is a catch-all.
In particular, we see no reason to interpret subsection
(b)(4) as applying only to the gross-receipts taxes—known
as “in lieu” taxes—that some States imposed instead of
property taxes at the time of the Act’s passage. See Brief
for Respondents 53–55; Brief for State of Washington
et al. as Amici Curiae 20–22. The argument in favor of
this construction relies on the House Report concerning
——————
We think this question of waiver is also best considered by the trial
court.
6 As originally enacted, the provision that is now 49 U. S. C.
§11501(b)(4) prohibited the imposition of “any other tax” that discrimi­
nates against a railroad. §26c (1976 ed.). The substitution of “another
tax” occurred when Congress first recodified the Act. In line with
Congress’s statement that revisions made at that time should not be
construed as having substantive effect, see n. 1, supra, we treat the two
terms as synonymous.
Cite as: 562 U. S. ____ (2011) 7
Opinion of the Court
the bill, which described subsection (b)(4) as prohibiting
“the imposition of . . . the so-called ‘in lieu tax.’ ” H. R.
Rep. No. 94–725, p. 77 (1975). But the Conference Report
on the final bill abandoned the House Report’s narrowing
language and described the subsection as it was written—
as prohibiting, without limitation, “the imposition of any
other tax which results in the discriminatory treatment of
any” railroad. S. Conf. Rep. No. 94–595, pp. 165–166
(1976); accord, S. Rep. No. 94–499, p. 65 (1975). And the
statutory language is the real crux of the matter: Subsec­
tion (b)(4) speaks both clearly and broadly, and a legisla­
tive report misdescribing the provision cannot succeed in
altering it.7
Nor do we agree with the Eleventh Circuit’s apparent
view that CSX does not challenge “another tax” because its
complaint relies on the exemptions the State has given.
See Norfolk Southern, 550 F. 3d, at 1315 (“The language of
section (b)(4) prohibits a discriminatory ‘tax’ not a dis­
criminatory tax exemption”); Brief for American Trucking
Assns., Inc. as Amicus Curiae 9. What the complaint
protests is Alabama’s imposition of taxes on the fuel CSX
——————
7 Alabama also invokes the remedial provision of subsection (c), n. 2,
supra, to urge that we read §11501 as effectively limited to property or
“in lieu” taxes. According to Alabama, that provision entitles federal
courts to grant relief only when States overvalue railroad property
under subsections (b)(1) and (b)(2): Federal courts, the State avers,
“have no power to enjoin the granting of tax exemptions as a violation
of subsection (b)(4), or, apparently [to remedy] any violation of sub-
section (b)(4).” Brief for Respondents 37. But that interpretation of
subsection (c)’s remedial provision cannot be right, because it would
nullify subsection (b)(4) (and, for that matter, subsection (b)(3) as well).
We understand subsection (c)’s remedial provision neither as limiting
the broad grant of jurisdiction to federal courts to prevent violations of
subsection (b) nor as otherwise restricting the scope of that subsection.
The remedial provision simply limits the availability of relief when a
State discriminates in assessing the value of railroad property, as
proscribed by subsections (b)(1) and (b)(2). That kind of discrimination
is not at issue here.
8 CSX TRANSPORTATION, INC. v. ALABAMA DEPT. OF
REVENUE
Opinion of the Court
uses; what the complaint requests is that Alabama cease
to collect those taxes from CSX. App. 23. The exemptions,
no doubt, play a central role in CSX’s argument: They
demonstrate, in CSX’s view, that the State’s sales and use
taxes discriminate against railroads. See id., at 22, ¶¶24–
26. But the essential subject of the complaint remains the
taxes Alabama levies on CSX.
The key question thus becomes whether a tax might be
said to “discriminate” against a railroad under subsection
(b)(4) because the State has granted exemptions from the
tax to other entities (here, the railroad’s competitors). The
statute does not define “discriminates,” and so we again
look to the ordinary meaning of the word. See supra, at 5.
“Discrimination” is the “failure to treat all persons equally
when no reasonable distinction can be found between
those favored and those not favored.” Black’s Law Dic­
tionary 534 (9th ed. 2009); accord, id., at 420 (5th ed.
1979); see also Webster’s Third New International Dic­
tionary 648 (1976) (“discriminates” means “to make a
difference in treatment or favor on a class or categorical
basis in disregard of individual merit”). To charge one
group of taxpayers a 2% rate and another group a 4%
rate, if the groups are the same in all relevant respects,
is to discriminate against the latter. That discrimination
continues (indeed, it increases) if the State takes the
favored group’s rate down to 0%. And that is all an ex­
emption is. See West Lynn Creamery, Inc. v. Healy, 512
U. S. 186, 210–211 (1994) (SCALIA, J., concurring in judg­
ment) (noting that an “ ‘exemption’ from . . . a ‘neutral’ tax”
for favored persons “is no different in principle” than “a
discriminatory tax . . . imposing a higher liability” on
disfavored persons). To say that such a tax (with such an
exemption) does not “discriminate”—assuming the groups
are similarly situated and there is no justification for the
difference in treatment—is to adopt a definition of the
term at odds with its natural meaning.
Cite as: 562 U. S. ____ (2011) 9
Opinion of the Court
In line with this understanding, our decisions have
repeatedly recognized that tax schemes with exemptions
may be discriminatory. In Davis v. Michigan Dept. of
Treasury, 489 U. S. 803 (1989), for example, we reviewed a
state income tax provision that exempted retirement
benefits given by the State, but not those paid by the
Federal Government. We held that the tax “discrimi­
nate[d]” against federal employees under 4 U. S. C. §111,
which serves to protect those employees from discrimina­
tory state taxation. Similarly, our dormant Commerce
Clause cases have often held that tax exemptions given to
local businesses discriminate against interstate actors.
