THOMAS, J., DISSENTING
CSX TRANSPORTATION, INC. V. ALABAMA DEPT. OFREVENUE
562 U. S. ____ (2011)
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 capable 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 holding stops
there, see
ante, at 10, n. 8, but I would go on.
I would hold that, to violate §11501(b)(4), a
tax exemption scheme must target or single out railroads by
comparison 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 exemption scheme—that targets or singles out railroads
as compared to other commercial and industrial taxpayers. That
reading settles the ambiguity in the word “discriminates” 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) (opinion 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 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 meaning of the word as it is used in subsection (b)(4). See
Robinson 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 interpretation of subsection
(b)(4).”
Id., at 340.
1
The structure of §11501(b) is
straightforward. Subsections (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
property,” 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 assessment 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 determine 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).[
Footnote 1]
Moreover, the phrase “another tax that discriminates” in subsection
(b)(4) suggests that the previous 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
property for less favorable tax treatment than other commercial 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 property. 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 commercial 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 understanding of subsection (b)(4). In previous
cases, we have identified the problem that made subsection (b)
necessary. At the time the Railroad Revitalization and Regulatory
Reform Act (4–R Act) was enacted, it was clear that “railroads
‘ “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 legislation 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 railroads. 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 residual clause, has any different aim, it is reasonable to
conclude 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 that states did not shift to new forms of tax discrimination
outside the letter of the first three subsections”);
Burlington
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 discriminating
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 dismissed. 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 whatsoever”); §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).
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.[
Footnote 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.[
Footnote 3] The
majority “hold[s] 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 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 subsection (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 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 “discriminat[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 between
those favored and those not favored.’ ” Ante, at 8.
This definition of “discriminate,” combined with the majority’s
insistence that the “distinctions drawn in §11501(b) are … between
railroads and other actors, whether interstate or local,” suggests
that the comparison class could be anyone.[Footnote 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 declining 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 convert 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 majority 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 railroads 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 justification” might mean, but neither does the
majority. There are all sorts of reasons that might lead a State to
distinguish between railroads and others for tax purposes. See Tr.
of Oral Arg. 58. For instance, in this case, Alabama 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.[Footnote 5] Of course, logically extending the meaning of
“discriminates” from subsections (b)(1) through (3) would avoid
this problem, as there is no need for “justification” 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 subsection (b)(4) that the
majority seems to imply. The rest of §11501(b) provides a logical
and coherent way to determine 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
prohibiting 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 majority 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.
Footnote
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).
Footnote
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).
Footnote 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 “generally 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 presented in this case. I would
decide it.
Footnote 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 competitors
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).
Footnote 5
The majority
appears to consider “sufficient justification” as a potential
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).
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