YELLOW TRANSPORTATION, INC. v. MICHIGAN
Before 1994, the Interstate Commerce Commission (ICC) allowed States to charge interstate motor carriers annual registration fees of up to $10 per vehicle. Under this system, some States discounted or waived registration fees for carriers from other States in exchange for reciprocal treatment. Under the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA), the ICC implemented a new registration system. ISTEA also capped state registration fees by establishing a fee system that "will result in a fee for each participating State that is equal to the fee?that such State collected or charged as of?1991." In 1991, the Michigan Public Service Commission did not levy a fee for Yellow Transportation, Inc.'s trucks pursuant to a reciprocal agreement. However, in 1992, the commission changed how it computed fees and, ultimately, levied a fee of $10 per vehicle on Yellow Transportation's entire fleet. Yellow Transportation sued, alleging that, because Michigan had not collected or charged a 1991 registration fee for those trucks, ISTEA's fee-cap provision prohibits Michigan from levying a fee for them. The Michigan Supreme Court concluded that reciprocity agreements are not relevant in determining what fee a State charged or collected as of 1991. The court reasoned that the new fee system is not based on the fees collected from one company, but at the generic fee Michigan charged or collected from carriers as of 1991.
Did the Michigan Supreme Court err in holding that, under the Intermodal Surface Transportation Efficiency Act of 1991, only a State's generic fee is relevant to determining the fee that was collected or charged as of November 15, 1991?
Legal provision: 49 U.S.C. 14504
Yes. In a 9-0 opinion delivered by Justice Sandra Day O'Connor, the Court held that, because the ICC's interpretation of ISTEA's fee-cap provision that States may not renounce or modify a reciprocity agreement so as to alter any fee charged or collected as of that date was permissible reading, the Michigan Supreme Court erred in declining to enforce it. "Under the ICC's rule, where a State waives its registration fee, its 'fee?collected or charged' is zero and must remain zero," wrote Justice O'Connor. Justice O'Connor concluded," to allow States to disavow their reciprocity agreements so as to alter any fee charged or collected as of November 15, 1991, would potentially permit States to increase their revenues substantially under the new system, a result that the ICC quite reasonably believed Congress did not intend." Justice John Paul Stevens concurred in the judgment.
Argument of Charles A. Rothfeld
Chief Justice Rehnquist: The first case this morning in which we'll hear argument is No. 01-270, Yellow Transportation, Inc. v. Michigan.
Mr. Rothfeld: Thank you, Mr. Chief Justice, and may it please the Court:
The issue in this case is a narrow one, but it has considerable practical importance for the continuing flow of interstate commerce.
In 1991, Congress enacted a statute that was designed to ease the burdens that State registration fees impose on trucks that travel interstate.
To help accomplish that purpose, the statute provides that a State's registration fee may not exceed the fee that the State collected or charged as of November 15th, 1991.
The question here before the Court is whether that Federal standard precludes a State from now imposing a fee on a category of trucks when the State waived the fee as to that category of trucks and therefore did not actually collect or charge it as of the controlling date.
Justice Stevens: May I ask, did it waive the fee for all carriers or just the carriers involved in this case?
Mr. Rothfeld: It... it waived the fee for all carriers in the category that are involved in this case.
The State had in place a reciprocity policy.
Justice Stevens: But did it waive the fee for all carriers in the State?
Mr. Rothfeld: I do not believe.
There is actually nothing in the record, Justice Stevens, that indicates how many States paid fees... how many trucks paid fees and how many did not.
It's my... our understanding that there were trucks that were not benefitting from the reciprocity policy and therefore they would have paid fees.
So I think... I think that the answer, although not reflected in the record, is that some trucks paid fees and some did not.
Justice Stevens: Thank you.
Mr. Rothfeld: As I say, the question is whether if there is a fee that is waived as to a category of trucks in 1991, whether or not that waiver must continue to remain in place currently because of the--
Chief Justice Rehnquist: You... you say as to a category of trucks.
Why do you add that qualification?
Why shouldn't it be true, if you're right, that if a truck... if a fee was waived as to any truck, it should remain in place?
Mr. Rothfeld: --Well, we think that the inquiry that's posed by the statute is how were trucks of a particular type treated.
And for example, imagine if a State had in place a sliding scale of fees as to different types of trucks at $10 for red trucks, $5 for white trucks, and nothing for blue trucks.
The statute refers to in... in terms... it says that the State's fee must equal the fee not to exceed $10 per vehicle that the State collected or charged as of November 15th, 1991.
Well, what in that... in that circumstance, what is the fee that the State charged when there are these different categories of trucks?
We think it has to be understood to mean the fee that the State charged to trucks of that type, and so, as I say, in 1991 in Michigan trucks of a particular type, trucks that were base-plated in the State of Illinois, were not subject to fees.
We, therefore, think that under the plain language of the statute, the same policy has to apply to trucks in that category now.
Justice O'Connor: Now, was there some change as of 1992 in connection with the fee applicable here?
Mr. Rothfeld: There was a change that was announced for the 1992 registration.
Justice O'Connor: Yes, and I guess that isn't before us--
Mr. Rothfeld: Well, that... that--
Justice O'Connor: --in this case.
Mr. Rothfeld: --To elaborate on... on Justice O'Connor's question, in 1991, the 1991 registration year, there is no question, and it is undisputed, that for the entitlement to operate in the State in 1991, on November 15th, 1991, the date identified as... as crucial in the statute, trucks that were base-plated in States that had reciprocity understandings with... with Illinois did not have to pay fees.
And therefore, Yellow Transportation, the petitioner here, whose trucks were base-plated in... in Illinois did not pay fees.
It is true, Justice O'Connor, that in... towards the end of 1991, prior to November 15th, the State announced a change for the 1992 registration year, and Yellow, being a diligent taxpayer, actually paid for 1992 prior to November 15th.
Chief Justice Rehnquist: What does the term base-plated mean?
Mr. Rothfeld: Base-plated means that plates, license plates, were issued by that State.
So the State... the title for the vehicles were in those States.
Chief Justice Rehnquist: When you say base-plated in Illinois, then that means the title was issued in Illinois--
Mr. Rothfeld: --The title--
Chief Justice Rehnquist: --and it had Illinois license plates on its truck?