See, e.g., Bacchus Imports, Ltd. v. Dias, 468 U. S. 263,
268–269 (1984) (holding that a state excise tax on alcohol
“discriminate[d]” against interstate businesses because of
exemptions granted to local producers); Camps New­
found/Owatonna, Inc. v. Town of Harrison, 520 U. S. 564,
588–589 (1997) (invalidating as “discriminatory” a state
property tax that exempted organizations operating for
the benefit of residents, but not organizations aimed at
nonresidents). And even our decision in ACF Industries,
on which the Eleventh Circuit relied in dismissing CSX’s
suit, made clear that tax exemptions “could be a variant of
tax discrimination.” 510 U. S., at 343.
Nor does the 4–R Act limit the prohibited discrimination
to state tax schemes that unjustifiably exempt local actors,
as opposed to interstate entities. Alabama argues for this
result, claiming that §11501(b) is designed “to protect
interstate carriers against discrimination vis-à-vis local
businesses.” Brief for Respondents 29. But the text of
§11501(b) tells a different story. Consistent with the Act’s
purpose of restoring the financial stability of railroads (not
of interstate carriers generally), supra, at 1, each of sub­
section (b)’s provisions proscribes taxes that specially
burden a rail carrier’s property or otherwise discriminate
against a rail carrier. And not a single provision of the
10 CSX TRANSPORTATION, INC. v. ALABAMA DEPT. OF
REVENUE
Opinion of the Court
Act (including the references in subsections (b)(1)–(3) to
“commercial and industrial property”) distinguishes be­
tween local and non-local taxpayers who receive favorable
tax treatment. The distinctions drawn in §11501(b) are
not between interstate and local actors, as the State con­
tends, but rather between railroads and other actors,
whether interstate or local. Accordingly, a state excise tax
that applies to railroads but exempts their interstate
competitors is subject to challenge under subsection (b)(4)
as a “tax that discriminates against a rail carrier.”8
——————
8 This conclusion does not, as Alabama and the dissent contend, turn
railroads into “most-favored-taxpayers,” entitled to any exemption (or
other tax break) that a State gives to another entity. See Brief for
Respondents 23; post, at 9 (opinion of THOMAS, J.). We hold only that
§11501(b)(4) enables a railroad to challenge an excise or other non­
property tax as discriminatory on the basis of the tax scheme’s exemp­
tions—as the dissent apparently agrees, post, at 1. Whether the
railroad will prevail—that is, whether it can prove the alleged dis­
crimination—depends on whether the State offers a sufficient justifica­
tion for declining to provide the exemption at issue to rail carriers. See
supra, at 8; Brief for United States as Amicus Curiae 25–26; Richmond,
F. & P. R. Co. v. Department of Taxation, Commonwealth of Va., 762
F. 2d 375, 380–381, and n. 4 (CA4 1985). So if, to use the dissent’s
example, a railroad challenged a scheme in which “every person and
business in the State of Alabama paid a $1 annual tax, and one person
was exempt,” post, at 9, for some reason having nothing to do with
railroads, we presume the suit would be promptly dismissed. Nothing
in this application of §11501(b)(4) offers a “windfall” to railroads. Ibid.
The dissent argues in addition that a State should prevail against
any claim of discrimination brought under subsection (b)(4) if it can
demonstrate that a tax does not “target” or “single out” a railroad, post,
at 1; that showing, without more, would justify the tax (although the
dissent declines to say just what it means to “target,” post, at 7, n. 3).
This argument primarily concerns the question whether Alabama’s tax
scheme in fact discriminates under subsection (b)(4)—a question we
have explained is inappropriate to address, see n. 5, supra. We note,
however, that the dissent’s argument about subsection (b)(4) rests
entirely on the premise that subsections (b)(1)–(3) prohibit only prop­
erty taxes that “target” or “single out” railroads, see post, at 4; so, the
dissent would say, a State may impose a 4% property tax on railroads
Cite as: 562 U. S. ____ (2011) 11
Opinion of the Court
III
As against the plain language of subsection (b)(4), Ala­
bama offers two arguments based on our decision in ACF
Industries. The first claim, which the Eleventh Circuit
accepted, rests on the reasoning we adopted in ACF Indus­
tries: We concluded there that railroads could not chal­
lenge property tax exemptions under subsection (b)(4),
and Alabama asserts that the same analysis applies to ex-
cise (and other non-property) tax exemptions. The second
contention focuses on alleged problems that would emerge
in the application of §11501(b) if the rule of ACF Indus­
tries did not govern all tax exemptions. On this view, even
if ACF Industries’ reasoning is irrelevant to cases involv­
ing excise taxes, its holding must extend to those cases to
prevent inconsistent or anomalous results. We reject each
of these arguments. We stand foursquare behind our
decision in ACF Industries, but we will not extend it in the
way the State wishes.
A
In ACF Industries, we considered whether a railroad
could sue a State under subsection (b)(4) for taxing rail­
road property while exempting certain other commercial
property. We held that the railroad could not do so. We
noted that the language of subsection (b)(4), when viewed
in isolation, could be read to allow such a challenge. But
we reasoned that the structure of §11501 required the
opposite result. 510 U. S., at 343. The Eleventh Circuit
——————
(assuming some unspecified number of other taxpayers also pay that
rate) while levying only a 2% property tax on railroad competitors. But
we have never decided, in ACF Industries or any other case, whether
subsections (b)(1)–(3) should be interpreted in this manner. And even
accepting the dissent’s unexplained premise, a serious question would
remain about whether to transplant this construction of subsections
(b)(1)–(3) to subsection (b)(4)’s very different terrain, see infra, at 16–
18.
