FI L ED U.S. COURT OF APPEAL S EL EVENTH CI RCUI T Dec ember

11, 2008 THOMAS K. KAH

N CL ERK [PUBLIS H]

IN THE UN ITED STATES COURT OF APPEALS

FOR THE ELE VENTH CIRCUIT

__ __ __ __ __ __ __ __ __ __ __ __
No. 0 8- 12 71 2

__ __ __ __ __ __ __ __ __ __ __ __
D. C. Dock et No. 0 8- 00 28 5- CV-HGD-S

NORFOLK SOUTHERN RAILW AY COMPANY,

Pl ai nt iff -Ap pe ll an t,

ve rs us

ALABAMA DEPARTMENT OF REVENUE
, TIM RUSS ELL, Co m m is si on er o f Rev en ue

.

Defen da nt s- App el le es

.

__ __ __ __ __ __ __ __ __ __ __ __ App eal fro m

th e Uni te d S ta te s Di st ric t Co ur t fo r th e Nor th ern Dis tri ct of Al ab am a

__ __ __ __ __ __ __ __ __ __ __ __ _ (Dece m be r 11 , 20 08 )

Befo re BARKETT an d WILSON, Circu it Ju dg es , and POGUE,* Ju dg e.

__ __ __ __ __ __ __ __ __ __ __ __ * Honorable Donald C. Pogue
, of the United States Court of I nterna tional Trade
, sitti ng b y desig nation.POGUE, Ju dg e:

Nor fo lk So ut he rn Rai lway Co m pa ny (“ Nor fo lk ”) ap pe al s an or de r de nyin g it s

ap pl ic at io n f

o r pr el im in ary in

jun ct iv e rel ie f fro m th e im po si ti on of Alab am a’s sa le s

an d us e ta x on di es el fu el

. Nor fo lk as se rts th at th e sa le s an d us e ta x on di es el fu el

di sc riminat es ag ai ns t rai lro ad co m pa ni es in vi ol at io n of S e c ti on 30 6( 1) (d ) of th e

Rai lro ad Rev it al iz at io n an d Reg ul at or y Refo rm Act of 19 76 (th e “ 4- R Act” ), cu rren tl y

co di fie d a s 4 9 U.S.C. § 11 50 1( b) (4 ).

W e affi rm th e di st ric t co ur t’s de ni al of a pr el im in ary in jun ct io n. No rf

ol k S. Ry.

v. Ala

. Dep ’t of Reven ue , Ci vi l Acti on No. 2: 08 -cv -0 02 85 -HGD, sl ip op

. at 33 (N.D.

Ala. Apr . 9 , 2 00 8)

. Befo re we ex pl ai n th e rea so ns fo r th at affi rm an ce, ho wev er, we

wil l fir st ou tl in e th e ta x pr ov is io ns Nor fo lk ch al le ng es , br ie fly rev ie w th e pu rp os e an d

te xt of t he 4-R Act, an d s um m ari ze t he pro ceed in gs be lo w; we wi ll th en ex pl ai n o ur

co nc lu si on th at Alab am a’s ta x d oe s n ot vi ol at e th e 4 -R Act

.

I

Tho ug h Nor fo lk is a Virg in ia rai lway co rp or at io n, it is qu al ifi ed to do bu si ne ss

in Alab am a an d ha s ap pr ox i mat e l y a on e-t hi rd m ark et sh are am on g Alab am a rai l

carr ie rs

. W hi le Nor fo lk ’s op erat io ns e x te nd acro ss twen ty-two st at es , it own s it s

r i gh ts -o f-way an d bu il ds
, m ai nt ai ns , an d rep ai rs it s tra ck s an d ot he r st ru ct u r e s i n

Alab am a, an d i s t he refo re s ub ject t o t ax at io n t he re.

-2-Pu rs ua nt to A LA

. C O D E §§ 40 -2 3- 1 to -2 13 (2 00 8)
, Alab am a le vi es a “ sa le s ta x”

o n t h e g r os s rece ip ts of ret ai l en ti ti es se ll in g ta ng ib le pe rs on al pr op ert y wit hi n t h e

st at e, id

. § 40 -2 3- 2( 1)
, an d a “ us e ta x” on th e st or ag e, us e, or co ns um pt io n of ta ng ib le 1

pe rs on a l p ro pe rty in th e st at e. Id

. § 40 -2 3- 61 (a). The ta x is le vi ed at a rat e of fo ur

pe rcen t of th e pu rch as e pr ic e. Id

. §§ 40 -2 3- 2( 1)
, -6 1( a). Afte r th e pa y m en t of

ad m in is tra ti ve an d en fo rcem en t ex pe ns es , an d sm al l p a ym en ts to ot he r st at e fu nd s,

Alab am a de po si ts th e sa le s an d us e ta x pr oc eed s in to it s Edu cat io n Trus t Fu nd

. Id

. §§

4 0 -2 3- 35 (a) to -3 5( f), -8 5. Fu rth er, a nu m be r of Alab am a ci ti es an d co un t i e s l e v y

lo cal sa le s an d us e ta xe s at va ry in g rat es

. No rf ol k S. Ry.
, Ci vi l A c t i o n N o

. 2: 08 -cv

00 28 5- HGD, sl ip op

. at 5. Nor fo lk m us t pa y th es e st at e an d lo cal sa le s an d us e ta xe s

on it s p ur ch as e, co ns um

pt io n, o r us e o f di es el fue l. Acco rd in g t o e xp ert tes ti m on y , 2

aft er cap it al im

pr ov em en ts an d co m

pe ns at io n, di es el fu el co ns ti tu te s Nor fo lk ’s th ird

hi gh es t b us in es s ex pe ns e.

Although in r eality

collecte d from re tailers, the sa les tax i s “conc lusively . . . presumed 1 to be a dire ct tax on the retail consumer .” Id . § 40-23-26( c).
Although not a t issue here , we note tha t Norfolk also pa y s state ad va lorem tax on it s 2 Alabama proper ty (e.g ., trac k, roadw ay

structure s, and roa dbeds) a nd pay s sales and use tax on the mater ials used to build, maintain, and repa ir its property . As motor car riers, a ir ca

rrier s, and
water car riers do not own, build, or maintain r oads, airpor ts and airspa ce, or

ports and wa terwa

y s, such ca rrier s do not pay

sales and use tax or ad valorem tax in this manner . We note also that if Norfolk buy s diesel fue l in other states, it still must pay use tax on the sales price or re asonable marke t value of the fuel used, unle ss it has alrea dy paid equa l or g rea ter a mounts of sales tax in the other state s. See A L A

. C O D E §§ 40-23-61( e), - 65.

-3-By an d la rg e, Nor fo lk ’s m ai n co m pe ti to rs do no t pa y Alab am a’s sa le s an d us e

3

ta x on th e di es el fu el th ey pu rch as e or co ns um e. Rat he r, so lo ng as m ot or carr ie rs pa y

Alab am a’s m ot or fu el ex ci se ta x, at a to ta l of $0 .19 pe r ga ll on , su ch en ti ti es do no t pa y

th e sa le s an d u se tax on di es el fue l. Id

. §§ 40 -1 7- 2( 1) (impos in g $0 .13 pe r ga ll on on

m ot or fu el ; ha vi ng pa id th is ta x, m ot or carr ie rs are “ no t su bjec t to an y ot he r ex ci se ta x

le vi ed by th e st at e”), -2 20 (e) (impos in g up on di st rib ut or s an d su pp li ers an ad di ti on al

ex ci se ta x of $0 .06 pe r ga ll on on m ot or fu el rece iv ed fro m a te rm in al
, refi ne ry , ba rg e,

or pi pe li ne ), -2 20 (j). Not ab ly, ho wev er, m ot or carr ie rs are no t ex em pt fro m th e sa le s 4

The pa rties ag ree that Norfolk’ s direct c ompetitors are “on-hig hway motor car

riers of 3
proper ty in interstate commer ce” (“motor c arr iers”) and “c arr iers of pr operty in interstate

commerc e by

ships, barg es, and othe r vesse ls” (“w ater car riers” ); air c arr iers only

marg inally compete w ith rail car

riers. Norfolk S. Ry. , Civil Action No. 2:08-c v-00285-HG D, slip op. at 4. The pa rties see mingly

ag ree that these dire ct competitors, or the “compe titive mode,” serve as the
proper “compa rison class” f

or sec tion (b)(4). Courts a re split on the issue of the pr oper “compa rison class.” Compare CSX Transp., Inc. v. Ala. De p’t of Reve nue , Civil Action No. 2:08- cv-00655- UWC, sl ip op. at 6-7 & n.3 (N.D. A la. J uly 8, 2008) (a

pply ing “ competitive mode”
compar ison class, consisting of railroa d' s “direc t competitors”), and Union Pac. R.R. v . Minn. Dep't of Reve nue , 507 F.3d 693, 695 ( 8th Cir. 2007) (same)
, and Ka. Cit y S. Ry . v. Bridges , No. 04-2547, 2007 U.S. Dist. L EXI S 23477, at *21-22 (W.D. L a. Mar . 30, 2007) (sa me), and Burlington N