Mr. Rothfeld: --Either Illinois license plates or plates that were issued through Illinois.
There... this goes beyond any issue that's presented here, but there is a understanding between the States, the International Registration Plan, and there are international registration plates that can be provided by... by any State, but it's provided through a single State.
And so the license plates here for Yellow trucks, it is sort of undisputed, were provided by Illinois.
So there is no question that within the understanding of... of the Michigan scheme in 1991, the Yellow trucks were based in Illinois and therefore benefitted from the reciprocity policy in place in... in Michigan.
Justice Kennedy: Your... your test that you propose is that it's the type of truck.
It... I take it there's nothing in... in the statute or in regulatory pronouncements that talk about types of trucks unless it's the number of axles or something.
But type of truck, it seems to me, can be applied in the generic way that Michigan argues.
It's a type of truck because it was within the exemption or without the exemption.
Mr. Rothfeld: Well, let me be clear what I... what I mean by that, Justice Kennedy.
I don't mean type of truck in terms of the number of axles or... or the weight of the truck.
I... I mean the category... the rule that the State applied in 1991... the State had in place a system of rules that applied, different... as we know, different fees to different types of trucks.
Let me give you an example.
Imagine that the State had a scheme in place in which it charged $10 for red trucks, $5 for white trucks, nothing for blue trucks, as I suggested before.
What is the... what is the fee that the State applied?
You have to say the fee the State applied to who and look at the rule that the State would have applied in 1991.
And that means identifying the type of truck in the sense of how would the rule categorize it.
And Congress has frozen in place, we believe, the rules that governed fee levels at the time.
If that were not the approach one took and there were these different--
Justice Stevens: May I ask, under your hypothetical, would that rule have prevented the company from repainting its trucks, paint the blue trucks white or the white trucks red, to get in a different category, which is what happened here?
They moved from one place of registration... one rule where the trucks were licensed to a place of the home office or something like that.
So could they have later repainted their trucks?
Or in this case, could they 2 years later have moved... changed the... the rule on... on which... whether it's a place of licensing or the home office?
Mr. Rothfeld: --Well, if... if the question, Justice Stevens, is whether the... the fee payer could avoid the fee by somehow modifying its trucks--
Justice Stevens: No, no, no.
Whether the State could change its... its... as it did here.
It did it in one year.
Could it have done the same thing, say, 3 years later?
Mr. Rothfeld: --Our... our understanding, Your Honor, is that that... the State could not do that.
We think that Congress has frozen in place expressly by the terms of the statute--
Justice Ginsburg: Locked in permanently to 1991.
So even if... let's say, the reciprocity agreement persists in 1991, but Michigan wants to change it in 1993 and '94.
It's locked in forever to a reciprocity agreement that it made with its sister State only for the year 1991.
Is that your reading?
Mr. Rothfeld: --Yes, and let me explain how we think that applies.
First, the statute went into effect in 1994, although it was enacted in 1991.
So in the intervening years, the State could have done whatever... whatever it wished.
We think that Congress has frozen the fee levels in place.
Now, whether those fee levels were established by reciprocity rule or by unilateral State law or by administrative fiat, it wouldn't matter.
The State had in place in 1991 a policy that said trucks of a certain character, trucks in this instance license plated in a... in Illinois, were not subject to fees.
Fees were not demanded from those trucks.
They weren't collected.
They weren't charged.
Those trucks did not have to pay a fee to entitle them to operate on the State's roads as of the relevant period.
And that being the case, we think Congress, which said the State's fee must equal the fee, not to exceed $10 per vehicle--
Justice Scalia: Well, Mr. Rothfeld, the problem I have with... with your... your argument is how does one go about identifying the category?
Is the category Michigan trucks, or is the category trucks subject to a reciprocity agreement so that if a reciprocity agreement that used to exist with Michigan were canceled, or if... if a... for that matter, a reciprocity agreement that did... that used to not exist with New York were adopted, you come into the category or go out of the category, depending upon whether you have a reciprocity agreement?
What category are... are you urging, and why do you pick that category instead of... instead of another one?
Mr. Rothfeld: --Well, we are picking the category that we think is... was selected by Congress because Congress said the fee in place in 1991 is frozen.
And so if that--
Justice Scalia: For... for the particular truck, or for the particular State as to which there is a reciprocity agreement, or with respect to any State as to which there is a reciprocity agreement?
It's hard to figure out which category they... they were talking about.
Mr. Rothfeld: --Well, I think that it's not complex in practice.
I think that what Congress was asking the State to do is look at how it would have treated a truck of this type in 1991.
Justice Scalia: That's... that's the key word, of this type.
Mr. Rothfeld: Well--
Justice Scalia: But what type?
Mr. Rothfeld: --Well, of whatever--
Justice Scalia: Owned by this company?
Mr. Rothfeld: --No, no.
Justice Scalia: Or from this State, or subject... or from a State that has... that currently has a reciprocity agreement?
Mr. Rothfeld: I think one would consider the rule that was in place in the State just as it did in 1991 and say here's a truck, this truck is base-plated in Illinois.
That is a characteristic this truck has, which is relevant under our rule, because our rule says under our existing reciprocity policy, we will not impose a fee on a truck that has its license plate issued by Illinois.
Therefore, this truck is not subject to a fee.
If such a truck comes along in 1995, after the statute goes into effect... and I should say the statute here is the refreshing acronym, ISTEA, the Intermodal Surface Transportation Efficiency Act.
When the ISTEA statute went into effect, this same... same truck goes into the State of Michigan.
It has characteristics which waive the fee to... as to it, had this truck been there in 1991, those same characteristics make the State waive the fee as to it now, because Congress has... has used the term the State may not charge fees that it was not charging in 1991.
Again, the precise language is the State's fee must equal the fee that the State collected or charged.
Justice Scalia: Well, Mr.--
Justice Ginsburg: --What about new vehicles?
What about a vehicle purchased, say, in 1995 base-plated in Illinois?
Mr. Rothfeld: If such a vehicle is base-plated in Illinois, that is the characteristic that is made relevant by the State's rule in place in 1991.
Justice Ginsburg: So it's not only vehicles that existed in 1991, it's any vehicle thereafter acquired.