12 CSX TRANSPORTATION, INC. v. ALABAMA DEPT. OF
REVENUE
Opinion of the Court
considered ACF Industries “determinative” of the question
here, Norfolk Southern, 550 F. 3d, at 1313, and Alabama
agrees, Brief for Respondents 18. We think they misread
that decision.
We began our analysis in ACF Industries by explaining
that railroads could not challenge property tax exemptions
under subsections (b)(1)–(3)—the provisions of §11501
specifically addressing property taxes. As noted earlier,
subsections (b)(1)–(3) prohibit a State from imposing
higher property tax rates or assessment ratios on “rail
transportation property” than on “other commercial and
industrial property.” The statute defines “commercial and
industrial property” as including only “property . . . subject
to a property tax levy.” §11501(a)(4). We interpreted that
phrase to mean “property that is taxed,” rather than
property that is potentially taxable. 510 U. S., at 341–342.
As a result, we determined that exempt (i.e., non-taxed)
property fell outside the category of “other commercial and
industrial property” against which the taxation of railroad
property is measured. Ibid. The conclusion followed:
Subsections (b)(1)–(3) permitted States to impose property
taxes on railroads while exempting other entities. Ibid.And because that was so, we stated, still another con­
clusion followed: Subsection (b)(4)’s prohibition on dis­
crimination likewise could not encompass property tax
exemptions. Id., at 343. We viewed this holding as a
matter of simple deduction: “It would be illogical to con­
clude that Congress, having allowed the States to grant
property tax exemptions in subsections (b)(1)–(3), would
turn around and nullify its own choice in subsection
(b)(4).” Ibid. Or stated otherwise: “[R]eading subsection
(b)(4) to prohibit what” other parts of the statute were
“designed to allow,” would “subvert the statutory plan”
and “contravene the ‘elementary canon of construction
that a statute should be interpreted so as not to render
one part inoperative.’ ” Id., at 340. The structure of
Cite as: 562 U. S. ____ (2011) 13
Opinion of the Court
§11501 thus compelled our conclusion that property tax
exemptions—even if “a variant of tax discrimination,” id.,
at 343—fell outside subsection (b)(4)’s reach.
But this structural analysis—the core of ACF Indus­
tries—has no bearing on the question here. Subsections
(b)(1)–(3) specifically address—and allow—property tax
exemptions. But neither those subsections nor any other
provision of the 4–R Act speaks to non-property tax ex­
emptions like those at issue in this case. Congress has
expressed no intent to “allo[w] the States to grant” these
exemptions. Ibid. Reading subsection (b)(4) as written—
to encompass non-property tax exemptions—therefore
poses no danger of “nullify[ing]” a congressional policy
choice or otherwise “subvert[ing] the statutory plan.” Id.,
at 340, 343. To the contrary: Giving subsection (b)(4)
something other than its ordinary meaning, absent any
structural reason to do so, would itself contravene the
expressed will of Congress.
Implicitly acknowledging that ACF Industries’ central
theory is irrelevant here, Alabama focuses on what that
decision called “[o]ther considerations reinforc[ing]” its
structural analysis. Id., at 343. Most notably, Alabama
underscores the following sentence from ACF Industries:
“Given the prevalence of property tax exemptions when
Congress enacted the 4–R Act, [§11501’s] silence on the
subject—in light of the explicit prohibition of tax rate and
assessment ratio discrimination—reflects a determination
to permit the States to leave their exemptions in place.”
Id., at 344. Alabama asserts that this statement “holds
just as true” for sales and use taxes. Brief for Respon­
dents 41.
That claim rings hollow. To be sure, ACF Industries
noted that Congress had declined to speak “with any
degree of particularity to” the permissibility of property
tax exemptions, even though States often granted them.
510 U. S., at 343. But we thought that fact relevant only
14 CSX TRANSPORTATION, INC. v. ALABAMA DEPT. OF
REVENUE
Opinion of the Court
because Congress had spoken with particularity in pro­
scribing other forms of discriminatory property taxes. The
very sentence Alabama highlights makes our reasoning
clear: Congress’s silence as to the practice of granting
property tax exemptions reflected its acquiescence in that
practice “in light of the explicit prohibition [in subsections
(b)(1)–(3)] of [property] tax rate and assessment ratio
discrimination.” Id., at 344 (emphasis added). If that
explicit prohibition had not existed—if §11501(b) had
consisted only of subsection (b)(4)’s broad ban on tax
discrimination—we could not have gleaned what we did
from congressional silence. After all, the very purpose of a
catch-all provision like subsection (b)(4) is to avoid the
necessity of listing each matter (here, each kind of tax
discrimination) falling within it. And with respect to non­
property taxes (like Alabama’s sales and use taxes), sub­
section (b)(4) is all there is. So here again, our analysis in
ACF Industries does not apply because it rested on subsec­
tions (b)(1)–(3)—that is, on the highly reticulated scheme
in the 4–R Act relating solely to property taxes.
