Interstate Commerce Commission v. Texas – Oral Argument – December 10, 1986

Media for Interstate Commerce Commission v. Texas

Audio Transcription for Opinion Announcement – January 20, 1987 in Interstate Commerce Commission v. Texas

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William H. Rehnquist:

We will hear arguments next in two consolidated cases, No. 85-1222, ICC against Texas, et al., and No. 85-1267, Missour-Kansas-Texas Railraod Company against Texas.

You may proceed whenever you’re ready, Mr. Taranto.

Richard G. Taranto:

Mr. Chief Justice, and may it please the Court:

This case concerns one particular form of mixed train-truck transportation, and whether the Interstate Commerce Commission could properly allocate this particular form of mixed service to the system of rail carrier regulation, rather than the system of motor carrier regulation.

Specifically, the transportation at issue in this case is TOFC service, trailer-on-flatcar or container-on-flatcar service, which involves a rail portion, during which the trailer or container rides on a railroad flatcar, and a motor portion, during which the trailer or container is pulled by motor vehicle.

Even more specifically, this case concerns only one particular form of TOFC service, a category of what has long been called Plan II service, where the entire service is provided by an interstate rail carrier on equipment owned and operated by the rail carrier.

The ICC decided in this case that that particular form of Plan II service should be subjected to the system of rail carrier regulation, and not to the system of motor carrier regulation.

Sandra Day O’Connor:

Mr. Taranto, part of the equipment is trailer rigs, truck-trailer rigs owned by the railroad?

Richard G. Taranto:

That’s right.

Sandra Day O’Connor:

So that it travels over the road in tractor-trailer rigs owned by the railroad; is that it?

Richard G. Taranto:

That’s right.

That trucks that pull the trailers or containers on the road in this case are owned by the rail carrier itself.

Sandra Day O’Connor:

For you to prevail, we have to decide that’s a form of rail service?

Richard G. Taranto:

You have to decide that that is transportation provided by a rail carrier within the meaning of the Staggers Act.

My argument today is–

Harry A. Blackmun:

Well, that… that fact is important to your–

–They could just as easy said, rail.

Richard G. Taranto:

–I’m sorry, Justice?

Thurgood Marshall:

They could just as easily have said, by rail, instead of saying, by a rail carrier.

Just to confuse us.

Richard G. Taranto:

Well, it is true that the statute generally uses the term, transportation provided by a rail carrier in various places.

And that it is not entirely consistent in its use of language.

But the phrase, transportation provided by a rail carrier, under the literal definition of the word transportation, includes motor vehicle as well as rail movement.

The Interstate Commerce Commission decided in this case that for the entire portion of TOFC service, both the motor and the truck portion, that the proper system of regulation for the entire service is the rail carrier provisions and not the motor carrier provisions.

This case arose as a result of Congress’ passage of the Staggers Act in 1980.

That statute, which extended and furthered the deregulation policies first put into place in the mid-1970s, made major changes in the system of rail carrier regulation in the United States.

The general findings and policies set forth in the statute are important to this case, because the state expressly provides that individual provisions of the entire Interstate Commerce Act must be interpreted to further the declared national rail transportation policy.

The Staggers… in the Staggers Act, Congress expressly found that overregulation had contributed to the financial plight of the rail industry, and that much regulation was today unnecessary, largely because transportation had become much more competitive.

It then went on to set out a new national rail transportation policy, which emphasized deregulation at the Federal level; maximum possible reliance on market forces in rail carriers providing transportation; uniformity between State and Federal regulation; and, in particular, the promotion of intermodal transportation.

Congress went even one step further, and expressly amended the national transportation policy that applies to other modes of transportation, to give the rail policy express priority.

Richard G. Taranto:

That policy must govern whenever a government action has an impact on rail carriers.

William H. Rehnquist:

You say, is that explicit in the statute, Mr. Taranto?

Richard G. Taranto:

Yes, in the very first words of Section 10101, the general national transportation policy, says that the following shall govern except when policy has an impact on rail carriers, in which case the specific rail carrier policy will govern.

In its first act pursuant to the Staggers Act, new… the Staggers Act new exemption provision, the ICC determined, in this case, that both the truck and train portions of rail-provided TOFC service should be exempt.

It took this action pursuant to two… to one of the two important provisions of the Staggers Act that is in issue in this case.

The exemption provision that the Staggers Act added to the Interstate Commerce Act changed what had been the historical practice.

Historically, all rail carrier activities were subject to an extensive system of regulation, covering the rates charged and most other aspects of rail carrier activities.

In 1976, Congress took one step and granted the Commission power to exempt activities.