. R.R. v. Comm'r of Reve nue , 509 N.W.2d 551, 553 (Minn. 1993) (same)
, with Burlington N

. Santa Fe Ry. v . Monroe , Civil Action No. 97-D -1754-N, slip op. at 21 (M.D . Ala. Aug . 10, 1998) (a

pply ing c omparison class of other “ commerc ial and industrial taxpay ers” ), and Atchison, Topeka & Santa Fe Ry. v . Arizona , 78 F.3d 438, 441 ( 9th Cir. 1996), cert. de nied , 519 U.S. 1029 (1996) (sa

me), and Ka. Cit

y S. R.R. v . McNamara , 817 F.2d 368, 375, 376 n.15 ( 5th Cir. 1987) (same ), and Ala. Great S. R.R. v. E agerton , 541 F. Supp. 1084, 1086 (M.D. Ala . 1982) (same) . The Supreme Court in dicta has applied the “other commerc ial and industrial taxpay ers”
cate g ory to challeng es to state taxes under se ction (b)( 4). See D ep't of Rev. v. ACF I ndus., Inc
., 510 U.S. 332, 335 (1994). I n any event, a s we find that the subje ct tax is g ener ally applicable in

acc ordanc e with ACF Industries , we ne ed not deter mine the appr opriate “ compar ison class” he re.

Rail carr iers do not pay

fuel e x cise tax on their purcha se or c onsumption of diesel fuel. 4 Id . §§ 40-17-2( 1) (“ motor fuel subjec t to the excise tax levied by this article shall not be subjec t to any other e x cise tax levied by the state” ), -220( d)(2) , -220(e ) (“ wher e any excise tax imposed

-4-an d us e ta x if th ey do no t pa y th e m ot or fu el ex ci se ta x on di es el fu el

. Se e id

. § 40 -1 7-

2( 1)

. Alab am a sp en ds it s fu el ex c i s e t a x pr oc eed s on th e co ns tru ct io n, rep ai r, an d 5

m ai nt en an ce of pu bl ic hi gh way s, id . § § 40 -1 7- 13 (4 ), -1 46 , - 22 2, as well as on c o s ts

of tax co ll ect io n a nd bo nd s p rev io us ly iss ue d t o b ui ld roa ds

. Id . § 4 0- 17 -1 3.

In ad di ti on , Alab am a le vi es a ga so li ne ta x a t a r a t e of $0 .12 pe r ga ll on on

ga so li ne in te nd ed fo r us e in in te rn al co m bu st io n en gi ne s. Id

. § 40 -1 7- 31 (a) (impos in g

an ex ci se ta x of $0 .07 pe r ga ll on an d a su pp le m en ta l ex ci se ta x of $0 .05 pe r ga ll on ).

An ad di ti on al ex ci se ta x of $0 .04 pe r g a l lo n al so ap pl ie s to ga so li ne

. Id

. § 40 -1 7-

22 0( a)-( b)

. Alab am a sp en ds th e pr oc eed s fro m t h e g a so li ne ta xe s to m ai nt ai n

hi gh way s an d st reet s. Id

. §§ 40 -1 7- 31 (c)( 2)
, -2 23

. Mo reo ve r, m ot or carr ie rs are al so

su bjec t to a m ot or ca rr ie r fu el ex ci se ta x eq ua l to th e ap pl ic ab le ga so li ne or di es el fu el

ta x, bu t th ey rece iv e cred it as to th ei r m ot or carr ie r fu el ex ci se ta x bi ll fo r ga so li ne or

di es el fu el ta x al read y pa id on th e su bjec t ga so li ne or di es el fu el

. Id

. §§ 40 -1 7- 14 1,

-

14 2( a). 6

by this section shall have be en paid to the state by a distributor or supplier the pa y ment shall be sufficie nt, the intent being that the tax shall be paid to the state but once” ).

Norfolk a

rg ues that “the re is no evide nce tha t motor carr iers pay

any thing other

than the 5 excise tax .” App.’ s Br . 5 n.3. Howeve r, Norf olk has not cited the c ourt to the rec ord, nor did Norfolk pr esent a

ny evidenc e bef

ore the trial court on this issue.

Section 40-17-141 r eads tha t “[e]very motor car

rier sha ll pay

an excise tax upon mot or 6 fuels used in its opera tions withi n this state at the same ta x rate per g allon as . . . the g asoline tax and diese l fuel tax.” Section 40-17-142(a ) indicate s that “[e]very motor car

rier subje ct to the tax here by imposed shall be entitled to a cr edit on such tax equivalent to the rate per g allon of the

-5-In te rs ta te an d in te rn at io na l wate r carr ie rs are al so ex em pt fro m th e sa le s an d us e

ta x on fu el

. Id

. §§ 40 -2 3- 4( a)(1 0)
, -6 2( 12 ). W hi le in tr as ta te wate r carr ie rs m us t pa y

sa le s an d us e ta xe s on fu el
, Nor fo lk in si st s th at in tra s t a t e w a t e r carr ie r sh ip m en ts

co ns ti tu te on ly a sm al l po rti on (acc or di ng to on e of Nor fo lk ’s tri al ex hi bi ts , on ly ab ou t

on e m il li on of ap pr ox im at el y 19 4 m il li on to ns of in tra st at e s hi pm en ts ) of it s

co m pe ti ti on wit hi n Al ab am a.

II

Nor fo lk ch al le ng es Alab am a’s le vy of sa le s an d us e ta x on di es el fu el un de r th e

4- R Act . Con gr es s p as se d t he 4-R Act i n 1 97 6:

“ to pr ov id e th e m ean s to reh ab il it at e an d m ai nt ai n th e ph y si cal faci li ti es , im pr ov e th e op er a t i o n s an d st ru ct ur e, an d res to re th e fin an ci al st ab il it y of th e rai lway syste m of th e Uni te d St at es .” § 10 1( a). Am on g th e m ean s ch os en by Co ng res s to fu lfi ll th es e ob jecti ve s, pa rti cu la rl y th e go al of fu rth eri ng rai lro ad fin an ci al sta bil ity
, w as a pr oh ib it io n on di sc riminat or y st at e ta xa ti on of rai lro ad pr op ert y

. Afte r an ex te nd e d pe rio d of

co ng res si on al in ve st ig at io n, Co ng res s c o n cl ud ed th at “ rai lro ad s are

ov er-t ax ed by at le as t $ 50 m il li on each y ear.” H. R. Rep

. No. 94 -7 25
, p. 78 (19 75 ) . . . .

In bro ad ter m s, Co ng res s d ecl ared in § 30 6( b) th at as se ss m en t rat io s o r ta xa ti on rat es impo se d on rai lro ad pr op ert y whi ch di ffer si gn ifi can tl y fro m th e rat io s or rat es im po se d on ot he r co m

m erci al an d in du st ria l
pr op ert y are pr oh ib it ed as bu rd en s on in te rs ta te co m m erce

. Sect io n

applicable Alabama

tax on m otor fuel whic h is curre ntly in effe ct on all motor fuel pur chase d by such motor ca

rrier within this state for

use in its operations either within or without thi s state and upon which the motor fue l tax has bee n paid by such motor ca

rrier .” Thus, it appea

rs that motor

car riers do not pa

y the motor ca

rrier fuel tax so long as the y

pay either the applicable g asoline or applicable diesel fue l tax es.

-6-30 6( c) d ecl ared an ex cep ti on fro m th e p ro vi si on s o f th e Tax Inju nc ti on Act, 2 8 U. S . C . § 13 41 , a ll owi ng rai lro ad s to ch al le ng e di sc riminat or y ta xa ti on in fed eral di st ric t co ur ts

.

Bur li ng to n N. R.R. v

. Okla

. Ta x Co mm’n
, 48 1 U.S. 45 4, 45 7 (1 98 7) (fo ot no te s

om it te d)

.