Alabama also emphasizes our statement in ACF Indus­
tries that “ ‘[p]rinciples of federalism’ ” supported our hold­
ing, Brief for Respondents 41–43 (quoting 510 U. S., at
345), but this final effort to borrow from that decision’s
analysis similarly fails. We indeed recognized in ACF
Industries that the 4–R Act limits the traditional taxing
power of the States. Because that is so, we expressed
“hesitan[ce] to extend the statute beyond its evident
scope.” 510 U. S., at 345. But here, for all the reasons
already noted, we are not “extend[ing] the statute”; we are
merely giving effect to its clear meaning. To reiterate: The
4–R Act distinguishes between property taxes and other
taxes. Congress expressed its intent to insulate property
tax exemptions from challenge; against that background,
ACF Industries stated that permitting such suits would
intrude on the States’ rightful authority. By contrast,
Cite as: 562 U. S. ____ (2011) 15
Opinion of the Court
Congress drafted §11501 to enable railroads to contest all
other tax exemptions; and when Congress speaks in such
preemptive terms, its decision must govern. Principles of
federalism cannot narrow §11501’s clear scope. See, e.g.,
CSX Transp., Inc. v. Georgia State Bd. of Equalization,
552 U. S. 9, 20 (2007) (rejecting the idea that federalism
principles preclude challenges to state valuation method­
ologies when §11501 “clearly authorized” such actions).
Nothing in ACF Industries suggested otherwise.
B
Alabama additionally makes a subtler argument involv­
ing ACF Industries. Given that decision, Alabama con­
tends, a ruling in CSX’s favor here would create troubling
inconsistencies. Alabama claims that subsection (b)(4)’s
singular prohibition on “discriminat[ion]” would then
mean one thing for property taxes (according to ACF
Industries) and another for non-property taxes, even
though nothing in the statute supports “morphing defini­
tions.” Brief for Respondents 32. And still worse than the
difference in meaning would be the difference in result:
A ruling for CSX, Alabama argues, would give railroads
more protection against non-property taxes than against
property taxes, even though no good reason exists for this
distinction.
Alabama’s one-word-two-meanings argument collapses
because it again rests on a misunderstanding of ACF
Industries. That decision did not define “discriminat[e]” or
say that a tax exemption could not fall within that term.
Quite to the contrary: As noted earlier, ACF Industries
frankly acknowledged that tax exemptions, including
property tax exemptions, “could be a variant of tax dis­
crimination.” 510 U. S., at 343; supra, at 9. We held that
property tax exemptions were immune from challenge
under subsection (b)(4) for structural, rather than linguis­
tic, reasons. Even assuming these exemptions “discrimi­
16 CSX TRANSPORTATION, INC. v. ALABAMA DEPT. OF
REVENUE
Opinion of the Court
nate[d],” they did so in a way that the specific provisions of
§§11501(b)(1)–(3) allow, and accordingly §11501(b)(4)’s
prohibition could not include them. That reasoning, once
more, does not apply here, because subsections (b)(1)–(3)
do not permit—indeed, in no way address—non-property
tax exemptions. We therefore do not adopt a new defini­
tion of “discriminate” in this case; in the context of the 4–R
Act, that word has, and has always had, just one meaning.
What remains is Alabama’s complaint that a ruling in
CSX’s favor, when combined with our decision in ACF
Industries, will result in divergent treatment of property
and non-property taxes. At times, Alabama dresses up
this objection in Latin: It contends that the canon of ejus­
dem generis, which “limits general terms [that] follow
specific ones to matters similar to those specified,” Gooch
v. United States, 297 U. S. 124, 128 (1936), has a role to
play in interpreting §11501(b). More particularly, Ala­
bama contends that this canon supports reading into
§11501(b)(4) every limitation contained in §§11501(b)(1)–
(3), including the exclusion of tax exemptions from the
class of state actions subject to challenge. See Brief for
Respondents 26–27. That interpretive move, Alabama
rightly notes, would ensure equal treatment of property
tax and non-property tax exemptions.
But we think ejusdem generis is not relevant here. As
an initial matter, subsection (b)(4), “[a]lthough something
of a catchall, . . . is not a general or collective term follow­
ing a list of specific items to which a particular statutory
command is applicable (e.g., ‘fishing rods, nets, hooks,
bobbers, sinkers, and other equipment’).” United States v.
Aguilar, 515 U. S. 593, 615 (1995) (SCALIA, J., concurring
in part and dissenting in part). Rather, that subsection is
“one of . . . several distinct and independent prohibitions.”
Ibid. Related to this structural point is a functional one.
We typically use ejusdem generis to ensure that a general
word will not render specific words meaningless. E.g.,
Cite as: 562 U. S. ____ (2011) 17
Opinion of the Court
Circuit City Stores, Inc. v. Adams, 532 U. S. 105, 114–115
(2001); see 2A N. Singer, Sutherland on Statutes and
Statutory Construction §47:17 (7th ed. 2007). But that
concern is absent here. Reading subsection (b)(4) to cover
non-property tax exemptions will not deprive subsections
(b)(1)–(3) of effect, because those subsections are ad­
dressed only to property taxes. A canon meaning literally
“of the same kind” has no application to provisions di­
rected toward dissimilar subject matter.
The better version of Alabama’s claim reads entirely in
English; it is simply that distinguishing between property
tax exemptions and other tax exemptions makes not a
whit of sense. We are not much inclined to disagree.
Neither CSX nor the United States as amicus curiae has
offered a satisfying reason for why Congress drew this
line—why in §§11501(b)(1)–(3) it barred challenges based
on property tax exemptions, but then turned around in
§11501(b)(4) to allow challenges based on, say, excise tax
exemptions. See Tr. of Oral Arg. 4–5, 24–25. CSX, for
example, has not presented any evidence that different tax
exemptions posed different levels of threat to railroads’
financial stability. So even if Congress had a good reason
for distinguishing between property and non-property tax
exemptions, we acknowledge that it eludes us.