But there was a limit in that provision.

Only activities of limited scope could be exempt.

The ICC began considering whether TOFC service, fell within that exemption, and Congress specifically noted the potential availability of the exemption provision as written when it was considering the Staggers Act.

But in the Staggers Act, Congress expanded the exemption power, and specifically directed the Commission to examine rail activities to determine when regulation was no longer necessary to protect shippers against an abuse of market power.

Congress also added to the exemption provision a specific section designed to promote the exemption of rail… of transportation provided by a rail carrier as part of intermodal service.

The second important provision of the Staggers Act–

William H. Rehnquist:

Mr. Taranto, excuse me for interrupting, because you answered my question earlier.

But could you again give me that Section… could you tell me what page of your appendix or petition that section is on?

Richard G. Taranto:

–I don’t believe that the petition includes the general national transportation policy.

William H. Rehnquist:

Something that critical was not included in the relevant statutes?

Richard G. Taranto:

It is included in the statutes; not in the appendix here.

In Section 10101, the general national transportation policy, which comes just before 10101a, the language I was referring to appears.

The pre-emption provision of the Staggers Act is the second important provision in this case.

And that provision worked an even more fundamental change in the system of rail carrier regulation.

Historically, an interstate rail carrier was subjected to a dual system of regulation.

And intrastate shipment was initially subjected to State regulation, with appeal to the Interstate Commerce Commission, to simplify matters, only if the State action discriminated against or unduly burdened interstate commerce.

Congress radically altered the balance of Federal and government authority in the Staggers Act.

After the Staggers Act, a State was permitted to continue regulation intrastate transportation only if it did so in accordance with Federal standards and procedures, and it had obtained certification from the ICC to continue that regulation.

In this case, Texas has been denied certification.

It was denied certification while the ICC decision that is at issue here was pending in the Fifth Circuit.

The precise chronology is as follows.

The ICC granted the exemption to TOFC service, both the motor and rail portions, in 1981.

Richard G. Taranto:

That decision was affirmed by the Fifth Circuit in its American Trucking Association’s case of 1981.

In the early eighties Texas, like many States, had provisional authority to continue regulating.

And under that provisional authority, it determined that for intrastate shipments it retained the authority to regulate the motor portions of TOFC service.

The ICC disagreed with that decision by Texas, and that decision was in turn–

Thurgood Marshall:

xxx distinguished it, didn’t they?

Richard G. Taranto:

–The ICC said that it’s 1981 exemption–

Thurgood Marshall:

No, I mean the second… Court of Appeals.

Richard G. Taranto:

–Yes, when that case went to the Fifth Circuit, the Fifth Circuit said that the transportation involved in the earlier case was interstate transportation; that the shipments there crossed State lines during the entire… at some point during the single TOFC service.

In this case, they said a different analysis is required when the service is purely intrastate.

And the Fifth Circuit determined that intrastate motor portions constituted transportation provided by a motor carrier, subject to the Motor Carrier Act, which expressly reserves such activity to State regulation.

It is our position that the Fifth Circuit decision was wrong because it took too simplistic a view of the statutory scheme, and because it failed to give the ICC the deference it is due in making an allocation decision, a decision about where to allocate an inherently mixed form of transportation in a complex regulatory scheme.

William H. Rehnquist:

I don’t see that the Fifth Circuit mentioned the provision which you referred me to earlier.

Did the government argue that provision to the Fifth Circuit?

Richard G. Taranto:

I’m not aware that the government made any argument based on the express priority given to the rail carrier policy.

We showed in our brief that the language of the two or three particular provisions at issue in this case can bear the construction that the Commission gave it.

First of all, the motor vehicle portion of TOFC service in fact constitutes transportation provided by a rail carrier, because transportation is given a broad definition in the statute that encompasses not just rail but also motor vehicle movement.

Second, when a rail carrier provides motor vehicle transportation, as an adjunct to, incidental to, its rail transportation, it need not automatically become transformed into a motor carrier.

Not all motor vehicle movement is by definition movement by a motor carrier.

The particular provisions at issue here, of course, can’t be read in isolation, as this Court… this Court’s approach in its American Trucking Association’s case of 1967, we think, took the proper approach.

First of all, the statutory scheme simply does not divide the world of motor vehicle movement and rail movement according to the same line that the statutory scheme is generally divided between motor carriers and rail carriers.

Antonin Scalia:

Am I correct that the argument on which the Fifth Circuit based its decision had not been presented to the ICC?

Is that right?

In the proceedings before the ICC did Texas make the argument that ultimately prevailed in the Fifth Circuit?

