CSX Transportation, Inc. v. Alabama Department of Revenue, No. 12-14611 (11th Cir. 2018)Annotate this Case
Alabama rail carriers pay a 4% sales and use tax on diesel fuel. Motor carriers and water carriers are exempt from that tax but motor carriers pay a Motor Fuels Excise Tax of $0.19 per gallon of diesel. Water carriers pay no tax for diesel fuel. The Eleventh Circuit previously determined that Alabama failed to sufficiently justify the scheme under the Railroad Revitalization and Regulatory Reform Act, 49 U.S.C. 11501, which forbids states from discriminating against rail carriers in assessing property or imposing taxes. The Supreme Court reversed and remanded. On remand, the district court again ruled that Alabama’s tax scheme does not violate the Act. The Eleventh Circuit then reversed. The excise tax justifies the motor carrier exemption. As to water carriers, their exemption is not “compelled by federal law.” Although imposing the sales and use tax on water carriers transporting freight interstate might “expose” the state to a lawsuit under federal law, compulsion requires more than exposure. The water carrier exemption is “compelled by federal law” only if imposition of the sales and use tax would violate federal law. It would not, so it violates the Act.
This opinion or order relates to an opinion or order originally issued on August 19, 2015.