So one... one element of this is that Michigan could not, on your reading, go over to the principal place of business, which in this case is... I take it, is Kansas with no... no reciprocity with Michigan... could not change that.
Everything is frozen forever under ISTEA.
Is that your view?
Mr. Rothfeld: That... that is our view, and we think--
Justice Souter: Well that's one of your views.
And may... may I ask you about the... the answer you didn't give to Justice Scalia?
Let's assume the statute isn't as clear as... as you are arguing that it is.
Isn't this the point at which you say, if it's not that clear, Chevron controls the answer?
Mr. Rothfeld: --That... that is absolutely correct, Justice Souter.
And if... it is our view that the... that the statutory language is... is unambiguous, but if we are wrong about that and if there is any opportunity to find any sort of... any wiggle room for the State in the statute, there is no doubt that the statute does not unambiguously require that reciprocity... requires States to... to change their reciprocity rules because the State... the... the statute refers, as I say, only to the fee that was charged.
It certainly doesn't say that States may change rules, particular types of rules.
And that being the case, Chevron deference is mandatory.
Here, in fact, agency deference should be at its height.
The agency here was expressly delegated by Congress the responsibility for promulgating interpretations of the ISTEA legislation.
It conducted notice and comment rulemaking.
It received dozens of comments from all interested parties, including the State of Michigan.
It issued regulations.
It issued formal interpretations of the statute.
It published a closely reasoned explanation for its conclusion.
And in those circumstances, I think every member of the Court has recognized that deference under Chevron principles is at its height, and because I think it... it simply cannot be said that the statutory language is clearly inconsistent with the approach taken by the agency, the agency's approach must be dispositive.
And here, what the agency found, unambiguously and expressly, dealing precisely with the question at issue before the Court now, is that if States had reciprocity policies in place in 1991, they may not amend, change, rescind, modify those policies in such a way--
Justice Stevens: Well, but did they change their reciprocity policy?
They just changed the way of identifying the State that's relevant for determining whether a particular truck has to pay or not.
Mr. Rothfeld: --Well, I... I think that is, in our view, a change in the reciprocity policy.
The reciprocity policy is determined by what... by certain factors.
The State... it could be a principal place of business.
It could be a different rule, place of license plating.
Justice Stevens: Where in the regulations does it say that the State may not do what it did here?
Mr. Rothfeld: The agency issued their interpretations of its regulations, which were published actually at two points.
There... there was a rulemaking proceeding, and along with rulemaking proceeding, it issued, as I said, formal interpretations of the statute and its rules.
There it indicated expressly that in its view reciprocity agreements must be frozen and cannot be modified.
A number of States indicated that they wanted to change their reciprocity rules, and the commission then held a second administrative proceeding--
Justice Stevens: Well, but did they change their reciprocity... did Michigan change its reciprocity agreement with either Illinois or Arkansas in this case?
Mr. Rothfeld: --Well, there is actually some question as to whether there were formal reciprocity agreements in place.
There is no question Michigan had a policy of providing fee waivers to trucks that were based in States that in Michigan view provided equivalent waivers to trucks that were based in Michigan.
Applying that policy in 1991, Michigan was of the view that Illinois provided such a waiver for Michigan trucks, and therefore, Michigan, under its policy announced by its public service commission, provided equivalent waiver for trucks that were based on Illinois.
That was unquestionably the rule that was in place in Michigan at the relevant time, and because of that, we think, that was the fee that was collected or charged.
To identify the fee that was collected or charged or can now be collected or charged from a particular truck that comes from the State, one has to look at the rule that was in place then and say, what was the fee that would have been applied then to this truck?
Under that approach, Michigan cannot now change its... its way of implementing reciprocity policies and therefore charge trucks that would not have been charged at that time.
If there are no further questions now, Your Honor, I'll reserve the balance of my time.
Argument of Austin C. Schlick
Chief Justice Rehnquist: Very well, Mr. Rothfeld.
Mr. Schlick, we'll hear from you.
Mr. Schlick: Mr. Chief Justice, and may it please the Court:
Congress assigned responsibility for implementing the single State registration system to the Interstate Commerce Commission.
The ICC determined that when States apply the statutory fee cap, they must consider the reciprocal fee reductions and reciprocal fee waivers that were in place as of November 15th, 1991.
That interpretation serves the central purpose of the fee cap provision, which was to grandfather the fees that were in place as of 1991, but only those fees.
The Michigan Supreme Court's generic fee rule, on the other hand, would convert Congress's grandfather provision into a provision that would allow new fees.
The ICC's interpretation ensures that the capped registration fee is equal to the fee that the State actually collected or charged as of November 15th, 1991.
Congress did not set the cap at the amount that the States could have charged.
If Congress had wanted to do that, the obvious thing to have done would have been to set the cap at $10, which is the amount that the ICC allowed all carriers to charge as of November 15th, 1991.
Justice Souter: Well, isn't there at least an argument that Congress could have had that in mind by the distinction between charged and collected?
I mean, if there is presumably a difference between them, then the... then the reference to charge would be to a fee that was not collected, which would get you to the point which you said Congress could have but did not provide for by the... by the flat $10.
So, I mean, I... I'm not... I guess what I'm saying is, unless I'm missing something, I don't think your statutory argument compels the conclusion, but your Chevron argument is... is... perhaps takes care of your position.
Mr. Schlick: Certainly the Chevron argument is... is essential to this case.
We think that the most natural reading of charge or... of collected or charged, though, is charged, demanded, collected, received.
Justice Ginsburg: Even though that was not the commission's first view.
The commission's first view of this case is that the States would not be bound by the reciprocity agreements and could charge... whatever they charged anyone, they could charge everyone.
Mr. Schlick: That's right, Justice Ginsburg.
The ICC did, during the rulemaking proceeding, change its interpretation.
As the D.C. Circuit said in NARUC v. ICC, that's what comment periods are for.
And the... the commission ultimately relied not only on the plain language of the statute, but also on the purposes underlying the statute.
The conference report on ISTEA makes clear that there were two purposes in... in Congress's mind when it drafted the statute.
One was ensuring that... ensuring benefit to carriers, ensuring that the overall costs of the... of the State registration requirements were minimized.