Richard G. Taranto:

The Fifth Circuit rested its decision on the view that this was transportation provided by a motor carrier.

Antonin Scalia:

Right.

A motor carrier.

Richard G. Taranto:

The ICC decision in this case itself does not reflect that… that argument.

I’m afraid I’m just unaware of what arguments were made in the proceeding leading up to the ICC decision.

The opinion itself does not reflect that.

Antonin Scalia:

We don’t really know the views of the ICC on this point?

Richard G. Taranto:

Well, we do know the view of the ICC that both the motor and truck portion is-properly brought within the rail carrier provisions of the Interstate Commerce Act.

The ICC decision itself does not speak about the Motor Carrier Act provision.

It does speak about the Motor Carrier Act, but not about the particular reservation of State authority.

Harry A. Blackmun:

Mr. Taranto, Texas was decertified after some 40 items of disagreement with the Texas Commission, is that right?

Richard G. Taranto:

Yes, that’s right.

Harry A. Blackmun:

Has the ICC had the same trouble with other State commissions in finding them recalcitrant?

Richard G. Taranto:

As far as I’m aware, Texas today remains the only State to have been denied certification.

There was a long process in which many States applied for certification.

Many of those States were eventually granted certification.

Some in the course of the application process dropped out, and decided that they would no longer continue seeking certification.

Harry A. Blackmun:

Of course, it’s a large State, and there’s probably a lot of intrastate movement in Texas that might not be the case in other States.

Richard G. Taranto:

Certainly, Texas is larger than most States, but other States have an enormous amount of intrastate movement.

xxx I suppose.

Richard G. Taranto:

Yes.

The specific question, whether Congress has ever addressed itself to whether truck movement can be encompassed in the rail carrier provisions has a fairly clear answer.

Congress has simply never said anything on that subject.

What Congress has said is that it sought to promote intermodal transportation, both in the specific exemption provision of the Staggers Act in adding, as part of the Motor Carrier Act of 1980, the promotion of intermodal transportation, to the general national transportation policy; and in taking a variety of other actions.

When one turns, finally, to the general rail carrier policy set out in the Staggers Act, nothing could be clear that… than that the ICC decision in this case furthers that policy.

The ICC decision here furthers the deregulatory policy; the policy of ensuring… of eliminating disparities between Federal and State regulation; and the policy of promoting intermodal transportation.

It is our view that because there is nothing specifically in the statute contrary to the ICC construction of the statute; and because the ICC decision here furthers the national rail transportation policy; that the ICC decision was correct, and that the Fifth Circuit decision should be reversed.

I would like to reserve the remainder of my time for rebuttal.

William H. Rehnquist:

Thank you, Mr. Taranto.

We’ll hear now from you, Mr. Roper.

Michael E. Roper:

Mr. Chief Justice and may it please the Court:

The issue before this Court is the narrow question of whether Congress delegated power to the ICC to exempt the motor portion of intrastate TOFC transportation provided by a rail carrier.

There is no dispute that the ICC does have, and did properly exercise, the power to exempt both the motor and rail portion of transportation provided by a rail carrier, when that transportation was on a interstate basis.

Likewise, there is no dispute that the ICC could and did exempt the rail portion of intrastate TOFC-COFC transportation provided by a rail carrier.

Railroad petitioners, all of whom are interstate rail carriers operating in Texas, concur in the analysis made by the government, and that will not be repeated here, hopefully.

Instead, my primary focus will be on what the practical effect of the decision below will be, if that decision is allowed to stand.

Petitioning railroads will suffer real and tangible harm if the motor portion of intrastate TOFC transportation provided by a rail carrier, is subject to regulation by the Railroad Commission of Texas.

Michael E. Roper:

While it is true that petitioners are not presently engaged in a large amount of that type of transportation, one reason for that is the uncertainty created by the decision below.

Railroad petitioners view complete intrastate TOFC-COFC transportation as a necessary component of their ability to be fully effective competitors in the State of Texas and other large States where there is a potential for long-haul transportation by rail.

The major effect of the decision below will be to prevent railroad petitioners from competing with intrastate motor carriers.

Texas has essentially conceded in its brief that its aim is just that, to protect intrastate motor carriers from competition.

One wonders why Texas is so concerned about protecting an industry, when that industry apparently is not itself concerned.

The Texas intrastate motor carriers have not appeared at any stage of this case before the ICC or the courts.

We believe it is safe to assume that motor carriers would have contested this matter if they were truly fearful of this competition.

In any event, railroads will not be able to effectively compete because of the higher costs and less flexibility associated with transportation that is partially regulated and partially deregulated.

Antonin Scalia:

I don’t really understand that.

