The Railroad Revitalization and Regulatory Reform Act (4-R Act) prohibits state and local governments from imposing taxes that discriminate against railroads.  Railroads and other commercial and industrial taxpayers in Alabama pay a four percent sales tax on diesel fuel, trucks pay a 19-cents per gallon excise tax and no sales tax, and water carrier pay no tax.  CSX claimed Alabama violated the 4-R Act by requiring railroads to pay sales tax on diesel fuel and exempting its competitors (even though railroads paid less in sales tax than trucks paid in excise tax).  In Alabama Department of Revenue v. CSX Transportation the Court held 7-2 that railroads can be compared to their competitors (rather than other commercial and industrial taxpayers) when determining whether a tax is discriminatory under the 4-R Act.  Competitors are a “similarly situated” class “since discrimination in favor of that class most obviously frustrates the purpose of the 4-R Act,” including restoring financial stability to railroads and fostering competition between railroads and other modes of transportation.  Because “[t]here is simply no discrimination when there are roughly comparable taxes” different taxes paid by railroads and their competitors must be compared.  And the justifications Alabama offered for why water carriers don’t pay any tax on diesel fuel must be examined when determining if railroads have been discriminated against.