(CN) – Alabama’s sales tax on diesel fuel does not discriminate against railroads, the 11th Circuit ruled. “A state remains free to exempt certain transactions or entities from generally applicable taxes,” Judge Pogue wrote, “as long as the state does not target railroads for discriminatory treatment.”
The Norfolk Southern Railway Co. sued the Alabama Department of Revenue for injunctive relief from the state’s tax. It claimed the tax discriminated against the railroad and violated the Railroad Revitalization and Regulatory Reform Act of 1976.
The federal appeals court in Atlanta upheld the district court’s denial of the railroad’s request, ruling that Alabama’s tax laws are applied equally.
Norfolk argued that the diesel tax discriminates against railroads, since the railway is in competition with motor and water carriers that do not use diesel fuel and do not pay the tax.
Pogue ruled that a state is not obligated to tax everyone and everything equally.