The second was preserving existing State revenues.
Michigan's approach, on the other hand, would allow dramatic increases in the fee amounts, in this case an increase from 0 to $10 per truck, that would overwhelm the administrative savings that Congress intended to ensure through the single State approach.
That... that also would be a very odd policy to allow those increases since Congress would, in fact, have been authorizing increases that the States themselves chose not to implement as of 1991.
Justice Stevens: Let me just be sure you agree with your colleague.
You take the position that they could not have changed the... the State to which they give reciprocity by changing from licensing State to State of principal place of business, even if they had done it 2 or 3 years later.
Mr. Schlick: As a general matter, that's correct, but let me explain, Justice Stevens, the particular problem presented here, which has not been addressed by the ICC or the Department of Transportation and that we think is preserved on... on remand.
As of November 15th, 1991, Michigan arguably had two different fee systems in place.
The first was the fee system for 1991.
If Yellow Transportation had come to the State of Michigan and said, we'd like to add an additional truck to... to our registration for this year, effective immediately, Michigan would have... it would have charged and Yellow would have paid under the old reciprocity arrangement, under which the fact that the truck was base-plated, had a license plate for Illinois would have been dispositive.
However, simultaneously, Michigan... Michigan was... was demanding and Yellow paid fees under the 1992 reciprocity approach where the fact that the... the truck had a license plate from Illinois would not be relevant and the fact that Yellow was headquartered in Kansas would be relevant.
The ICC did not determine in its American Trucking Associations proceeding, which... which is the relevant one on this question, whether the... whether that sort of... of conflict would be resolved in favor of the old rule or the new rule.
And that's the question that we think should remain open on remand.
As a matter of fact, right now the--
Justice Scalia: I... I don't understand.
I thought... I thought '91 is the... is the... is the base period that... that's consulted.
Why... why would you use the new rule?
Mr. Schlick: --The new rule would... would be implemented as... as a result of this unusual situation, unique in our... in our experience, where there were two... where there two fee systems in place at the same time.
Justice Scalia: There was only one in '91.
The second one came in after '91.
If you allow a new fee system to... to change things, you should... you should allow a new reciprocity agreement to change things.
I... I just don't see why this is a problem.
Mr. Schlick: Well, the unique feature here is that both were in place and operational as of November 15th, 1991.
And the... that... there's also a question of whether the move to the new fee system--
Justice Scalia: They... they were both operating in '91?
Mr. Schlick: --That's right.
As of November 15th, 1991, both were in place.
Justice Scalia: Okay.
Mr. Schlick: And operational.
Justice Scalia: --I thought the change occurred in January 1, 1992, but that's okay.
Mr. Schlick: --To answer your question, Justice Scalia, the... the change... the new system became effective for the 1992 registration year commencing January 1st, 1992, but the charges were assessed in the fall of 1991.
Justice Ginsburg: So if Yellow Freight hadn't paid early, would this argument be off the board?
In other words, this... this fee was paid.
The 1992 paid... fee was paid before November 15th, '91.
Suppose Yellow Freight had waited till after January 1.
Mr. Schlick: The significance of that, Justice Ginsburg, would be something for the Department of Transportation in a pending proceeding that's... that is open now to consider.
That... that's... that question has not been answered, the significance of... of the date of payment.
Justice Ginsburg: But you're suggesting there's a possibility that somebody would be penalized for early payment, for prompt payment.
Mr. Schlick: No.
I think there would be much more to it than that.
And again, this is... this is a... a unique situation.
There have not been problems with implementing this system, and the Department of Transportation has before it a request for declaratory ruling filed by Michigan, that was mooted by the Michigan Supreme Court's decision which adopted this generic view rule that moots out all these questions.
And that proceeding could be reopened if this Court were to remand to the Michigan Supreme Court.
But the... the specific significance of the date on which Yellow made payment has not been addressed by the ICC or by the Department of Transportation.
The... the fee system here... the actual fee rule of the ICC has been in place for almost 9 years now.
There have not been serious problems of administration.
It's a mechanical process where States simply fill out the... carriers fill out a chart which has the applicable State, the number of trucks in the State.
It's a matter of multiplication and then adding some... the fee for... for each State.
As I was explaining, the Michigan situation is unique and should be left to be resolved by the Michigan courts and by the Department of Transportation.
Justice Ginsburg: Do you say the same thing for the argument that there in fact was no reciprocity in place with Illinois in 1991?
Mr. Schlick: --We do, Justice Ginsburg.
That's a... a subpart of... of this State-specific question.
The facts surrounding that have... have really not been developed before the Michigan courts or even before the Department of Transportation at this point.
The ICC's interpretation of the fee cap is a reasonable implementation of Congress's provision.
It's consistent with the language of the statute and its purposes and we submit that it should be upheld.
The decision of the Michigan Supreme Court should be reversed, and the case should be remanded.
Argument of Thomas L. Casey
Chief Justice Rehnquist: Thank you, Mr. Schlick.
Mr. Casey, we'll hear from you.
Mr. Casey: Mr. Chief Justice, and may it please the Court:
Before I begin my principal argument, I would like to spend just a moment on this... this point of the changeover in Michigan from base-plating to principal place of business.
We believe it is not present in the... in this case at this point.
This case was litigated on that point throughout the Michigan courts up until the Michigan Supreme Court decision.
Michigan had in place a system called base-plating where we imposed fees based on the State in which the vehicle was licensed.
In early 1991, the system changed from that base-plating system to a system that all the other States used based on the principal place of business of the truck carrier.
Chief Justice Rehnquist: That was what determined reciprocity.
Mr. Casey: That's what determined reciprocity.
And Yellow Freight Company, at that time Yellow Transportation... their trucks were licensed in Illinois, a State with which Michigan has reciprocity, but its principal place of business of the parent company is Kansas, a State with which Michigan does not have reciprocity.
And so when Michigan made this change during 1991, we then switched over and imposed fees for Yellow Freight for the registration year of 1992.
But those fees, as normal industry and State practice, were sent out in September of 1991 for the next registration year.
And Yellow Freight paid them in October of 1991.
Again, that's typical industry practice.
They're assessed and paid in advance of the registration year.
The statute took effect here in December of 1991.
