CSX Transportation, Inc. v. Alabama Dept. of Revenue (09-520)

argument 09-520

CSX Transportation, Inc. v. Alabama Dept. of Revenue

Supreme Court of the United States 1h 1m 6 speakers 8 chapters transcribed 7 days ago official recording ↗

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What is the central legal issue in CSX Transportation v. Alabama Department of Revenue?

John G. Roberts 0:02

We'll hear argument first this morning in case 09520, CSX Transportation versus the Alabama Department of Revenue. Mr. Phillips.

C. Michael Phillips 0:11

Thank you, Mr. Chief Justice, and may it please the Court. The pivotal and, in my judgment, incorrect holding of the 11th Circuit in the Norfolk Southern case is reproduced in the appendix to this case because Norfolk Southern is the controlling precedent for our particular dispute. And at page 29A of the appendix to the petition, And there the Court of Appeals said that there is nothing in the 4R Act's plain language that indicates an intent to reach exemptions from generally applicable sales and use taxes. To our way of thinking, all this case is about whether or not the State has free reign to employ exemptions without exposing the effects of those exemptions to a challenge under B4 of the statute.

Anthony M. Kennedy 0:54

But in light of our AFC case, it seems to me that what you're arguing is that the statute would The effect of your argument is that the statute gives more protection in the case of non-property taxes than property taxes. And that's an odd reading of the statute, which is directed primarily to the property tax.

C. Michael Phillips 1:14

No, I think, Justice Kennedy, what we're doing is recognizing that Congress was very specific and very explicit about how to treat property taxes and set up an entire quite carefully reticulated scheme in dealing with them in B-1 and B-3 and then said, In general, when you're dealing with areas that are not approved by B1 and B3, then you have to examine whether or not the overall scheme, in fact, discriminates against rail carriers. So while it is true that there could be circumstances in which you may end up with somewhat more protection as a consequence of B4, I think that's a function of Congress not having limited the B4 exemption. to property and just saying it's discrimination against the rail carrier generally that the statute is aimed to prevent or

Anthony M. Kennedy 1:57

protect against. But what's the possible rationale for that distinction? Why would that distinction make any sense?

C. Michael Phillips 2:03

Well, I think because Congress didn't have the full run mind of possibilities in front of it at that point in time. I mean, it probably had some sense of what other taxes were out there that might pose discrimination. But I do think Congress is very much concerned that the States, once they saw the roadmap laid out for them in B1 through B3 might seek other ways to recoup what they were going to lose in revenues when the three-year period lapsed and to be in a position to protect the railroads in the B4 through B4 in a situation when there would be future actions taken by the States.

Elena Kagan 2:39

Is that in the legislative record?

C. Michael Phillips 2:41

There's very little in the legislative record, Your Honor, because the specific formulation of this is before a catch-all provision comes in very, very late in a 15-year process. Every other lower court, every lower court that's looked at it has drawn the inference, which seems to me the only fair inference to draw, when Congress said, look, this is not just for in-lieu taxes. I mean, there was some debate about that going on between the House and the Senate, and the Conference Committee makes it clear. This is not just something that's adopted by the states in lieu of a broader property tax. It is intended, then, to have I think the language that you would normally give to a term as broad and sweeping as any other tax that discriminates against rail carriers.

Unknown 3:28

Mr. Phillips, this is what troubles me about your position. You make a viscerally appealing case on the facts of this case where you say that your clients, the railroads, are being taxed more than competing carriers, truckers and water carriers. But if all it says is discriminates, and you think that that has to be applied without qualification, then even if a state makes an exemption for widows over 85 and doesn't make the same exemption for railroads, the railroads win, right? No, I don't believe that's the necessary — How do you limit the term discrimination, just a discrimination in favor of other competing carriers?