You can’t have it both ways.

Either it’s… you’re saying, it’s important to you, but it’s not important to them.

It seems to me if it’s important to you, it ought to be important to the Texas motor carriers, too.

Michael E. Roper:

Well, you would think so–

Antonin Scalia:

You’re going to make money and they’re not going to lose any.

It really doesn’t work that way, it seems to me.

Michael E. Roper:

–We will be able… if the motor portion is deregulated as the rail portion, we will be able to provide additional competition there is no question about that.

Antonin Scalia:

And the Texas truckers must lose money.

I mean, it seems to me you have to pick one argument or the other.

Maybe the Texas truckers just trust the State of Texas to preserve their interests.

Michael E. Roper:

Well, given the history of the Railroad Commission, I could certainly understand why they would put that trust there.

But in any event, I don’t think it’s necessarily an either/or situation.

TOFC-COFC transportation involves the movement of usually two trailers or containers on one flatcar.

Under the TOFC exemption adopted by the ICC, a portion of the movement must be over the rail in order for the rail carrier to be able to provide over-the-road motor vehicle service in its own trucks.

Both interstate and intrastate TOFC-COFC shipments move on the same flatcars, in the same trains, and receive the same physical handling.

However, if the decision below stands, the intrastate TOFC-COFC shipments will be subject to economic regulation by the RCT, Railroad Commission, while the interstate shipments will be exempt from economic regulation.

The example discussed in railroad’s opening brief is illustrative of the problem.

That example concerned a shipper making an intrastate shipment from Houston to Texarkana, Texas, and a shipper making a TOFC shipment from Houston to Texarkana, Arkansas.

The rail carrier chosen by the first shipper would move the trailers over its tracks to Dallas, and then would have to obtain either a certificate to operate as a motor carrier to move the trailers to Texarkana, Texas, or would have to use another certificated motor carrier for that portion of the move.

The interstate shipper, using–

John Paul Stevens:

Yes, but isn’t the anomaly present if you were just a motor carrier and you didn’t have a rail involved?

John Paul Stevens:

One going to Texarkana, Texas is subject to the Texas Commission.

One going across the State line is subject to the Interstate Commerce Commission.

Michael E. Roper:

–That is true, but in this case, Congress has form a different form of regulation.

John Paul Stevens:

I understand.

But I don’t think the anomaly adds much to your argument is all I’m saying.

Michael E. Roper:

Well, I think it’s illustrative of the problem you have with the dual regulatory system, that Congress has concluded was too much of a burden on the rail carrier industry.

And that’s why they did what they did.

It is interesting to note that Texas did not dispute the validity of this example, but rather stated that the disparity was condoned by Congress.

We believe that statement to be erroneous.

Because Congress, in adopting the Staggers Act, specifically found that separate State and Federal regulatory policies were to be eliminated.

Congress therefore preempted State regulation of intrastate rail transportation except to allow certified States to regulate in accordance with Federal standards and procedures.

Texas, of course, because of its decertification, does not even have that power.

If the decision below stands, the policy of uniformity between Federal and State regulation will be frustrated.

That result would be contrary to the stated policy in 49 U.S.C. 10101a of assuring that intrastate regulation is consistent with Federal standards.

We also believe that the decision below conflicts with this Court’s holding in the Transcontinental Gas Pipe Line case.

As this Court held, once the Congress has decided not to regulate in an area such as economic regulation, the States are not free to step in and regulate.

Texas is attempting to do just that by asserting that the ICC does not have the power to exempt the full intrastate TOFC transportation provided by a rail carrier.

The Staggers Act expressly adopted the policy to rely on market forces, rather than economic regulation.

And we believe Texas’ attempt to frustrate that police is contrary to the holdings in Transco.

William H. Rehnquist:

It did… the Act does exempt intrastate transportation by motor, doesn’t it?

Michael E. Roper:

By motor?

William H. Rehnquist:

Yes.

By motor carrier?

Michael E. Roper:

No–

William H. Rehnquist:

What is the phrase that the Fifth Circuit relied upon?

Michael E. Roper:

–Well, the Fifth Circuit said that the ICC and Congress had to be talking only about interstate transportation when they were talking about motor and rail portions.

William H. Rehnquist:

Well, isn’t there language in the act that allows States to regulate intrastate motor transportation?

Michael E. Roper:

Yes, there is.

But this is not transportation provided by motor carriers.

William H. Rehnquist:

Well, that’s where the argument is really.

William H. Rehnquist:

Because if it is transportation provided by motor carriers, it isn’t subject to that kind of market forces analysis that the other forms of motor transportation are?

