(The following article by Paul Beebe was posted on the Salt Lake Tribune website on August 15.)
SALT LAKE CITY, Utah — Union Pacific Railroad has sued the state of Utah, saying the Tax Commission discriminates against it by taxing the company’s diesel fuel purchases, while airlines and trucking firms are exempt.
UP has asked the federal court in Salt Lake City to prohibit the commission from levying sales and use taxes against the Omaha, Neb.-based transportation company.
It isn’t clear how much money is at stake. Spokesmen for UP and the Attorney General’s Office said information about tax collections is private.
John McCarrey, an assistant attorney general, said Utah is immune from most lawsuits under the 11th Amendment to the Constitution. The state has asked the court to dismiss the case, he said.
Although UP spokesman Gene Hinkle would not comment about fuel expenditures or other specifics Monday, it’s clear the company spends heavily in the state. UP operates 1,333 miles of track and employs more than 1,700 people here. Last year, it shelled out $146.2 million on goods and services, including diesel fuel.
UP’s average fuel price jumped 29 percent in the second quarter of this year, to $2.15 a gallon from $1.67 a gallon in the same period of 2005. The company is the biggest freight carrier in the country.
According to UP, the Railroad Revitalization and Regulatory Reform Act bars the state from imposing a tax against the company if its competitors are exempted.
UP’s principal competitors in Utah are trucking companies and airlines, which “are not subject to Utah sales and use tax on the purchase of fuel used for transportation purposes,” the suit says.
McCarrey said Utah levies aviation and motor fuel taxes. But he declined to say whether they are substitutes for a sales tax.
“It’s premature to comment on that. But, certainly, we will do that when the time comes in federal court, if that becomes necessary,” McCarrey said.
There are exceptions to the 11th Amendment protection. States can consent to be sued. Congress also can cancel immunity through legislation.
Utah will not consent to UP’s suit, and Congress has not explicitly addressed whether it authorized sales tax lawsuits against states in federal courts, McCarrey said.