But this admission does not take us far in Alabama’s
direction. Even if the 4–R Act were ambiguous, we doubt
we would interpret subsection (b)(4) to replicate each facet
of subsections (b)(1)–(3). Treating property tax exemp­
tions and other tax exemptions equivalently might make
sense, as Alabama argues. But so too might allowing
railroads to challenge all taxes (property or non-property)
that contain exemptions. After all, as we noted earlier,
tax exemptions are an obvious form of tax discrimination.
See supra, at 8–9. It is hardly self-evident why Congress
would prohibit a State from charging a railroad a 4% tax
and a competitor a 2% tax, but allow the State to charge
18 CSX TRANSPORTATION, INC. v. ALABAMA DEPT. OF
REVENUE
Opinion of the Court
the railroad a 4% tax and the competitor nothing. The
latter situation would frustrate the purposes of the Act
even more than the former. In ACF Industries, we ac­
cepted that anomaly because the terms and structure of
the Act demanded that we do so. But we could say no
more in favor of the result than that it was “not so bizarre
that Congress could not have intended it.” 510 U. S., at
347 (internal quotation marks omitted). That was not a
glowing recommendation, and we see no reason today to
view the matter differently. Accordingly, even assuming
that statutory ambiguity permitted us to do so, we would
hesitate to extend the distinction between tax exemptions
and differential tax rates in order to avoid a distinction
between property and non-property taxes. That would
seem a poor trade of statutory anomalies.
In any event, and more importantly, the choice is not
ours to make. Congress wrote the statute it wrote, and
that statute draws a sharp line between property taxes
and other taxes. Congress drafted §§11501(b)(1)–(3) to
exclude tax exemptions from the sphere of prohibited
property tax discrimination. But it drafted §11501(b)(4)
more broadly, without any of the prior subsections’ limita­
tions, to proscribe other “tax[es] that discriminat[e],”
including through the use of exemptions. That congres­
sional election settles this case. Alabama’s preference for
symmetry cannot trump an asymmetrical statute. And its
preference for the greatest possible latitude to levy taxes
cannot trump Congress’s decision to restrict discrimina­
tory taxation of rail carriers.
IV
Our decision in this case is limited. We hold that CSX
may challenge Alabama’s sales and use taxes as “tax[es]
that discriminat[e] against . . . rail carrier[s]” under
§11501(b)(4). We do not address whether CSX should
prevail in that challenge—whether, that is, Alabama’s
Cite as: 562 U. S. ____ (2011) 19
Opinion of the Court
taxes in fact discriminate against railroads by exempting
interstate motor and water carriers. Alabama argues, in
support of barring CSX’s challenge at the outset, that this
inquiry into discrimination may pose difficulties. Brief for
Respondents 35–37. We cannot deny that assertion, but
neither can we respond to it by precluding CSX’s claim.
Discrimination cases sometimes do raise knotty questions
about whether and when dissimilar treatment is ade­
quately justified. In the context of the 4–R Act, those hard
calls can arise when States charge different tax rates to
different entities in a practice the statute specifically
subjects to challenge. See §11501(b)(3). So too, difficult
issues can emerge when, as here, States provide certain
entities with tax exemptions. In either case, Congress has
directed the federal courts to review a railroad’s challenge;
and in either case, we would flout the congressional com­
mand were we to declare the matter beyond us.
For the reasons stated, we reverse the judgment of the
Eleventh Circuit and remand the case for further proceed­
ings consistent with this opinion.
It is so ordered.
Cite as: 562 U. S. ____ (2011) 1
THOMAS, J., dissenting
SUPREME COURT OF THE UNITED STATES
_________________
No. 09–520
_________________
CSX TRANSPORTATION, INC., PETITIONER v.
ALABAMA DEPARTMENT OF REVENUE
ET AL.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE ELEVENTH CIRCUIT
[February 22, 2011]
JUSTICE THOMAS, with whom JUSTICE GINSBURG joins,
dissenting.
I agree with the Court that Alabama’s sales and use
taxes are “another tax” within the meaning of 49 U. S. C.
§11501(b)(4) and that a scheme of tax exemptions is capa
ble of making a tax discriminatory. Ante, at 6–8. As a
general matter, therefore, I agree that Alabama’s sales
and use taxes could potentially violate subsection (b)(4),
and would do so if their exemptions “discriminate[d]
against a rail carrier.” §11501(b)(4). The majority’s hold
ing stops there, see ante, at 10, n. 8, but I would go on.
I would hold that, to violate §11501(b)(4), a tax exemp
tion scheme must target or single out railroads by com
parison to general commercial and industrial taxpayers.
Although parts of the majority’s discussion appear to
question this standard, see ante, at 8–11, the limited
holding does not foreclose it. Because CSX cannot prove
facts that would satisfy that standard in this case, I would
affirm.
I
In my view, “another tax that discriminates against a
rail carrier” in §11501(b)(4) means a tax—or tax exemp
tion scheme—that targets or singles out railroads as
2 CSX TRANSPORTATION, INC. v. ALABAMA DEPT. OF
REVENUE
THOMAS, J., dissenting
compared to other commercial and industrial taxpayers.
That reading settles the ambiguity in the word “discrimi
nates” by reference to the rest of the statute and gives
subsection (b)(4) a reach consistent with the problem the
statute addressed.
A
“Discriminates,” standing alone, is a flexible word.
Compare, e.g., Clackamas Gastroenterology Associates,
P. C. v. Wells, 538 U. S. 440, 446 (2003) (“[T]he statutory
purpose of [the Americans with Disabilities Act of 1990 is]
ridding the Nation of the evil of discrimination”), with
Davis v. Bandemer, 478 U. S. 109, 132 (1986) (plurality
opinion) (“[U]nconstitutional discrimination occurs only
when the electoral system is arranged in a manner that
will consistently degrade a voter’s or a group of voters’
influence”); and United Haulers Assn., Inc. v. Oneida-
Herkimer Solid Waste Management Authority, 550 U. S.