Co ns is te nt wit h it s pu rp os e, th e t ex t of th e 4- R Act fo cu se s pr im ari ly on

di sc riminat or y pr op ert y ta xa ti on , bu t it al so in cl ud es a br oa de r pr oh ib it io n in se ct io n

11 50 1( b) (4 ). In c ur ren t fo rm , 49 U.S.C. § 1 15 01 read s: 7

(a) In th is sec ti on

—
(1 ) th e te rm “ as se ss m en t” m ean s va lu at io n fo r a pr op ert y ta x l ev ie d b y

a ta xi ng di st ric t;

(2 ) th e te rm “ as se ss m en t j ur is di ct io n” m ean s a g eo gr ap hi cal area in a St at e us ed in de te rm in in g th e as se ss ed va lu e of pr op ert y fo r ad

va lo rem tax at io n;
(3 ) th e te rm “ rai l tr a ns po rta ti on pr op ert y ” m ean s pr op ert y , as de fin ed by th e Bo ard
, own ed or us ed by a rai l carr ie r pr o v i d i n g tra ns po rta ti on su b

ject to th e juri sd ic ti on of th e Bo ard un de r th is
pa rt; an d

(4 ) th e te rm “ co m

m erci al an d in du st ria l pr op ert y ” m ean s pr op ert y , ot he r th an tra ns p o r t at io n pr op ert y an d la nd us ed pr im ari ly fo r

The orig inal lang uag e of the rele vant portion of the Ac t, section 306, was or igina lly 7 codified a s 49 U.S.C. § 26c. CSX Transp., Inc. v. Ga. State Bd. of Equalization , 128 S. Ct . 467, 470 n.1 (2007). I n 1978, section 306 wa s rec odified, without any intended substantive cha ng e, at 49 U.S.C. § 11503. Id .; Act of Oc t. 17, 1978, Pub. L . No. 95-473, Ch. 15, 92 Stat. 1337, 1445- 46, 1466 (1978). I n 1995, Congr ess ag ain re codified se ction 306, without substantive chang e, as 49 U.S.C. § 11501. Ga. State Bd. Of Equalization , 128 S. Ct . at 470 n.1; Act of D ec. 29, 1995, Pub. L . No. 104-88, § 102(a ), 109 Stat. 803, 843-44 (1995).

-7-ag ric ul tu ral pu rp os es or ti m be r gr owi ng , de vo te d to a co m m erci al

or in du st ria l u se an d s ub

ject t o a pro pe rty tax lev y

. (b ) The f o l lo win g act s un reas on ab ly bu rd en an d di sc riminat e ag ai ns t in te rs ta te co m

m erce , a n d a St at e, su bd iv is io n of a St at e, or au th or it y act in g fo r a St at e o r su bd iv is io n o f a St at e m ay no t d o a ny of th em :
(1 ) Ass es s rai l tra ns po rta ti on pr op ert y at a va lu e th at ha s a hi gh er rat io to th e tru e m ark et va lu e of th e rai l tra ns po rta ti on pr op er t y th an t h e r a t i o th at th e as se ss ed va lu e of ot he r co m m erci al an d in du st ria l p ro pe rty i n th e sa m e as se ss m en t juri sd ic ti on ha s to th e tru e m ark et va lu e of th e ot he r co m m erci al an d in du st ria l pr op ert y

. (2 ) Lev y or co ll ect a ta x on a n a s s e s s ment th at m ay no t be m ad e

un de r pa rag rap h (1 ) of

th is su bs ect io n.
(3 ) Lev y o r c o l le ct an ad va lo rem pr op ert y ta x on rai l
tra ns po rta ti on pr op ert y at a ta x rat e th at e x c e ed s th e ta x rat e ap pl ic ab le to co m

mer c i a l an d in du st ria l pr op ert y in th e sa m e

as se ss m en t ju ris di ct io n.
(4 ) Im po se an ot he r ta x th at di sc riminat es ag ai ns t a r a il carr ie r pr ov id in g tra ns po rta ti on su bjec t to th e juri sd ic ti on of th e Bo ard

un de r th is pa rt.

(c) Not wit hs ta nd in g se ct io n 13 41 of ti tl e 28 an d wit ho ut reg ard to th e

am ou nt in co nt ro ve rs y or ci ti zen sh ip of th e pa rti es , a di st ric t co ur t of th e Uni te d St at es ha s juri sd ic tio n, co nc ur re nt w ith ot he r juri sd ic ti on of co ur ts of th e Uni te d St at es an d t he Sta te s, t o pr ev en t a vi ol at io n of su bs ect io n (b ) of th is se ct io n. Rel ie f m ay be gr an te d un de r th is su bs ect io n on ly if th e rat io of as se ss ed va lu e to tru e m ark et va lu e of rai l tra ns po rta ti on pr op ert y

ex ceed s by at le as t 5 pe rcen t th e rat io of as se ss ed va lu e t o tru e m ark et

va lu e of ot he r co m

m erci al an d in du st ria l pr op ert y in th e sa m e as se ss m en t juri sd ic ti on

. The bu rd en of pr oo f in de te rm in in g as se ss ed va lu e an d tru e

m ark et va lu e is go ve rn ed by St at e la w. If th e rat io of th e as se ss ed va lu e of oth er co m

m er ci al an d in du st ria l pr op ert y in th e as se ss m en t juri sd ic ti on to th e tr ue m ark et va lu e o f al l o th er co m m erci al an d i nd us tri al pro pe rty

can no t be de te rm in ed to th e sa ti sf act io n of th e di st ric t co ur t th ro ug h th e

-8-ran do m -s am pl in g m et ho d kn own as a sa le s as se ss m en t rat io st ud y (to be

carr ie d ou t un de r st at is ti cal pr in ci pl es ap pl ic ab le to su ch a st ud y ), th e

co ur t s ha ll fin d, as a vi ol at io n o f th is sec ti on

—
(1 ) an as se ss m en t of th e rai l tra ns po rta ti on pr op ert y at a va lu e th at ha s a hi gh er rat io to th e tru e m ark et va lu e of th e rai l tra ns po rta ti on pr op ert y th an th e as se ss ed va lu e of al l ot he r pr op ert y su bjec t to a pr op ert y ta x le v y i n th e as se ss m en t juri sd ic ti on ha s to th e tru e

m ark et va lu e of al l ot he r co m m erci al an d in du st ria l pr op ert y ; an d

(2 ) th e co ll ect io n of an ad va lo rem pr op ert y ta x on th e rai l
tra ns po rta ti on pr op ert y at a ta x rat e th at ex ceed s th e ta x rat io rat e ap pl ic ab le to tax ab le pro pe rty in t he tax in g d is tri ct

.

Si m il ar to ot he r juri sd ic ti on s, th is ci rcu it in te rp ret s se ct io n 11 50 1( b ) ( 4 ) as a

“ cat ch al l” th at pr ev en ts al l form s of dis cri m in at or y ta xe s, pro pe rty or ot he rwis e. Se e

Ala

. Gre at S. R.R. v. Eag er to n , 66 3 F.2 d 10 36
, 10 40 (1 1t h Ci r. 19 81 ). Se e al so Dep ’t

of Reven ue v. ACF Ind us ., In c ., 51 0 U.S. 33 2, 33 9- 40 (1 99 4) (rea di ng sec ti on (b) (4 )

br oa dl y to in cl ud e di sc riminat or y pr op ert y ta xe s, in di rect ly in di cat in g th at (b )(4 ) al so

pr ev en ts di sc riminat or y

no n- pr op ert y

tax es ).

II I

On Feb ru ary 19
, 20 08
, Nor fo lk fil ed su it in th e Uni te d St at es Dis tri ct Co ur t fo r

th e Nor th ern Dis tri ct of Alab am a, ch al le ng in g th e im po si ti on of Alab am a’s sa le s an d

u s e ta x on it s di es el fu el
, an d se ek in g de cl arat or y in ad di ti on to pr el im in ary an d

pe rm an en t in

jun ct iv e rel ie f. Nor fo lk ’s co m pl ai nt al le ge d th at “ [t]he Alab am a sc he m e

of ta xa ti on

. . . res ul ts in di sc riminat io n ag ai ns t Alab am a rai lro ad s

. . . in vi ol at io n of

-9-Sect io n 11 50 1( b) (4 ), whi ch en ti tl es Nor fo lk [] to in jun ct iv e rel ie f pr ov id ed by Sect io n

11 50 1( c) th er e o f

. ” The Defen da nt s, Alab am a Dep art m en t of Rev en ue an d Tim

Ru ss el l, Co m

m is si on er of Rev en ue (co ll ect iv el y , “ Dep art m en t” ), res po nd ed th at

Nor fo lk co ul d no t cl ai m “ reas on ab le cau se ” t o be li ev e th at a 4- R Act vi ol at io n ha d

oc cu rred
, be cau se th e la w ha s rem ai ne d un ch an ge d si nc e Bur li ng to n No rt he rn Sa nt a

Fe Rai lw ay v. Mon ro e , Ci vi l Acti on No. 97 -D-1 75 4- N (M.D. Ala. Aug

. 10
, 19 98 )

(h ol di ng th at Alab am a’s sa le s an d us e ta x on di es el fu el di d no t vi ol at e th e 4- R Act)

.