The statutory language that we're dealing with talks about a fee that such State collected or charged as of November 15th, 1991.
Our argument on the... the way it was litigated through the State courts is that Michigan charged Yellow Freight before November 15th, 1991 and we collected from Yellow Freight prior to 19... prior to November 15th, 1991.
Chief Justice Rehnquist: Albeit on a system that didn't go into effect until--
Mr. Casey: For the registration year 1992, we charged and collected.
Yellow Freight disputed that.
That's the way it was litigated up to the Michigan Supreme Court.
It didn't involve this question of whether reciprocity was relevant or irrelevant.
The Michigan... pardon me.
The Michigan Supreme Court decided it on a... a different basis than the other State court opinions had.
And that raised the question which this Court granted certiorari.
In its briefs, Yellow Transportation has implied that we've somehow waived that issue.
We have not.
We did not brief it in this Court because this Court limited the grant of certiorari to the issue that the supreme court did decide.
So we... we believe that the case should be affirmed on the basis that the Supreme Court of Michigan decided it.
If it is not affirmed, however, we agree with the United States that the case should be remanded to the Michigan Supreme Court for consideration of this other issue which is still viable.
So turning now to our principal argument in defense of the Michigan Supreme Court's decision, the statute required the ICC to implement a fee system, to adopt a fee for the States, a fee system for a fee not to exceed $10 per vehicle, that such State collected or charged as of November 15th, 1991.
Beginning with the statutory language, under Chevron, if the intent of Congress is clear, that's the end of the matter.
The precise question that needs to be addressed here is what did Congress intend.
How do you determine the fee?
We believe that Congress's intent is clear.
Under the language of this statute--
Justice O'Connor: --Well, if we think it isn't altogether clear and in fact could be read the other way, don't we have to consider Chevron deference?
Because that's how the agency has interpreted it.
Mr. Casey: --If it... yes, if... if the statute is not clear, then you proceed to the second step of Chevron, which is whether the agency's interpretation is a permissible one.
We believe we don't need to get to the second step of Chevron because the text of the statute is unambiguous.
Justice Ginsburg: But if you're wrong about the text being unambiguous... and you do have an uphill argument there because didn't the two lower courts in Michigan reason the other way?
Didn't they reject the argument that the Michigan Supreme Court embraced?
Mr. Casey: The... I agree the second step of Chevron is always an uphill argument, to overcome an agency interpretation.
It's... but on... on the facts of this case, on the text of this statute, we believe that the agency interpretation is impermissible.
What the... what the agency did here was not just interpret the statute; they have, in fact, rewritten it.
They have imposed conditions in the statute which are simply not there.
Justice Ginsburg: But didn't the lower courts in Michigan say that was a proper reading, that the ICC's reading--
Mr. Casey: Yes.
Justice Ginsburg: --was a proper--
Mr. Casey: Yes, they did.
Justice Ginsburg: --Which makes it harder for you to argue that there is a plain meaning the other way.
Mr. Casey: Yes, it does make it harder.
But it... it is still a burden that we believe we can overcome because we believe that, as this Court did in the Whitman v. ATA, it is possible to look at a statute, say a statute is ambiguous, and still say that an agency interpretation is unreasonable.
We believe what the agency has done here is unreasonable.
What the agency has done here is add language to the statute.
They have imposed the requirement in the statute that you look at reciprocity agreements.
There is nothing in the statute about looking at reciprocity agreements.
There's nothing in the statute about looking at particular carriers or how particular carriers are treated.
All this statute... this subsection of the statute requires and permits is to look at what the State collected or charged as of 1991, November 15th.
Chief Justice Rehnquist: Is there anything in the record that indicates what percentage of revenue a State like Michigan gets on the basis of these reciprocity agreements or how much... how much of its revenue from this kind of tax is not affected by reciprocity agreements?
Mr. Casey: The record in this case is very scant.
It was decided on summary disposition right after filing of the complaint.
I do know that in the year 2000, which is 9 years after the enactment of the statute, total Michigan revenue from registration fees was $2.7 million.
There are 38 States participating in the single State registration system.
We have reciprocity agreements with 21 of those States.
Chief Justice Rehnquist: Thank you.
Mr. Casey: But I don't know how those individually break down.
Michigan registers approximately 5,000 trucking carriers each year.
About half of them are from Canada.
But I don't know.
That's intra and interstate carriers.
The fees for intrastate carriers are different.
They're $100 instead of $10.
But the record is very scant in this case because of the way it developed.
Justice Kennedy: Would you tell me again why you think the statute is... is clear and unambiguous in your favor?
Mr. Casey: There--
Justice Kennedy: I see... I see the sense of a generic approach because of the trucks being painted a different color or reincorporation and so forth.
Mr. Casey: --There... there--
Justice Kennedy: But I'm not sure that I can find that under the clear language of the statute.
There's a common sense aspect to it.
Mr. Casey: --There are very few words which are at issue here.
The fee that such State collected or charged as of November 15th, 1991.
We believe that means you look only to what the State collected or charged under its fee system.
That is, what... if... if a State collected or charged its fee... it's $10 in Michigan... from any carrier as of November 15th, that ends the matter.
Justice Scalia: So you're reading in... you're reading in from any carrier.
And... and, yes, that's reasonable to read that in, I suppose.
But it's also reasonable to read in from a carrier of... of this sort.
Or you could read in from this particular truck.
You could read in a lot of... you have to read in something, it seems to me.
Mr. Casey: Well, if... under our interpretation, under... under the plain text, we submit you don't have to read in anything.
The... the words, collected or charged, are in the disjunctive.
They... they're verbs.
They require something.
Charged means sent out a bill or an invoice.
Collected means we received something.
Justice Souter: Let me ask you this.
Did... does Michigan... did Michigan at the relevant time have a scheme in which every truck of every size, weight, class, et cetera was charged the same fee?
Justice Scalia: No.
Mr. Casey: These... these fees deal only with--
Justice Souter: No, but can you give me a yes or no answer to that?
Did Michigan say, we have a law that says if you are a truck, you pay X dollars, no ifs or buts?
Is... was that the Michigan law?
Mr. Casey: --The statute in Michigan imposes a $10 fee but permits a waiver, meaning 0.