330, 338 (2007) (“In this context, ‘discrimination’ simply
means differential treatment of in-state and out-of-state
economic interests that benefits the former and burdens
the latter” (some internal quotation marks omitted)).
Even though “discriminate” has a general legal meaning
relating to differential treatment, its precise contours still
depend on its context. See Guardians Assn. v. Civil Serv.
Comm’n of New York City, 463 U. S. 582, 592 (1983) (opin
ion of White, J.) (“The language of Title VI on its face is
ambiguous; the word ‘discrimination’ is inherently so”);
Regents of Univ. of Cal. v. Bakke, 438 U. S. 265, 284 (1978)
(opinion of Powell, J.) (“The concept of ‘discrimination’ . . .
is susceptible of varying interpretations”). Here, the word
“discriminates” in subsection (b)(4) is ambiguous as to the
appropriate comparison class. Burlington Northern R. Co.
v. Commissioner of Revenue, 509 N. W. 2d 551, 553 (Minn.
1993) (“To be discriminatory, a tax must be discriminatory
as compared to someone else”). It is also ambiguous as to
Cite as: 562 U. S. ____ (2011) 3
THOMAS, J., dissenting
what type of difference is required to violate the statute—
e.g., any distinction, singling out, or something in between.
Therefore, I would use the context to resolve the mean
ing of the word as it is used in subsection (b)(4). See Rob
inson v. Shell Oil Co., 519 U. S. 337, 341 (1997) (statutory
interpretation focuses on “the language itself, the specific
context in which that language is used, and the broader
context of the statute as a whole”). We did precisely that
in Department of Revenue of Ore. v. ACF Industries, Inc.,
510 U. S. 332 (1994), where we similarly faced a question
about the meaning of subsection (b)(4). In that case, our
structural analysis of §11501(b) was “central to the inter
pretation of subsection (b)(4).” Id., at 340.
1
The structure of §11501(b) is straightforward. Subsec
tions (b)(1) through (3) instruct that States may not assess
railroad property at “a higher ratio to the true market
value . . . than . . . other commercial and industrial prop
erty,” 49 U. S. C. §11501(b)(1), collect taxes based on those
inflated assessments, §11501(b)(2), or set property tax
rates for railroad property higher than that “applicable to
commercial and industrial property” in the same assess
ment jurisdiction, §11501(b)(3). Subsection (b)(4) then
forbids “[i]mpos[ing] another tax that discriminates
against a rail carrier.”
I would look to subsections (b)(1) through (3) to deter
mine the meaning of “discriminates” in (b)(4). As many
lower courts have correctly recognized, subsection (b)(4)
is a residual clause, naturally appurtenant to subsections
(b)(1) through (3).1 Moreover, the phrase “another tax that
discriminates” in subsection (b)(4) suggests that the previ
——————
1 See,e.g., Kansas City Southern R. Co. v. McNamara, 817 F. 2d 368,
373–374 (CA5 1987); Burlington Northern R. Co. v. Superior, 932 F. 2d
1185, 1186 (CA7 1991); Alabama Great Southern R. Co. v. Eagerton,
663 F. 2d 1036, 1041 (CA11 1981).
4 CSX TRANSPORTATION, INC. v. ALABAMA DEPT. OF
REVENUE
THOMAS, J., dissenting
ous subsections all describe taxes that “discriminate” in a
manner similar to that forbidden by subsection (b)(4). See
Washington State Dept. of Social and Health Servs. v.
Guardianship Estate of Keffeler, 537 U. S. 371, 384 (2003)
(reading the phrase “other legal process” restrictively
because “where general words follow specific words in a
statutory enumeration, the general words are construed to
embrace only objects similar in nature to those objects
enumerated by the preceding specific words” (internal
quotation marks and brackets omitted)).
Subsections (b)(1) through (3) each prohibit particular
types of state taxes that target or single out railroad prop
erty for less favorable tax treatment than other commer
cial and industrial property. First, the “discriminat[ion]”
addressed in subsections (b)(1) through (3) can only be
described as taxes that target or single out railroad prop
erty. Those subsections specifically concern taxes that
affect railroad property differently from the way they
affect a larger class of comparative taxpayers’ property.
See §§11501(b)(1)–(3); cf. ante, at 9 (“[E]ach of subsection
(b)’s provisions proscribes taxes that specially burden a
rail carrier’s property or otherwise discriminate against a
rail carrier” (emphasis deleted)). Second, each subsection
refers to the same comparison class—other “commercial
and industrial property.” §§11501(b)(1)–(3).
I think it follows that, under subsection (b)(4), a tax
“discriminates against a rail carrier” if it similarly targets
railroads for tax treatment less favorable than other com
mercial and industrial taxpayers. As we found in ACF
Industries, the structure of the statute provides a light by
which to navigate the meaning of subsection (b)(4).
2
The background of §11501(b) also supports this under
standing of subsection (b)(4). In previous cases, we have
identified the problem that made subsection (b) necessary.
Cite as: 562 U. S. ____ (2011) 5
THOMAS, J., dissenting
At the time the Railroad Revitalization and Regulatory
Reform Act (4–R Act) was enacted, it was clear that “rail
roads ‘ “are 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.’ ” ACF Industries, supra, at 336 (quoting
Western Air Lines, Inc. v. Board of Equalization of S. D.,
480 U. S. 123, 131 (1987) (quoting, in turn, S. Rep. No. 91–
630, p. 3 (1969))). The “temptation to excessively tax
nonvoting, nonresident businesses . . . made federal legis
lation in this area necessary.” Western Air Lines, supra, at
131; see also Burlington Northern R. Co. v. Oklahoma Tax
Comm’n, 481 U. S. 454, 457 (1987) (noting that “[a]fter an
extended period of congressional investigation, Congress
concluded that ‘railroads are over-taxed by at least $50
million each year’ ” (quoting H. R. Rep. No. 94–725, p. 78
(1975))).