Fo ll owi n g t he pa rti es ’ su bm is si on of br ie fs an d a he ari ng on Mar ch 14
, th e

co ur t de ni ed Nor fo l k ’s mo t io n fo r pr el im in ary in jun ct io n, co nc lu di ng th at Nor fo lk 8

was un li ke ly to su ccee d on th e m eri ts of it s cl ai m

. Se e No rf ol k S. Ry. v. Ala

. Dep ’t of

Reven ue , Ci vi l Acti on No. 2: 08 -cv

- 0 0 2 8 5 -HGD, sl ip op

. at 33 (N.D. Ala. Apr

. 9,

20 08 ). The co ur t fo un d t ha t:

th e ot h e r t a x e s im

po se d on m ot or carr ie rs an d wate r carr ie rs , su ch as

ex ci se ta xe s an d m ot or fu el t a x e s s h ou ld be co ns id ered [b ut ] th e us e to whi ch ta x rev en ue s are pu t sh ou ld no t be co ns id ered

. Thi s is be cau se th e St at e ha s [an ] ob li ga ti on to m ai nt ai n pu bl ic r i g h t s of way an d m us t de te rm in e so m e way to fu nd th at o b l ig at io n, an d th e St at e can no t

m ai nt ai n t he rai ls be cau se th ey are p riv at e p ro pe rty.

Id

. at 25

. The co ur t fu rth er he ld th at “ th e sa le s an d us e ta x pa id by rai l carr ie rs is no t

di sc riminat or y ” be cau se “ [r]ail carr ie rs do no t pa y a di sp ro po rti on at e am ou nt of ta xe s

The pa rties ag ree d pursuant to 28 U.S.C. § 636(c)( 1) and F E D

. R. C I V

. P. 73 to the 8 exercise of

jurisdiction by

a fe dera l mag istrate judg e.

-10-in co m

pa ris on to th ei r di rect co m pe ti to rs

. ” I

d

. a t 32

. As “ th e ov eral l ta x sc he m e

res ul ts in ro ug h l y e q u a l tre at m en t of al l th es e carr ie rs ,” Alab am a “ do es no t pu t rai l

carr ie rs at an ov eral l co m pe ti ti ve di sa dv an ta ge ,” co ns id eri ng th at in tra st at e w a t e r

carr ie rs m us t pay th e sa m e sa le s and us e ta x and m ot or carr ie rs m us t pay th e va rio us

m ot or fue l ex ci se tax es

. Id

.

Nor fo lk no w b rin gs th is in te rlo cu to ry ap pe al , i n acco rd an c e w it h 28 U.S.C. §

12 92 (a)( 1)
, fro m

th e d en ia l o f it s ap pl ic at io n fo r a p rel im in ary in jun ct io n. 9

IV

The Co ur t rev ie ws tri al co ur t de ni al s of pr el im in ary in jun ct io ns un de r th e ab us e

of di sc ret io n s t a n d a r d. Jo hn st on v. Ta mpa Sp or ts Aut h
., 53 0 F.3 d 13 20
, 13 24 (1 1t h

Ci r. 20 08 ) (p er curi am ). Acco rd in gl y , th e Co ur t revi ews th e tri al co ur t’s fin di ng s of

fact fo r cl ear erro r an d it s con cl us io ns of la w de no vo

. Cu mul us Med ia

, In c. v. Cl ea r

Ch an ne l Co mmc’n s, In c., 30 4 F .3d 11 67 , 11 71 -7 2 (1 1t h C ir. 2 00 2)

.

28 U.S.C. § 1292(a)(1) rea ds that “the c ourts of appe als shall have jur isdiction of 9
appea ls from . . . [i] nterlocutory order s of the district cour ts of the United States . . . g ranting
, continuing, modify

ing, r efusing or dissolving injunctions.”

-11-V

Our rev ie w, of co ur se , m us t fo cu s on Nor fo lk ’s sp eci fic cl ai m th at th e

exemp ti on s for m ot or an d wate r carr ie rs fro m th e Alab am a fu el sa le s an d us e ta x o n

di es el fu el are di sc riminat or y in vi ol at io n of th e 4- R Act. Si gn ifi can tl y , Nor fo lk do es

no t co m pl ai n th at it m

us t pa y a di ffer en t rat e of ta x on di es el fu el th an ot he r Alab am a

ta xp ay ers

. In st ead
, Nor fo lk arg ue s th at th e di st ric t co ur t erre d by ex pa nd in g it s rev ie w

to in cl ud e co ns id erat io n of Alab am a’s m ot or fu el ex ci se an d ga so li ne ta xe s, an d th at

in de te rm in in g whe th er a st at e ta x di sc riminat es ag ai ns t rai lro ad s, a co ur t m ay lo ok

on ly to th e ch al le ng ed sa le s an d us e ta x on di es el fu el it se lf a n d may n o t co ns id er

m ot or carr ie rs ’ pa y m en t o f th e m ot or fue l ex ci se an d g as ol in e ta xe s.

Nor fo lk ’s l eg a l an al y si s is , i n pa rt, co rrec t, as ex pl ai ne d be lo w. Non et he le ss ,

un de r th e 4 -R Act , a s in te rp ret ed an d ap pl ie d by t he Su pr em e Co ur t, a st at e rem ai ns

free to ex em

pt cert ai n tra ns act io ns or en ti ti es fro m ge ne ral ly ap pl ic ab le ta xe s, su ch as

th e sa le s an d us e ta x at is su e he re, as lo ng as th e s t a t e d o e s no t ta rg et rai lro ad s fo r

di sc riminat or y tre at m en t. Thu s, be cau se we ag ree wit h th e di st ric t co u r t’s ul ti m at e

co nc lu si on th at Nor fo lk can no t su ccee d o n t h e m eri ts of it s un de rlyin g act io n, we

affi rm th e d is tri ct co ur t’s o rd er d en y in g No rfo lk a pr el im in ary in jun ct io n. 1 0

Be cause we f

ind a pre liminary

injunction unwarra

nted, as we aff

irm the district court’s 1 0 leg al conc lusion that Norfolk had no likelihood of succ ess on the mer its in t his case, w e nee d not addre ss either (1) the power of the district cour

t to awar d an injunction under 49 U .S.C. § 11501(c) wher e plaintiffs ha ve not af firmatively

proven, in a ccor dance with that statute, that “the

-12-A. ACF Ind us tr ie s ap pl ie s to thi s ca se

Alt ho ug h ne it he r pa rty br ie fed ACF In du st ri es in de pt h, we fin d th is 19 94 U.S.

Su pr em e Co ur t de ci si on reg ard in g ad va lo rem ta x ex em pt io ns de te rm in at iv e of

Nor fo lk ’s ap pe al

. In ACF In du st ri es , th e Su pr em e Co ur t he ld th at “ a St at e m ay gr an t

ex em pt io ns fro m a ge ne ral ly ap pl ic ab le ad va lo rem pr op ert y ta x wit ho ut su bje ct ing the

ta xa ti on of rai lro ad pr op ert y to ch al le ng e un de r th e [4 -R Act, § 11 50 1( b) (4 )].” Dep ’t

of Reven ue v. ACF In du s., In c ., 51 0 U.S. 33 2, 33 5 (1 99 4)

. The Co ur t co nc lu de d th at

s e c t i o n 11 50 1 “ do es no t li m it th e St at es ’ di sc ret io n to ex em pt no nr ai lro ad pr op ert y ,

bu t no t rai lro ad pr op ert y , fro m ad va lo rem pr op ert y ta xe s of ge ne ral ap pl ic at io n.” Id

.

at 34 7- 48

.

