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 exemption
scheme must target or single out railroads by comparison to general
commercial and industrial taxpayers.”
CSX Transp., Inc. v.
Alabama Dept. of Revenue (
CSX I ), 562 U.S. 277-298
(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
Department of Revenue.
I
A
Last time this case was before the Court, I explained in detail
my reasons for interpreting “another tax that discriminates 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 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 omitted). Subsections (b)(1)
through (3) thus “establish a political check” by preventing States
from imposing excessive property taxes on railroads “without
imposing the same taxes more generally on voting, resident local
businesses.”
Ibid. Subsection (b)(4) is best understood as
addressing the same problem in the same way.
Id., at
301-302.
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 vehicles). 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 “discriminates” 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
“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
something 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. 582-593 (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 limitation 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 industrial’—but not the noun ‘property’—from the
first three provisions, append general in front of it and
‘taxpayers’ 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. 192-218 (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 statutory term
“discriminates” is no different from the majority’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 majority
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 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 ambiguity 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 independent
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 opinion). I joined the majority
in rejecting that argument.
Id., at 297 (dissenting
opinion). But whereas there is no uncertainty 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
understand 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. 578-589 (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 comparison class will
“depen[d] on the theory of discrimination alleged in the claim.”
Ante, at 4-5. Sometimes the comparison class will be “all
other commercial and industrial taxpayers,” sometimes it will be
“the railroad’s competitors” 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 conclude that
competitors are similarly situated, and therefore qualify as a
comparison class, is the professed purposes 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 manner 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 majority’s certitude that §11501(b)(4)
is designed to further
those goals by combatting
that evil, at least in
the way the majority
asserts. Instead, the first three subsections provide strong
textual evidence that §11501(b) was designed to stabilize rail
carriers by protecting them from discrimination against interstate
commerce. And they provide evidence 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 targeted 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 similar 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
prohibitions 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
purposes of the 4-R Act.
The majority’s conclusion that competitors are a permissible
comparison class completely ignores these contextual clues,
permitting subsection (b)(4) to serve different statutory goals by
a different mechanism than its three predecessor 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 competition 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
competitors and
any other similarly situated taxpayers.
See
ante, 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 undisciplined
approach the majority endorses could well lead to other
unanticipated consequences. This is why the policy judgments needed
to link statutory mechanisms to statutory 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 carriers, 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 operations,” 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 depend on the identity of the purchaser, but on whether
the 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: provide guidance concrete
enough to ensure that the” statute is applied consistently.
James, 550 U.S., at 215 (SCALIA, J., dissenting). We have
demanded clarity from Congress when it comes to statutes that
“se[t] limits upon the taxation 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. 332-345 (1994). We should demand the same of ourselves when we
interpret those statutes. Yet after today’s decision, 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 Alabama’s burden of litigating a
baseless claim of discrimination that should have been dismissed
long ago. I respectfully dissent.
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