In other words, §11501(b) responded primarily to what
its text describes—property taxes that soaked the rail
roads. The obvious rationale supporting subsections (b)(1)
through (3) is that the “way to prevent tax discrimination
against the railroads is to tie their tax fate to the fate of a
large and local group of taxpayers.” Kansas City Southern
R. Co. v. McNamara, 817 F. 2d 368, 375 (CA5 1987); see
also Atchison, T. & S. F. R. Co. v. Arizona, 78 F. 3d 438,
441 (CA9 1996). In this way, subsections (b)(1) through
(3) establish a political check on the taxation of rail
roads. States cannot impose excessive property taxes on
the nonvoting, nonresident railroads without imposing
the same taxes more generally on voting, resident local
businesses.
Absent any indication that subsection (b)(4), as a resid
ual clause, has any different aim, it is reasonable to con
clude that it shares the same one as subsections (b)(1)
through (3). See, e.g., Kansas City Southern R. Co., supra,
at 373–374 (Congress included subsection (b)(4) “to ensure
6 CSX TRANSPORTATION, INC. v. ALABAMA DEPT. OF
REVENUE
THOMAS, J., dissenting
that states did not shift to new forms of tax discrimination
outside the letter of the first three subsections”); Burling
ton Northern R. Co. v. Superior, 932 F. 2d 1185, 1186 (CA7
1991) (“Subsection (b)(4) is . . . designed to prevent the
state from accomplishing the forbidden end of discriminat
ing against railroads by substituting another type of tax”).
Subsection (b)(4) should be understood to tackle the issue
of systemic railroad over-taxation the same way that the
other subsections do—by linking the taxation of railroads
to the taxation of businesses with local political influence.
Thus, a “tax that discriminates against a rail carrier” is a
tax that targets or singles out rail carriers compared to
commercial and industrial taxpayers.
B
Under this test, CSX’s complaint was properly dis
missed. CSX has not alleged that Alabama’s sales and use
taxes target railroads compared to general commercial
and industrial taxpayers. See ACF Industries, 510 U. S.,
at 346–347 (leaving open a case in which “railroads—
either alone or as part of some isolated and targeted
group—are the only commercial entities” subject to a tax);
Norfolk Southern R. Co. v. Alabama Dept. of Revenue, 550
F. 3d 1306, 1316 (CA11 2008). CSX alleges that it paid a
tax on its fuel that certain rail competitors did not have to
pay. But it concedes, as it must, that the sales and use
taxes are “generally applicable.” Pet. for Cert. i; see Ala.
Code §40–23–2(1) (2010 Cum. Supp.) (imposing a four
percent sales tax on “every person, firm, or corporation . . .
selling at retail any tangible personal property whatso
ever”); §40–23–61(a) (2003); see also Norfolk Southern R.
Co., supra, at 1316; Tr. of Oral Arg. 36.
Discrete exemptions for certain railroad competitors—
namely, fuel exemptions for interstate motor carriers and
interstate ships and barges—do not make a generally
applicable tax “discriminat[ory]” under subsection (b)(4).
Cite as: 562 U. S. ____ (2011) 7
THOMAS, J., dissenting
Widespread exemptions could theoretically cause a facially
general tax to target railroads, but the limited exemptions
at issue here do not suggest that, and CSX has not argued
it.2 Accordingly, CSX has not stated a cognizable claim for
discrimination under §11501(b)(4).
II
The Court does not settle the ambiguity in the word
“discriminates” in subsection (b)(4)—leaving open both the
appropriate comparison class and the type of differential
treatment required to constitute discrimination.3 The
majority “hold[s] only that §11501(b)(4) enables a railroad
to challenge an excise or other non-property tax as dis
criminatory on the basis of the tax scheme’s exemptions.”
Ante, at 10, n. 8. Thus, when the majority says that “a
state excise tax that applies to railroads but exempts their
interstate competitors is subject to challenge under sub
section (b)(4),” ante, at 10, it must mean only that a tax
exemption scheme could potentially violate subsection
(b)(4).
As I understand it, the majority does not decide whether
——————
2 Although the majority rightly observes that whether a given tax is
discriminatory may often be a difficult question, see ante, at 19, this is
not a close case. I therefore need not define the exact boundaries of
what constitutes targeting or singling out. See, e.g., Norfolk Southern
R. Co. v. Alabama Dept. of Revenue, 550 F. 3d 1306, 1316, n. 16 (CA11
2008) (listing examples of courts finding railroads targeted by various
state tax schemes).
3 The majority declines to reach the comparison class issue. But the
question presented was: “Whether a State’s exemptions of rail carrier
competitors, but not rail carriers, from generally applicable sales and
use taxes on fuel subject the taxes to challenge under 49 U. S. C.
§11501(b)(4) as ‘another tax that discriminates against a rail carrier.’ ”
The question presented thus asks whether CSX can challenge a “gener
ally applicable” tax based on exemptions granted to rail competitors—a
straightforward comparison class issue. The lower courts have split
over the proper scope of the comparison class, and the issue was pre
sented in this case. I would decide it.