The co m pa ny in ACF In du st ri es ch al le ng ed Oreg on ’s ad va lo rem ta x on re al an d

pe rs on al pr op ert y on th e gr ou nd th at Oreg on ex em pt ed va rio us cl as se s of go od s fro m

ratio of a ssessed value to true marke t value of r ail transporta tion property exceeds by

at least 5
perc ent the ra tio of assessed va lue to true mar ket value of

other c ommercia l and industrial
proper ty in the same a ssessment jurisdiction,” or (2) the cor rec t equitable standa

rd for a district court to apply

in awar ding a

n injunction pursuant to subsection (c) in light of the U .S. Supreme Court’s decisions in W

inter v. NRDC, Inc ., No. 07-1239, 2008 U.S. L EXI S 8343, at * 24, *30 (U.S. Nov. 12, 2008) ( “A plaintiff se eking a pre liminary injunction must establish that he is likely to succe ed on the mer its, that he is likely to suffer irrepa rable harm in the a

bsence of preliminary

relief , that the balanc e of e quities tips i n his favor, a nd that an injunction is in the public interest. . . . A pr eliminary injunction is an ex traordina ry reme dy never awa rded a s of rig ht”) a nd eBay Inc. v . Merc

Exc hange, L.L.C. , 547 U.S. 388, 391 (2006) (in orde r to war rant injunctive relief

, “[a] plainti ff must demonstrate : (1) that it has suffe red a n irrepa rable injury ; (2) that reme dies ava ilable at law, suc h as monetar y damag es, ar e inade quate to compe nsate for that injury ; (3) that, conside ring the balanc e of ha rdships betwee n the plaintiff and de fenda nt, a

reme dy in equity is warr anted; and ( 4) that the public intere st would not be disserved by a perma nent injunction”).

-13-t h e ta x, in cl ud in g m ot or ve hi cl es , an d in st ead ch arg ed su ch bu si ne ss es a “m o d e s t

an nu al r e g is tra ti on fee.” Id

. at 33 5. Oreg on th us “ ex em pt [ed ] cert ai n cl as se s of

co m m erci al an d i nd us tri al pro pe rty whil e ta xi ng rai lro ad cars in ful l.” Id . at 3 37

.

The Su pr em e Co ur t an al y zed th e ch al le ng ed ta x un de r se ct io n (b )( 4 ) f or

di sc riminat io n. Id

. at 33 5. Bec au se , un de r th e 4- R Act’s pl ai n la ng ua ge , se ct io ns
(b )(1 )-(3 ) di d no t co nt e mp l a t e ou tl awin g ex em pt io ns fro m ge ne ral ly ap pl ic ab le

pr op ert y ta xe s, th e Co ur t reas on ed
, (b )(4 ) co ul d no t ei th er -- “ Co ng res s pl aced ex em pt

pr op ert y be y on d th e reac h of s u bs ect io ns (b )(1 )-(3 ) [an d th eref or e it wou ld be ]

il lo gi cal to co nc lu de th at Co ng res s .

. . wou ld tu rn aro un d and nu ll ify it s own ch oi ce

in su bs ect io n (b )(4 ).” Id . at 3 43

. 1 1

I n particula

r, the Supreme Court concluded: 1 1

Subsections (b)(1) -(3) of § [11501] . . . forbid the imposition of highe r prope rty tax rates and asse ssment ratios upon “ra il transportation proper ty ” than upon “other commerc ial and industrial prope rty .” “Commerc ial and industrial
proper ty ,” which se rves a s the compar ison class for me asuring unlawful discrimination under those pr ovisions, is define d as “pr operty , other than transporta tion property

and land use d primarily

for a g ricultural pur

poses or timber
g rowing , devoted to a c ommercia l or industrial use and subjec t to a proper ty tax levy .” § [11501] (a) (4). . . .

The statute doe s not define [the phrase “subjec t to a proper ty tax l evy ”], which on its face could bea

r one of two interpre tations: (1) taxed property ; or (2) ta x able
proper ty , a broa der c ateg ory

consisting of

the g ener al mass of prope rty within the State’s jurisdiction and power to tax , including pr operty that enjoy s a cur

rent exemption . . . .

I n the context of this provision, which concer ns the diffe rential a ssessment of taxed property , the words “ proper ty subject to a prope rty

tax l evy” must mean “taxed proper

ty .” Given the “norma l rule of statutory construction” tha t “identical

-14-In ACF In du st ri es , th e Su pr em e Co ur t pr im ari ly rel ie d up on th e pl ai n la ng ua ge

an d st ru ct ur e of th e 4- R Act, bu t “ [o ]the r co ns id erat io ns ” bu tt res s e d it s an al y si s. Id

.

at 34 3. Fi rs t, th e Co ur t no te d th a t t h e 4 -R Act, whi le sp eci fic al ly ad dr es si ng ot he r

types of di sc riminat or y ta xe s, “ do es no t sp eak wit h an y de gr ee of part ic ul ari ty to th e

qu es ti on of ta x ex em

pt io ns .” Id

. Co ng res s co ul d cl earl y ha ve pr oh ib it ed su ch

ex em pt io ns , bu t di d n ot

. Id

. at 34 4. Seco nd
, th e Co ur t em ph as iz ed th e tra di ti on al

po wer of th e st at es in pr ov id in g ex em pt io ns fro m pr op ert y ta xe s as “ an im po rta nt

a s p ect of st at e an d lo cal ta x po li cy .” Id

. In de ed
, “ [i]t was co m m on a t t h e t i me

§[ 11 50 1] was dr aft ed
, as it is no w, fo r St at es wit h ge ne ral ly a p p li cab le ad va lo rem

pr op ert y ta x e s t o ex em

pt va rio us cl as se s of co m m erci al pr op ert y .” Id

. Co ng res s’s

words used in diff

ere nt parts of the same ac t are intended to have the same meaning ,” that phra se must car ry the same me aning in subsection (a) (4), whe re it qualifies the de finition of “commer cial and industrial pr operty .” . . .

[Thus,] the def

inition of “commerc ial and industrial prope rty ” excludes prope rty that is ex empt. Ex empt proper ty , then, is not part of the c omparison class a g ainst which discrimination is measure d under subse ctions (b)(1) -(3) , and it follows that railroa ds may

not challeng e prope rty

tax ex emptions under those provisions. . . .

[W ]e must pay

heed to the f

act that Cong ress plac ed exempt property bey ond the

rea ch of subse ctions (b)(1) -(3) . I t would be illogica l to conclude that Cong ress, having allowed the States to g rant prope rty tax ex emptions in subsections (b)( 1)-( 3), would turn ar ound and nullify its own choice in subsec tion (b)(4). So [a
contra ry ] reading of subsec tion (b)(4), w hile plausible when vie wed in isolation, is untenable in lig ht of § [11501] as a w hole. . . . The struc ture of § [11501] . . .

war rants the c onclusion that subsection (b)( 4) does not limit st ate discr etion to levy a tax upon railroad pr operty while exempting var ious classes of nonr ailroad
proper ty

.

Id . at 340-43 (c itations, int erna l quotation marks, and footnote omitted).

-15-“ si le nc e on th e su bjec t . . . refle ct s a de te rm in at io n to pe rm it th e St at es to le av e th ei r

ex em pt io ns in pl ace.” Id

. Thi rd
, th e Co ur t de te rm in ed th at “ pr in ci pl es of fed eral is m ”

in fact co m

pe ll ed it s read in g of th e 4- R Act, be cau se “ [w]hen de te rm in in g th e br ead th

of a fed eral st at ut e th at im pi ng es up on or pr e-em

pt s th e St at es ’ tra di ti on al po wers , [th e

Co ur t is ] he si ta nt to ex te nd th e st at ut e be y on d it s ev id en t sc op e.” Id

. at 34 5. Se e al so

Ca rmi ch ae l v. S. Coa l & Co ke Co.
, 30 1 U.S. 49 5, 50 9 (19 37 ) (“ [i]t is in he ren t in th e

ex erci se of t he po wer to ta x th at a st at e be free to se le ct th e su bjec ts of ta xa ti on an d

to gra nt ex em

pt io ns .”).

The Su pr em e Co u r t d i d ack no wled ge , ho wev er, th at a cas e in whi ch “ th e

rai lro ad s -- ei th er al on e or as pa rt of so m e is ol at ed an d ta rg et ed gr ou p -- are th e on ly

co m m erci al en ti ti es su bjec t t o a n a d v al or em pr op ert y ta x” co ul d cal l in to qu es ti on

whe th er th e st at e ha d real ly “ ex em pt ed ” ot he r co m

m erci al en ti ti es an d co ul d in di cat e

a 4- R Act vi ol at io n. ACF In du s. , 51 0 U.S. at 34 6- 47

. Non et he le ss , as a res ul t of ACF

In du st ri es , whi le th e 4- R Act pr oh ib it s th e im po si ti on of di sc riminat or y pr op ert y ta x

rat es , th e Act do es no t pr ev en t a st at e fro m ex em pt in g ot he r co m

m erci al en ti ti es fro m

su ch ta xe s an d le av in g ta xe s on rai lro ad s in pl ace, s o l o n g as th e rai lro ad is no t

ta rg et ed

. 1 2

Although the conclusion see ms “anomalous,” w ithin the context of the 4-R Ac t as a 1 2 whole, the r esult is not “so biz arr e that Cong ress ‘c ould not have intended’ it.” Id . at 346-47 (quoting Demare

st v. Manspeak

er , 498 U.S. 184, 191 (1991)).