Justice Souter: So are you telling me that the answer to my question is yes?
There is only one category known in Michigan and that is the category of a truck?
Mr. Casey: No.
There... there... there's a fee of $10 or 0.
Some trucks were charged 10.
Some were charged 0.
Justice Souter: So there are at least two categories.
Mr. Casey: Yes.
Justice Souter: And if there are at least two categories, don't you have to do just what Justice Scalia said you have to do?
You have to read something into the statute, or you would be reading it in such a way as to charge against a truck in category A what, under the Michigan law, you would have charged against a truck for category B. That can't be right.
So that you've got to... as Justice Scalia has suggested, you've got to read in some kind of a categorization in addition to the plain meaning of the statute.
Isn't that right?
Mr. Casey: I... I disagree.
The... the words, collected or charged, are in the disjunctive.
So if the State either collected the fee as of November or charged it as of November--
Justice Souter: No matter to whom.
No matter to what truck.
Mr. Casey: --No matter to whom.
Justice Stevens: May I also suggest that the... when you look at those words in the context of the whole subparagraph (4), which is the part--
Mr. Casey: --Yes.
Justice Stevens: --which begins, shall establish a fee system, so you're talking about collected or charged as part of a system.
Mr. Casey: That's correct, Your Honor.
Well, it's... it's true.
And that... that goes to another part of our argument.
This... this system or this section, subsection (3), is the section in which Congress implemented its goal of preserving State revenues.
There... there are two goals that Congress had in passing the single State registration system.
One is to simplify the whole procedure for the trucking industry and for States, and two was to preserve State revenues.
This subsection (3) that we're dealing with is a section that preserves State revenues.
And when you look at it in that context, the text here deals only with fees that the State collects.
There are other sections that talk about payments by trucks to States.
There are sections that talk about carriers specifically.
Congress didn't use the word carriers in this subsection.
They didn't use the words, payments by trucks to... or by carriers to States.
They could have used those words, as they did in other subsections.
Chief Justice Rehnquist: Carrier in your view signifying the entity that owns the trucks?
Mr. Casey: Yes.
What... you... earlier you mentioned trucks of different weights and things.
We're talking only here about the power vehicle.
We're not talking about the trailer part of the truck.
This is just for proof of insurance.
It's a $10 only.
There are other fees that various interstate agreements have for different axle weights, and that kind of thing.
Justice Kennedy: I... I guess our point is that for you to make the statute work, you are reading something into it that isn't there, which is this generic system and... or this generic theory.
And there's a certain amount of common sense to that, but it seems to me that by your having to do that, you in effect concede the statute is ambiguous and then your clear argument case collapses.
Mr. Casey: Well, I would... I respectfully disagree, Your Honor.
Justice Stevens: The words, fee system, are in the statute itself.
That's... those are the first words in the subsection to which you're--
Mr. Casey: --This... correct.
This... this subsection is part of a fee system, and this... this subsection of that system is the section that deals with ensuring that States receive their revenue.
And when you put it in that context and you look at the specific words of the statute here, when you look at the collected or charged in the disjunctive, the statute--
Justice Scalia: --I don't understand what you get out of the disjunctive.
Mr. Casey: --The statute--
Justice Scalia: How... how does that help you?
Mr. Casey: --The statute--
Justice Scalia: It seems to me that for the trucks that were from reciprocity States, the fee was neither charged nor collected.
So how does the disjunctive help you?
Mr. Casey: --That's what the Michigan Supreme Court said, in essence, that if the... if the State collected or charged the $10 fee, period, then the statute is satisfied.
Justice Ginsburg: Did the State sponsor that--
Mr. Casey: Everything else is irrelevant.
Justice Ginsburg: --In Michigan you... you helpfully began your argument by pointing out that the case had been decided on a different ground below.
Mr. Casey: Yes.
Justice Ginsburg: And this question of plain meaning or not surfaced for the first time in the Michigan Supreme Court, and that was the basis for its decision.
Mr. Casey: Yes.
Justice Ginsburg: Did you make that argument?
Did the State of Michigan make that argument, or was it something that the Michigan Supreme Court brought up on its own?
Mr. Casey: It was made in a few paragraphs as one alternative argument in a long brief, but the principal thrust of the argument... it was... it was mentioned in the Michigan Court of Appeals opinion and rejected.
It's in the appendix, I believe, on page 29 where they rejected it.
But, yes, it was presented to the Michigan Court of Appeals.
It is still active in the Michigan courts.
Justice Ginsburg: You presented it but not as your main argument.
Mr. Casey: Our argument... our principal argument, the way the case was framed in the State courts was this timing issue.
Did Michigan properly switch over from the base-plating to the principal place of business and could we, therefore, impose the fee and apply the statute to Yellow Freight?
We also argued as one of our alternative arguments that it didn't matter or that the... the statute didn't matter... didn't apply to specific carriers, that it applied broadly to everyone.
The supreme court at oral argument asked... started asking questions about this theory that they ultimately decided it on.
But the... the theory that the Michigan Supreme Court decided the case on was, by no means, the... the principal focus of the... the case that was briefed and argued below.
Justice Scalia: General Casey, you... you say that the purpose of this section was to preserve State revenues, but... but... the consequence of the... the theory that you're espousing is... is not just to preserve State revenues, but to augment them.
It... it allows the States to... to take in significantly more than they took in before.
That is, all of those considerable States that had reciprocity and from whom they collected, from whose trucks they collected nothing, they can now collect $10.
That... that's... it goes far beyond preserving State revenues.
Mr. Casey: Well, the... we... we submit that the fears that have been expressed in our opponents' briefs that these reciprocity agreements will automatically be abrogated is unfounded, for a couple of reasons, principally because those reciprocity agreements were originally entered into by States for economic reasons, totally apart from the... the statute.
It's not as though the... the State is looking at this as a... as a giant money-making event--
Justice Scalia: I understand that.
I'm... I'm not worried about the sky falling, but I'm addressing your argument from the purpose of the statute.
And you say the purpose is to preserve State revenues, but you come up with a theory that goes far beyond preserving State revenues.
It permits the States to augment their... their revenues considerably.
In... in order to preserve State revenues, you need go no further than... than your opponents' theory.