8 CSX TRANSPORTATION, INC. v. ALABAMA DEPT. OF
REVENUE
THOMAS, J., dissenting
CSX has stated a claim even in this case but instead
leaves that issue for remand. Accordingly, States remain
free to argue—and lower courts to hold—that complaints
like CSX’s should be dismissed for failing to state a “dis
criminat[ion]” claim under §11501(b)(4) when they do not
allege that railroads are targeted or singled out compared
to commercial and industrial taxpayers generally.
Nonetheless, despite the majority’s assertion that it is
“inappropriate” to address whether Alabama’s tax scheme
actually discriminates within the meaning of §11501(b)(4),
ante, at 10, n. 8, parts of its opinion suggest an answer to
that question that I believe is incorrect. Relying on the
second definition in Black’s Law Dictionary, the majority
defines “discriminates” as “ ‘failure to treat all persons
equally when no reasonable distinction can be found be
tween those favored and those not favored.’ ” Ante, at 8.
This definition of “discriminate,” combined with the major
ity’s insistence that the “distinctions drawn in §11501(b)
are . . . between railroads and other actors, whether inter
state or local,” suggests that the comparison class could be
anyone.4 Ante, at 10. The majority ultimately implies that
“another tax that discriminates against a rail carrier” is
any tax that draws a distinction between a rail carrier and
anyone else without sufficient justification. See ante, at
10, n. 8 (“Whether the railroad will prevail . . . depends on
whether the State offers a sufficient justification for de
——————
4 A comparison class of “anyone” is broader than either of the sides in
the lower courts’ split on this issue. Courts usually disagree over
whether to use commercial and industrial taxpayers or railroad com
petitors as the comparison class. Compare Burlington Northern, S. F.
R. Co. v. Lohman, 193 F. 3d 984, 985–986 (CA8 1999) (applying a
comparison class of rail competitors); Burlington Northern R. Co. v.
Commissioner of Revenue, 509 N. W. 2d 551, 553 (Minn. 1993) (same),
with Kansas City Southern R. Co., 817 F. 2d, at 375 (using commercial
and industrial taxpayers as the comparison class); Atchison, T. & S. F.
R. Co. v. Arizona, 78 F. 3d 438, 441 (CA9 1996) (same).
Cite as: 562 U. S. ____ (2011) 9
THOMAS, J., dissenting
clining to provide the exemption at issue to rail carriers”).
I do not read subsection (b)(4) so independently of (b)(1)
through (3). Perhaps, as the majority asserts, subsection
(b)(4) is not an ideal candidate for ejusdem generis. Ante,
at 16–17. But given the ambiguity of subsection (b)(4),
(b)(1) through (3) are the best guides for understanding its
proper scope—something we recognized in ACF Industries.
510 U. S., at 343. It is more reasonable to discern the
meaning of “discriminates” in subsection (b)(4) using the
preceding subsections than to pluck from the dictionary a
definition for such a context-dependent term.
Detaching subsection (b)(4) from the rest of the section
would expand its meaning well beyond the scope of the
problem that necessitated §11501(b). Instead of simply
eliminating the particular vulnerability of railroads by
tying their tax fate to that of general commercial and
industrial taxpayers, railroads would receive a surprising
windfall: most-favored taxpayer status. This would con
vert subsection (b)(4) from a shield into a sword.
The implication of the majority opinion is that if every
person and business in the State of Alabama paid a $1
annual tax, and one person was exempt, CSX could sue
under subsection (b)(4) and require the State to either
exempt CSX also or “offe[r] a sufficient justification” for
the distinction. See ante, at 10, n. 8. Although the major
ity denies that this would provide railroads most-favored
taxpayer status, see ibid., it acknowledges that States
would have to justify any tax distinction that railroads
argue may disfavor them.
The only bulwark against requiring States to give rail
roads every tax exemption that anyone else gets would be
open-ended judicial determinations of what is “sufficient
justification” for such distinctions. Ibid. Unsurprisingly,
the statute provides no guidance for what “sufficient justi
fication” might mean, but neither does the majority.
There are all sorts of reasons that might lead a State to
10 CSX TRANSPORTATION, INC. v. ALABAMA DEPT. OF
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THOMAS, J., dissenting
distinguish between railroads and others for tax purposes.
See Tr. of Oral Arg. 58. For instance, in this case, Ala
bama points out that motor carriers and interstate water
carriers pay a separate—and frequently higher—tax on
fuel from which railroads are effectively exempt. Brief for
Respondents 12–16, 59–60. That might be a “sufficient
justification” for their exemptions from the taxes here, but
the majority expressly disclaims reaching that question.
Ante, at 5, n. 5.5 Of course, logically extending the mean
ing of “discriminates” from subsections (b)(1) through (3)
would avoid this problem, as there is no need for “justifica
tion” at all: A tax either targets railroads by comparison to
commercial and industrial taxpayers or it does not.
* * *
I disagree with the meaning of “discriminat[e]” in sub
section (b)(4) that the majority seems to imply. The rest of
§11501(b) provides a logical and coherent way to deter
mine what subsection (b)(4) means, and we have used that
methodology before. See ACF Industries, 510 U. S., at
340. The best way to read subsection (b)(4) is as prohibit
ing taxes that target or single out railroads as compared to
general commercial and industrial taxpayers. That is the
test I would establish, and I do not understand the major
ity to foreclose the lower courts from utilizing it. Under
that test, CSX’s challenge to Alabama’s sales and use
taxes was properly dismissed. Accordingly, I respectfully
dissent.
——————
5 The majority appears to consider “sufficient justification” as a poten
tial defense for the State, see ante, at 10, n. 8, but since it derives from
the meaning of “discriminates,” a lack of sufficient justification would
seem to be a part of what a railroad would have to plead in order to
state a claim for a violation of §11501(b)(4).