The oral arguments before the U.S. Supreme Court in Alabama Department of Revenue v. CSX Transportation Inc. found the justices seeking a manageable way to evaluate whether a state tax statute is discriminatory while also keeping the case from appearing before the court for a third time, wrote Benjamin Blair of Faegre Baker Daniels in "Avoiding ‘Déjà vu 2' in High Court CSX Tax Case," published by Law360 on December 18, 2014. At issue is a provision of the Railroad Revitalization and Regulatory Reform Act of 1976 (4-R Act) that prohibits a state from discriminating against a railroad in its tax regime.
How the Supreme Court approaches its analysis will impact not only similar railroad appeals pending across the county, but also a variety of other taxpayers protected from discriminatory taxation by congressional action, Blair wrote. Section 306 of the 4-R Act, codified at 49 U.S.C. 11501, broadly prohibits states from engaging in four discrete types of tax discrimination against railroads. While the first three involve discriminatory property taxes, subsection (b)(4) prohibits a state from "impos[ing] another tax that discriminates against a rail carrier," Blair reports.
Only time will tell which issue or issues the Supreme Court will address. One thing, however, is certain: the high court does not want its decision in CSX II to lead to a CSX III, according to Blair.