Mr. Casey: --Under their interpretation what has happened, in effect, is that State revenues are at best frozen, but in practical effect, they may really be ratcheted downward because of changing economic circumstances.
Justice Stevens: Would you explain one thing to me that response... it relates to Justice Scalia's question, too.
In this particular case, it clearly augmented State revenues because the place of... principal place of business of this carrier doesn't have a reciprocity agreement.
But it would seem to me that with respect to other carriers, it might diminish the revenue because some of them... it might be just the reverse.
They might have... that change might go from a State with... with a... without a reciprocity agreement to one that does have--
Mr. Casey: Well, when Michigan changed from a base-plating to principal place of business, it resulted in, on balance, no economic benefit.
Justice Stevens: --With respect to some States, it would increase revenues; with respect to others, it would decrease revenues.
Mr. Casey: Correct.
Justice Scalia: But your... your argument is you can charge everybody $10 no matter from what State.
Isn't... isn't that your theory?
Mr. Casey: --Our... the Michigan Supreme... under the--
Justice Scalia: That you can, as far as the Federal statute is concerned, charge everybody $10.
Mr. Casey: --Or the maximum that they were charging at the time that the statute took effect.
It may not have been $10.
Whatever their State maximum that they were charging at the time, and some States don't have $10.
Justice Scalia: No.
I'm... as far as Michigan is concerned--
Mr. Casey: As far as Michigan is concerned.
Justice Scalia: --your argument is that you can charge everybody the full $10.
Mr. Casey: That's correct.
Chief Justice Rehnquist: But Michigan has some interest in getting its own trucks... having lower fees in other States I suppose.
Mr. Casey: Of course.
As we've indicated in our briefs, Michigan has committed that we are not going to abrogate our reciprocity agreements, but as I... as I've indicated, there are economic reasons why States are not going to, in a wholesale, abrogate these... or these reciprocity agreements.
They're not going to cut their own throats by... by doing that.
They... they have to live with these trucking companies.
They have to live with these economic benefits that cause them to enter into these reciprocity agreements in the first place.
And... and there's another factor at work here too.
The... the 1994 ICC Termination Act required Congress... or excuse me... required the Department of Transportation to replace this entire regulatory scheme as of 1997, but it has not happened yet.
Depending on the outcome of this case, it... this may serve as an impetus to replace this entire system with something that could serve both the States and the trucking industry better than the current system.
But the... as... as you indicated, the sky is very unlikely to fall regardless of what this Court does if... if it affirms the supreme court or not.
Justice Stevens: May I ask you a question?
What... how would you come out or how would the case come out if we decided that the statute required every State to maintain existing reciprocity agreements?
It couldn't... they couldn't charge higher fees and they couldn't cancel reciprocity agreements.
Would you win or lose if we interpret it that way?
Mr. Casey: Would Michigan win or lose?
Justice Stevens: Yes, in this case.
As I understand it, you haven't changed any reciprocity agreement.
You've merely changed the method of deciding which State is relevant for the purposes of granting reciprocity to particular truckers.
Mr. Casey: Michigan probably would not win or lose in that.
It would probably be no change--
Justice Scalia: You assert the right to terminate reciprocity agreements.
Mr. Casey: --That... under the--
Justice Scalia: --Your basic point here--
Mr. Casey: --Under the theory--
Justice Scalia: --is that despite this Federal statute, you can terminate your reciprocity agreement with Kansas and charge the full $10.
Mr. Casey: --That's the theory of the Michigan Supreme Court opinion.
Yes, it is, Your Honor.
Justice Stevens: But you haven't terminated the agreement, have you?
Mr. Casey: We... we have an agreement with Illinois, not Kansas.
But we have not.
We have... Michigan has not terminated any reciprocity agreements.
Michigan will not.
Other... under this rationale, other States could as a--
Justice Ginsburg: General Casey I have a question about the response you just gave.
I thought there was lurking in this case as an issue, if there should be a remand, that there was no viable reciprocity agreement with Illinois, that that terminated in 1989.
Are you... are you--
Mr. Casey: --Well--
Justice Ginsburg: --abandoning that argument?
Mr. Casey: --No.
There... in the past, back in the early 1980s, there were formal written contracts of reciprocity.
When Michigan passed its statute in 1989 formalizing the $10 fee, the public service commission terminated those contracts and contacted every State with which it had reciprocity to verify this.
This whole question of reciprocity is somewhat uncertain.
Many States are not sure with whom they have reciprocity because various State--
Justice Ginsburg: Is that a... is that a live issue in this case?
Mr. Casey: --Michigan has a reciprocity agreement with Illinois, we believe.
We... we operate our system as though we... we give reciprocity to trucks licensed in Illinois, and it's our understanding that Illinois gives reciprocity to trucks licensed in Michigan.
Justice Ginsburg: So there would be no point in saying that that's an issue open for a possible remand.
Mr. Casey: That's... I believe that's correct.
Justice Stevens: But that's not right.
You don't give reciprocity to trucks licensed in Illinois.
You give reciprocity to trucks who are owned by companies who have principal place of business in Illinois.
Mr. Casey: That's correct.
I misspoke myself, Your Honor.
For purposes of this case, at the time we had the base-plating system, but now it's... if... if we ultimately lose on that other point and we are stuck with the base-plating method and could not... and the Michigan court rules against us and we are stuck with the base-plating method, that could cause a problem for Michigan.
Let me... let me just close by saying that we believe that the Michigan Supreme Court's decision is faithful to the text, results in a consistent and a coherent interpretation of the Federal statute, that is consistent with the congressional intent, and we believe it should be affirmed.
If it is not affirmed, we urge the Court to remand the case back to the Michigan Supreme Court for consideration of the other issues that were not considered by it.
If there are no further questions.
Rebuttal of Charles A. Rothfeld
Chief Justice Rehnquist: Very well, Mr. Casey.
Mr. Rothfeld, you have 4 minutes remaining.
Mr. Rothfeld: Thank you, Mr. Chief Justice.
A couple of quick points.
First, we think that the key issue in the case has been identified by questions from a number of members of the Court.
Something has to be read into the statute.