-16-W hi le in Nor fo lk ’s cas e we are de al in g wit h ex em pt io ns to a sa le s an d us e ta x,

rat he r th an an ad va lo rem ta x as in ACF I nd us tr ie s , t h e S u p r e me Co ur t’s an al y si s is

eq ua ll y ap pl ic ab le

. The refo re, ACF In du st ri es ’ co ns tru ct io n of th e 4- R Act gu id es ou r

de ci si on

. Fi rs t, as w it h th e ad va lo rem pr op ert y ta xe s cha ll en ge d in ACF In du st ri es ,

t h ere is no th in g in th e 4- R Act’s pl ai n la ng ua ge th at in di cat es an in te n t t o r e a c h

ex em pt io ns fro m ge ne ral ly ap pl ic ab le sa le s an d us e ta xe s. The la ng ua ge of se ct io n
(b )(4 ) pr oh ib it s a di sc riminat or y “ ta x” no t a di sc riminat or y t ax ex em pt io n. Seco nd
,

th e Su pr em e Co ur t di d no t li m it it s co nc lu si on – th at th e 4- R Act “ do es no t sp eak wit h

an y de gr ee of pa rti cu la rit y to th e qu es ti on of ta x ex em pt io ns ” – to ad va lo rem pr op ert y

ta xe s; it s co nc lu si on th eref or e ha s di rect a p p l i c at io n to th e is su e pr es en te d he re.

Thi rd
, as wit h pr op ert y ta x ex em pt io ns , sa le s an d us e ta x ex em pt io ns were ub iq ui to us

at th e ti m e th e 4- R Act was dr aft ed
, an d th us be ne fit fro m th e sa m e pr es um pt io n th at

C o n g r e s s ’ si le nc e refl ect s a de te rm in at io n to le av e su ch ex em pt io ns in pl ace. 1 3

I n 1976 and bef

ore, most states exempted var ious entities and g oods from sales ta x es. 1 3 See J O H N F. D U E & J O H N L

. M I K E S E L L , S A L E S T A X A T I O N : S T A T E A N D L O C A L S T R U C T U R E A N D A D M I N I S T R A T I O N 50-82 (The J ohns Hopkins University Press 1983) (de scribing historically common state sales ta x exemptions , including e x emptions for consumable s, industrial fuel and machiner y , ag ricultural g oods, and food a nd other ne cessities, in addition to ex emptions for char ities and g overnme ntal entities); Geor g e B . Br abson, Analysis of Sales and Use Tax Exe mptions – W

ith Comment as to More Uniform Applications , 9 V A N D

. L

. R E V . 294, 294, 308- 15 (1956) ( descr ibing sa les tax ex emptions for g overnme ntal entities and interstate sales
transac tions, as well as exemptions “cre ated out of g overnme ntal taxi ng policies or socia l economic c onsiderations”; in par ticular, a s of 1956, Alabama “g rante d nine broa d are as of exemption [ from its sales and use tax] , including f arm produc ts, farming tools, im plements and fer tiliz er, ne wsprint, text books, tobacc o products, motor fue ls, and foodstuffs” ). See also A D V I S O R Y C O M M I S S I O N O N I N T E R G O V E R N M E N T A L R E L A T I O N S , S I G N I F I C A N T F E A T U R E S O F

-17-Fi na ll y , co nc ern s fo r st at e so ve rei gn ty are jus t as ke en

. W e acco rd in gl y joi n ot he r

co ur ts th at al so ha ve ap pl ie d th e ACF In du st ri es ’ an a l ysi s to st at e an d lo cal ta xe s

an al og ou s t o Al ab am a’s sa le s an d u se tax on di es el fue l. 1 4

W e reco gn iz e th at so m e co ur ts po st -1 99 4 ap pe ar t o h a v e i gn or ed ACF

In du st ri es , an d ha ve in st ead sc ru ti ni zed ex cep ti o ns to ge ne ral ly ap pl ic ab le no n

pr op ert y ta xe s. Howev er, as th es e de ci si on s do no t ev en di sc us s ACF In du st ri es or 1 5

it s in flu en ce on th ei r an al y se s, we do no t fin d th em pe rs ua s i v e

. I n a d d it io n, th es e

cas es co nf

li ct wit h pr e-1 99 4 cas es th at ha ve ap pl ie d a si m il ar an al y si s to th at in ACF

In du st ri es to no n- pr op ert y ta xe s. Se e, e.g

. , Bur li ng to n N. R.R. v. Ci ty of Su pe ri or , 93 2

F I S C A L F E D E R A L I S M : 1976-77 E D I T I O N , V O L

. I I R E V E N U E A N D D E B T 185 (1976), available at http:// www.libra

ry .unt.edu/g po/acir/SFF F/SFF F- 1976-1977-V2.pdf (showing that 37 states exempted medicines and 22 e x empted food f rom sales tax); A D V I S O R Y C O M M I S S I O N O N I N T E R G O V E R N M E N T A L R E L A T I O N S , S T A T E L E G I S L A T I V E P R O G R A M , V O L

. 3 S T A T E A N D L O C A L R E V E N U E S 104 (1975), available at http:// www.libra

ry .unt.edu/g po/acir/Repor ts/information/m-94.pdf (stating that “many states” provided sale s tax exemptions for “ food, drug , and other commodities”); Carr oll H. Sierk, State Tax Exe mptions of Non-Profi t Organizations , 19 C L E V

. S T

. L

. R E V . 281, 282 (1970).

See, e .g., Atchison, Topeka & Santa Fe Ry. v . Arizona , 78 F.3d 438, 442- 44 (9th Cir. 1 4 1996), cert. de nied , 519 U.S. 1029 (1996) (e x emptions for transa ction privileg es and use taxes); Reg’l Disposal Co. v. City of Centralia , 51 P.3d 81, 83 (Wash. 2002) (tax on sol id waste transfe r); Dep’ t of Reve nue v. D urango & Silverton Narrow Gauge R.R. , 989 P.2d 208, 215-16 (Colo. App. 1999) (tourism taxes); Burlington N . Santa Fe Ry. v . Monroe , Civil Action No. 97- D-1754-N , slip op. at 21-24 (M.D. Ala. A ug . 10, 1998). See also Burlington N. & Santa Fe Ry. v

. Atwood , 271 F. Supp. 2d 1359, 1367 (D. Wy o. 2003) (c oal transpor tation tax ).

See, e .g. , CSX Transp., Inc. v. Ala. Dep’ t of Reve nue , Civil Action No. 1 5 2:08-cv-00655- UWC, sl ip op. at 7 (N.D. A la. J uly 8, 2008); Union Pac. R.R. v . Minn. Dep’ t of Rev enue , 507 F.3d 693, 695- 96 (8th Cir. 2007); Ka. Cit y S. Ry . v. Bridges , No. 04-2547, 2007 U.S. Dist. L EXI S 23477, at *16-25 (W.D. L a. Mar . 30, 2007); Burlington N . R.R. v. Comm’ r of Rev enue , 606 N.W.2d 54, 58-59 (Minn. 2000); Burlington N ., Santa Fe Ry. v . Lohman , 193 F.3d 984, 985-86 (8th Cir. 1999), cert. de nied , 529 U.S. 1098 (2000).

-18-F.2 d 11 85
, 11 87 -8 8 (7 th Ci r. 19 91 ); Ka

. Ci ty S. Ry. v. McNa mar a , 81 7 F.2 d 36 8, 37 4-

78 (5t h C ir. 1 98 7)

.

The refo re, we ho ld th at ACF In du st ri es co nt ro ls ou r an al y si s, an d di ct at es th at

th e Alab am a ta x st at ut e at is su e, wit h it s ex em pt io ns fo r m ot or an d wate r carr ie rs , do es

no t of fen d th e 4- R Act so lo ng as th e ta x is ge ne ral ly ap pl ic ab le an d do e s n o t ta rg et

rai lro ad s wi th in Alab am a.

