The U.S. Supreme Court ruled against the State of Alabama in a decision released last month. The Court broadened the ability of railroads to challenge state taxes as illegally favoring other types of carriers, ruling in favor of CSX Corp. The justices, voting 7-2, said CSX can press claims that the state is violating a federal law that protects railroads from discrimination by forcing the company to pay higher fuel taxes than motor and water carriers.
A lower court has said that the federal law, known as the Railroad Revitalization and Regulatory Reform Act, doesn’t permit suits over generally applicable sales and use taxes. CSX says that in some parts of the state it pays diesel fuel taxes of as much as 10% — or 30 cents per gallon on fuel costing $3. Motor carriers pay a flat rate of 19 cents per gallon, while water carriers are exempt from sales and use taxes if they travel in interstate or foreign commerce, according to a statement by CSX.
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