Now, we think what we would read into the statute is clearly the correct thing to read into it, but even if we are not absolutely right about that, petitioner should prevail because given the agency's determination here, the... the tie goes to this side of the table and we think that that should be dispositive on that issue in the case.
Second, there's been some discussion about issues that are other issues in the case and... and the proper disposition as to them.
We think that there is no question about the existence of reciprocity agreements or policies that would require remand, in response to Justice Ginsburg's question.
I think Mr. Casey has candidly acknowledged that there was clearly a reciprocity policy in place in Michigan, whether identified reciprocity agreement or simply unilateral policy.
There was no question about the nature of that policy.
There has been no dispute throughout the entire course of this litigation about whether there was such a policy and whether it was consistently enforced.
And therefore, there... I think there is no subject there to be considered further on remand.
The question of whether Michigan's prospective change in its policy for the 1992 registration year and whether Yellow's diligence in paying that early should somehow affect the proper outcome here and require Yellow to pay in the future--
Chief Justice Rehnquist: I didn't understand the last clause that you just spoke.
Mr. Rothfeld: --Well, the... the question whether the fact that Yellow paid in advance of November 15th, 1991 for a registration year that was not going to go into effect until sometime in 1992--
Chief Justice Rehnquist: Well, the statute says collected or charged.
Mr. Rothfeld: --Well, as of 1991, and the question is collected or charged, in our view, for what?
And we think it's for the entitlement to operate on Michigan's roads at the relevant time.
I guess I would take a little bit of issue with what Mr. Schlick said.
The... the ICC we think expressly addressed that point in its declaratory order when States, including Michigan, said--
Chief Justice Rehnquist: Well, but it really hasn't been fully fleshed out here, that particular angle.
I... I think it would be perfectly consistent to agree with your basic position and still feel that was open on remand, as... as the Solicitor General said.
Mr. Rothfeld: --Well, our view is that if that is... if there's to be further litigation on that point, the proper forum for that is the administrative proceeding that... that Mr. Schlick also mentioned.
There is actually pending before the Department of Transportation a proceeding initiated by Michigan which takes issue with the ATA's... with the... the ICC's determination on that point and asks for reconsideration by the agency.
We think that that is the appropriate place to consider that where the agency can exercise its expertise.
We then appeal to the D.C. Circuit if there's to be some... some question about it.
So that... that's what we would suggest is the appropriate--
Justice Ginsburg: But why should we get into an issue that the Michigan Supreme Court didn't resolve?
It is an issue.
You may be right or wrong on the merits of it, but at least we would not... we are here reviewing a determination made by the Michigan Supreme Court.
You are saying that we should, at the same time, strike at an issue that the Michigan Supreme Court didn't reach.
Mr. Rothfeld: --Well, it is true the Michigan Supreme Court did not decide it.
Our suggestion is that the more appropriate place for it to be subject to further litigation, if there is to be further litigation, is in this agency proceeding with an appeal to the Federal court.
But... but you are correct that it was not expressly addressed by the Michigan Supreme Court in this... in this case.
One final point quickly in response to Justice Stevens' question about whether the State terminated reciprocity agreements or... or not, or simply changed its policy.
We think it doesn't matter how you look at it.
Either way, the State clearly changed the rule that it was applying.
It had a clearly articulated rule consistently applied that trucks based in certain places would not be subject to fees.
It is now changing that rule and it's therefore trying to collect and charge fees as to those trucks that it did not charge before or collect before, and we think that is clearly precluded by the statutory language and is certainly decided by the ICC adversely to Michigan.
If there are no further questions, Mr.--
Justice Stevens: Could I ask on that question?
The... the point is should not exceed the fee that was charged.
If in the aggregate the change from the place of determining which State applies, if the aggregate were to decrease the collections, which theoretically it could be, then there would be no violation of the statute, as I understand it.
Mr. Rothfeld: --Well, we think it can't be considered in the aggregate.
First of all, the statutory language refers to the fee per vehicle.
Justice Stevens: No, a fee system it refers to.
Mr. Rothfeld: It does, but if I may, Mr. Chief Justice, just respond briefly.
The particular provision which has the fee-freezing provision refers to the fee per vehicle.
So I think that would be precluded.
Chief Justice Rehnquist: Thank you, Mr. Rothfeld.
Mr. Rothfeld: Thank you, Mr. Chief Justice.
Chief Justice Rehnquist: The case is submitted.
Argument of Speaker
Mr. Speaker: The opinion of the Court in No. 01-270, Yellow Transportation, Inc. versus Michigan will be announced by Justice O'Connor.
Argument of Justice O'Connor
Mr. O'Connor: This case comes to us on writ of certiorari to the Supreme Court of Michigan.
Before 1994, the Interstate Commerce Commission allowed States to charge interstate motor carriers operating within their borders annual registration fees of up to $10 per vehicle.
In the Intermodal Surface Transportation Efficiency Act of 1991, Congress directed the ICC to create a new system called the Single State Registration System which caps state registration fee by directing the ICC to establish a fee system that would result in a fee for each participating state as equal to the fee not to exceed $10 per vehicle that such state collected their charge as of November 15, 1991.
The ICC ruled that under the new system, the States could not terminate reciprocity agreement that were in placed under the old regime.
To allow State to do so, the ICC concluded it would be inconsistent with the statute's fee-cap provision and what Congress' intent that the flow of revenue for the States be maintained while the burden of the registration system for the motor carriers be reduced.
We granted certiorari in this case to determine whether the Michigan Supreme Court erred in holding that the ICC's rule is inconsistent with the language of the fee-cap provision.
We hold that the ICC's interpretation of the Act's fee-cap provision is a permissible reading of the statutory language and reasonably resolves any ambiguity in it.
We therefore, defer to the agency's interpretation under the principles that established in Chevron U.S.A. versus Natural Resources Defense Council, Inc.
The statute can easily be read as the ICC chose, making that unlawful for a State to renounce and modify a reciprocity agreement so as to alter any fee charge that collected as of November 15, 1991.
Under the ICC's rule, where a State waives its registration fee, its fee collected or charged is zero and must remain zero.
To allow States to disavow their reciprocity agreements that can permit States to increase their revenues substantially, a result that the ICC reasonably believes Congress did not intend.
Justice Stevens has filed an opinion concurring in the judgment.