B. Ala ba m a’ s s al es an d us e ta x o n fuel is ge nera ll y a ppl ic ab le an d

do es no t ta rg et ra il ro ad s

The sa le s an d us e ta x at is su e in th is cas e qu al ifi es as ge ne ral ly ap pl ic ab le
, an d

th us do es no t di sc riminat e ag ai ns t rai lro ad s in vi ol at io n of th e 4- R Act. Al a b a m a

le vi es it s fo ur pe rcen t sa le s ta x “ [u ]pon ev ery pe rs on , fir m , or co rp or at io n

. . . en ga ge d

. . . in th e bu si ne ss o f s e l l i n g at ret ai l an y ta ng ib le pe rs on al pr op ert y wha ts oe ve r,”

A L A

. C O D E § 40 -2 3- 2( 1)
, an d it s fo ur pe rcen t us e ta x “ on th e st or ag e, us e or ot h e r

co ns um pt io n i n t hi s s ta te of t an gi bl e p ers on al pro pe rty.” Id

. § 4 0- 23 -6 1( a).

Si m pl y be cau se Alab am a ex em pt s in te rs ta te wate r carr ie rs as well as so m e

m ot or carr ie rs do es no t tra ns fo rm th e as se ss m en t in to a di sc riminat or y ta x. Alt ho ug h

a ta x wit h wid es pr ead ex em pt io ns co ul d in di cat e th at a st at e ha s “ si ng le [d ] ou t” th e

rai lro ad fo r di sc riminat or y tre at m en t, t ha t i s n ot th e cas e h ere. ACF In du s. , 51 0 U.S.

at 34 7. Alab am a ex em

pt s fro m th e sa le s an d us e ta x va rio us typ e s o f go od s an d

en ti ti es

. Se e A LA

. C O D E §§ 40

- 2 3

- 4 t o -5
, -6 2. Sp eci fic al ly, th e Alab am a ta x co de

-19-ex em

pt s sa le s an d us e ta x on di es el fu el as to m ot or carr ie rs ; in te rs ta te sh ip pe rs ; st at e,

co un ty, a nd m

un ic ip al en ti ti es ; co un ty an d ci ty sc ho ol bo ard s; cert ai n ch ari ta bl e

or ga ni zat io ns ; co m

m erci al fis hi ng ve ss el s; fu el fo r ki ln us e in m an uf act ur in g pl an ts ;

fu el fo r of f-h ig hwa y ag ric ul tu ral us es ; fu el fo r of f-s ho re res ou rce ex pl or at io n; an d fu el

te m po rari ly br ou gh t in to Alab am a by a no n- res id en t fo r pe r s o n a l u s e. Se e id

.

Howev er, al l ot he r en ti ti es are s u b je c t t o th e ta x on di es el fu el
, in cl ud in g in tra st at e

wate r carr ie rs an d m ot or carr ie rs th at ha ve no t pa id th e m ot or fu el ex ci se ta x. On th e

reco rd be fo re th e co ur t, Alab am a’s sa le s an d us e ta x do es no t ta rg et or si n g l e ou t

rai lro ad s.

Our co nc lu si on i s c o n s i st en t wit h pr ev io us cas e la w in ot he r juri sd ic ti on s.

Gen eral ly, cas es th at ha ve ap pl ie d ACF In du st ri es or si m il ar an al y se s, an d ha ve fo un d

ta xe s to ta rg et th e rai lway in du st ry , ha ve in vo lv ed t a x e s l e vi ed al m os t ex cl us iv el y

up on rai lro ad s. In co nt ras t, ta xe s m or e li ke th e ta x at is su e in th is cas e, whe re a st at e 1 6

See, e .g., Burlington N

. & Santa Fe Ry. v . Atwood , 271 F. Supp. 2d 1359, 1363, 1367 1 6 (D. Wy o. 2003) (holding that Wy oming’ s Coal Transporta tion Tax , althoug h g ener ally applicable , single d out railroads be cause they wer e liable f

or more tha

n 99% of the total tax); Reg’l Disposal Co. v. City of Centralia , 51 P.3d 81, 83 (Wash. 2002) (holding the tax on s olid
waste tra nsfer targ eted r ailroads, a s it tax ed an a ctivity only eng ag ed in by

railroa ds); Dep’ t of Rev enue v . Durango & Silverton Narrow Gauge R.R. , 989 P.2d 208, 215-16 (Colo. App. 1999) (holding the tourism tax es discriminatory beca use they taxed only

a ver y small gr oup of taxpay ers, of

which ra ilroads wer e a pa rt); Burlington N

. R.R. v. Huddle

ston , 94 F.3d 1413, 1417 (10th Cir. 1996) (finding a 4-R Ac t violation when state law e x empted all entities except a ve ry “nar row g roup” of

taxpay ers, including railroa ds, from tax on personal prope rty ); Burlington N

. R.R. v. Bair , 60 F.3d 410, 413 ( 8th Cir. 1995), cert. de nied , 516 U.S. 1113 (1996) (f inding discrimination when a sta te tax si ng led out for taxation all personal pr operty of ra ilroads while leaving untaxed most persona l property of other ta x pay ers) ; Ogilvie v. State B d. of Equalizati on ,
-20-ta xe s rai lro ad s al on g wi t h man y ot he r bu si ne ss es , bu t ex em pt s cert ai n di sc ret e

in du st rie s, hav e be en fo un d to be ge ne ral ly ap pl ic ab le an d th us no t di sc riminat or y

. 1 7

Alt ho ug h we co nc lu de th at Alab am a’s sa le s an d us e ta x on fu el is ge ne ral ly

ap pl ic ab le an d do es no t ta rg et rai lro ad s, Norfo lk rai se s on e ad di ti on al arg um en t th at

we m us t ad dr es s. Nor fo lk at te m pt s to cl ai m th at th e Alab am a ta x st ru ct ur e si ng le s ou t

893 F. Supp. 882, 886 (D. N .D. 1995) (holding that state targ eted r ailroads “ under the prete x t of broad e x emptions” - only four industries, including railroa ds, paid the tax); Burlington N . R.R. v. City of Superior , 932 F.2d 1185, 1187- 88 (7th Cir. 1991) (holding that the occ upational tax on iron ore c oncentr ates doc ks, though g ener ally applicable , in effe ct applied only to docks owned by one par ticular ra il carr ier a

nd thus ill eg ally

targ eted it); Ka. Cit

y S. Ry . v. Mc

Namara , 817 F.2d 368, 370, 374- 78 (5th Cir. 1987) (holding that the class of taxpay ers, only

transporta

tion and communica tion util ities, was unnec essar ily small to be g ener ally

applicable ); Burlington N

. R.R. v. Bair , 766 F.2d 1222, 1224 ( 8th Cir. 1985) (finding 4-R Act discrimination when a roll back a nd cre dit scheme ha d the ef fec t of exempting 95% of persona l property

owner s from taxation).

See, e .g., ACF Indus. , 510 U.S. at 346-48 (f inding no discr imination when a g ener ally 1 7 applicable proper

ty tax ex empted many

other industries); Burlington N . & Santa Fe Ry. v . State Tax Comm’n , 188 F.3d 1039, 1042 ( 8th Cir. 1999) (compar ing “ g ener al applica tion” cate g ory to “exempt” ca teg ory , and finding that a per sonal proper ty tax as applied to rolling stock that exempts property

in transit throug h the state did not violate the 4-R Ac t); Burlington N . Santa Fe Ry. v . Monroe , Civil Action No. 97-D -1754-N, slip op. at 21-22 ( M.D. Ala. Aug . 10, 1998); Atchison, Topeka & Santa Fe Ry. v . Arizona , 78 F.3d 438, 442- 44 (9th Cir. 1996), cert. de nied
, 519 U.S. 1029 (1996) (holding that exemptions for motor c arr iers fr om the transac tion privilege s and use ta x es did not violate the 4-R Ac t - the tax was imposed upon 17 classifica tions of business activities and enc ompassed over 140,000 taxpay ers) ; Duluth, Missabe & Iron Range Ry

. v. W isconsin , 100 F.3d 69, 71 n.2 ( 7th Cir. 1996) (holding tha t ge nera lly applicable ad valor em taxes analog ous to ACF Industries not discriminatory ); Union Carbide Corp. v. Bd. of Tax Comm’rs , 69 F.3d 1356, 1359 ( 7th Cir. 1995) (same) ; Burlington N . R.R. v. W

isc. Dep’ t of Rev enue , 59 F.3d 55, 57- 58 (7th Cir. 1995) (holding that even a tax t hat exempted 80% of nonrailroa d commerc ial and industrial prope rty from g ener ally

applicable ad valor em prope rty tax did not violate the 4-R Act); CSX Transp., Inc. v. Tenn. State Bd. of Equalization , 801 F. Supp. 28, 35 (M.D. Te nn. 1992) (holding that g ener ally applicable ad valor em taxes analog ous to ACF Industries not discriminatory ).

-21-rai lro ad s, be cau se Alab am a us es th e pr oc eed s of th e ta xe s le vi ed on m ot or carr ie rs to

m ai nt ai n ro ad s an d rai lro ad s do no t rece iv e si m il ar su bs id ie s in vi ol at io n of W es t Lyn n

Cr ea mer y, In c. v. Hea ly
, 51 2 U.S. 18 6 (1 99 4)

. In W es t Lyn n , th e Su pr em e Co ur t he ld

th at th e di sc riminat or y effe ct s of a ta x or ot he r pa y m en t to th e st at e can no t be an al y zed

wit ho ut ta ki ng in to acco un t “ th e us e to whi ch pa y m en ts are pu t.” Id

. at 2 0 1

. We s t

Lyn n , ho wev er, in vo lv ed a di rect su bs id y to in -s ta te pr od uc ers , rat he r th an an al le ge d

in di rect su bs id y su ch as th at at is su e he re. Id

. at 19 1. Fu rth erm or e, th e Su pr em e Co ur t

di sa pp ro ve d of th e su bs id y be cau se it co ns ti tu te d an un la wfu l bu rd en ag ai ns t

in te rs ta te co mmerc e

. Id

. at 19 9 ( “A pu re su bs id y fu nd ed ou t of ge ne ral rev en ue

or di na ril y im

po se s no bu rd en on in te rs ta te c o mm e r ce, bu t m erel y as si st s lo cal

bu si ne ss

. The pr ic in g or de r in th is cas e, ho wev er, is fu nd ed pr in ci pa ll y fro m ta xe s on

th e sa le of m il k pr od uc ed in ot he r St at es

. By so fu nd in g th e su bs id y , res po nd en t no t

on ly as si st s lo cal farm ers , bu t bu rd en s in te rs ta te co m m erce .” (fo ot no te om it te d ) )

.

Alt ho ug h Co ng res s gr ou nd ed it s im p l e ment at io n of th e 4- R Act in U.S. C O N S T

. art

.
I, § 8, cl

. 3, se e Pit ts bu rg h & La ke Eri e R.R. v. Ry. La bo r Execu ti ves ’ Ass ’n
, 49 1 U.S.

49 0, 51 0- 11 (1 98 9)
, ou r an al y si s in th is cas e is li mi t e d to th e sp eci fic st at ut or y

la ng ua ge of th e 4- R Act, rat he r th an th e sc op e of th e Co m m erce Cl au se

. Se e Ka

. Ci ty

S. Ry. v. McNa mar a , 81 7 F.2 d 36 8, 37 6 (5 th Ci r. 19 87 ) (“ Alt ho ug h it m ay be he lp fu l

in an al y zi ng so m e as pe ct s of th e pr ob le m , Co m m erce Cl au se do ct rin e do es no t an swe r

-22-th e q ue st io ns po se d b y th e 4 -R Act .”).

It fo ll ows th at we fin d Nor fo lk ’s arg um en ts un pe rs ua si ve

. W e wil l no t co m pa re

th e sa le s an d us e ta x to th e fu el ex ci se ta x, in so far as th ere are di ffer en ces in th e way s

in whi ch th ei r res pe ct iv e p ro ceed s ar e sp en t. Fi rs t, in lin e wit h th e m ajor it y of ot he r
juri sd ic ti on s, an d as Nor fo lk it se lf ur ge s, we de cl in e to lo ok pa st th e pa rti cu la r ta x at

is su e to an al y ze th e ov eral l st a t e t a x s tru ct ur e. Seco nd
, we be li ev e th at th e us e to 1 8

whi ch a st at e pu ts it s ta x rev en ue is irr el ev an t to th e is su e of 4- R Act di sc riminat io n.

Se e Atch is on , To

pe ka & Sa nt a Fe Ry

. , 7 8 F

. 3d at 44 3; Tr ai le r Tr ai n v. St at e Ta x

Co mm’n
, 92 9 F.2 d at 13 03

. The 4- R Act it se lf “ ha s it s ro ot s i n e q u i t y pr act ic e, in

pr in ci pl es o f f

e d e r a l i s m , an d in reco gn it io n of th e im pe rat iv e ne ed of a St at e to

ad m in is te r i t s o w n fis cal op erat io ns .” Tu ll y v. Gri ff in , I nc

. , 4 29 U.S. 6 8, 73 (1 97 6)

.

See, e .g., Burlington N

. R.R. v. City of Superior , 932 F.2d 1185, 1187- 88 (7th Cir. 1 8 1991); Gen. Am . Transp. C orp. v. Limbach , No. C-2-85-1603, 1987 U .S. Dist. L EXI S 13362, at *33-34 (S.D. Ohio De c. 28, 1987); Gen. Am . Transp. C orp. v. Kentuck y , 791 F.2d 38, 41- 42 (6th Cir 1986); McNamara , 817 F.2d a t 376-78; Ala. Great S. R.R. v. E agerton , 541 F. Supp. 1084, 1086 (M.D. Ala. 1982) . Earlier case s applied the a

naly sis that Norfolk advoc ates. See B urlington N. R.R. v. Triplett , 682 F. Supp. 443, 445-46 (D . Minn. 1988) (holding that railroa ds had a competitive disadvanta g e: “the f uel tax paid by

trucks is dedica ted to the trucks’ roadbe ds [wherea s] t he ra ilroads must pay the fue l tax in addition to pay ing f or their tra cks”, a

nd barg es and air planes, whic h pay

the same ta x rate as ra ilroads, “do not have to maintain their rig ht-ofway s”); Atchison, Topeka & Santa Fe Ry. v . Bair , 338 N.W.2d 338, 347 (I owa 1983)
, cert. denied , 465 U.S. 1071 (1984). Howe ver, the Eig hth Circuit has overr uled Tripl ett

in Trail er Train C o. v. State Tax Comm’n , 929 F.2d 1300, 1303 ( 8th Cir. 1991), cert. de nied , 502 U.S. 856 (1991). I n Trail er Train , the cour t definitively

held that “the use of the proc eeds of a tax has no bear ing on the question of whethe r the tax is dis criminatory ” under the 4-R Act. Trail er Train
, 929 F.2d a t 1303. Other c ourts have f ollowed suit. See, e .g. , Atchison, Topeka & Santa Fe Ry. v

. Arizona , 78 F.3d 438, 443 ( 9th Cir. 1996), cert. de nied , 519 U.S. 1029 (1996) (“ The 4-R Ac t

rea ches only

tax burdens and not tax benefits”); Burlington N . R.R. v. Comm’ r of Reve nue , 606 N.W.2d 54, 60 (Minn. 2000).

-23-Alab am a m

us t pa y fo r th e crea ti on , m ai nt en an ce, an d rep ai r of it s ro ad s, an d m us t, in

so m e fas hi on , ob ta in fu nd s fo r su ch crea ti on , m ai nt en an ce, an d rep ai r. Bu t Alab am a

ha s no co ns ti tu ti on al di sc ret io n to al lo cat e fu nd s to pr iv at e pr op ert y

. Se e A LA

. C O N S T

.

art

. IV, § 93 (“ The st at e sh al l no t eng ag e in wor ks of in te rn al im pr ov em en t, no r le nd

m on ey or i ts cred it in aid of s uc h .

. . ; n or sh al l t he st at e b e in te res te d i n a ny pri va te

or co rp or at e en te rp ris e, or le nd m on ey or it s cred it to an y in di vi du al , a ss oc ia ti on , o r

co rp or at io n.” ). Fu rth erm or e, Alab am a m ai nt ai ns th e ro ad s fo r th e pu bl ic go od an d no t

f o r t h e be ne fit of m ot or carr ie rs ; m ot or carr ie rs on ly ta ng en ti al ly be ne fit fro m t h e

pu bl ic ro ad s. The own ers hi p an d m ai nt en an ce of it s rig ht s- of -way , wit h bo th th e co st s

an d be ne fit s as so ci at ed wit h su ch own ers hi p, m erel y co ns ti tu te pa rt of Nor fo lk ’s co st

of do in g bu si ne ss as a rai lro ad
, an d do no t in di cat e di sc riminat i o n a s t o N or fo lk or

ot he r rai lway com

pa ni es

.

Acco rd in gl y , we co nc lu de th at Nor fo lk wou ld no t su ccee d on th e m eri ts of it s

cas e. Co ns eq ue n t l y, we al so co nc lu de th at th e di st ric t co ur t di d no t ab us e it s

di sc ret io n in de nyin g th e pr el im in ary in jun ct io n, an d th e di st ric t co ur t’s de ni al of th e

pr el im in ary in

jun ct io n i s

AFFIRMED

.

-24-