Michael E. Roper:

Not to the degree, although the 1980 Motor Carrier Act, I think, did loosen up the regulatory control significantly for interstate motor carriers.

But it is our position that the statute that was adopted by Congress, where they said, transportation provided by a rail carrier, is exactly covering this type of transportation.

These are all rail carriers.

It is transportation provided by these rail carriers.

And beyond that, the first portion of 49 U.S.C. 10505 talks about matters relating to transportation provided by rail carriers.

And this is certainly a matter that relates to transportation provided by a rail carrier.

You must have a prior or subsequent move over the rail in order for this exemption to apply.

So I don’t think it’s… the construction of the statute, you know, is clear that transportation which, as defined in the Interstate Commerce Act, does include motor vehicle, when it’s transportation provided by a rail carrier, it falls exactly within the statute.

And that is our position.

That’s all I have.

Thank you.

William H. Rehnquist:

Thank you, Mr. Roper.

We’ll hear now from you, Mr. Rodriguez.

Fernando Rodriguez:

Mr. Chief Justice, and may it please the Court:

For well over 50 years the Railroad Commission of Texas has regulated intrastate motor carriage, within the State of Texas.

That regulation has been active.

That regulation has been vigorous.

But I submit to the Court that at the same time, that regulation has been even-handed, and has been entirely in keeping with the legislative mandate under which the Railroad Commission operates.

That legislative mandate was given to the Commission by the Texas legislature.

In early 1984, the ICC, acting pursuant to what it considered to be its jurisdiction and authority, exempted from regulation the motor carrier portion of a totally intrastate TOFC shipment.

I agree with Mr. Roper that the question in this case is simply this: Did the ICC have the jurisdiction under its statutes, under the sections in its statutes, to exempt the motor carrier portion of a purely intrastate TOFC shipment, or, as the State of Texas contends, is there a countervailing force to that?

The State of Texas contends… Mr. Chief Justice, I think that was the question you were asking just a moment ago… that Section 10521b is an express limitation on the power of the ICC to regulate intrastate motor carriage.

John Paul Stevens:

May I just ask at that point, suppose that instead of granting an exemption, the ICC had felt there was a danger that the railroad would have a monopoly and would gouge the shippers, and wanted to regulate rather than exempt the entire TOFC or whatever you call it combined type of service, including the intrastate motor carriage portion.

Your position is, they couldn’t have done that either.

Fernando Rodriguez:

Your Honor–

John Paul Stevens:

What is your position on that?

Fernando Rodriguez:

–Justice Stevens, we’re still talking about a purely intrastate movement?

John Paul Stevens:

Correct.

You’d have the same–

Fernando Rodriguez:

Yes, Your Honor.

John Paul Stevens:

–transportation at issue.

But instead of ordering the State to exempt, the ICC had said, we’d like to regulate this, because we’re afraid the railroad’s going to gouge the shippers?

Fernando Rodriguez:

Yes, Your Honor, we contend that under 10521b, which is the express reservation of power to the States, the ICC… the ICC simply has no jurisdiction–

John Paul Stevens:

You’d say they didn’t have jurisdiction there either?

Fernando Rodriguez:

–Yes, Your Honor, that’s correct.

In short, this is clearly a case that involves preemption or not preemption.

And that being the case, we have to apply the principles of preemption.

Now we recognize… the State of Texas recognizes… that Congress’ authority to regulate interstate between the intrastate commerce which they seek to regulate and interstate commerce, as long as they choose a reasonable method, which comports with Constitutional limitations, they can regulate those intrastate commerce type of movements.

Antonin Scalia:

Textually, your argument comes down to the argument that this transportation is not being… is being provided by a motor carrier rather than by a railroad; isn’t that what it all boils down to?

Fernando Rodriguez:

That’s what it all boils down to, Justice Scalia.

Antonin Scalia:

Well, it seems to me it’s being provided by a railroad.

Fernando Rodriguez:

Well, Your Honor, is a truck not a struck simply because it has Burlington Norther or MKT on the side, when that truck provides the same type of service which John Doe Freight Lines provides?

Our contention is that you do not… you consider what section of the statute you come under by looking at the type of transportation provided.

You do not look at who owns the particular type of vehicle.

If it is motor vehicle transportation as defined by the statute in 10102–

Antonin Scalia:

Then how could you get ICC jurisdiction over the motor carrier portion of interstate transportation.

Do you assert that the ICC doesn’t have jurisdiction over that either?

Fernando Rodriguez:

–No.

Yes, they do, Your Honor.

The ICC does have jurisdiction over interstate motor carriage.

Essentially–

John Paul Stevens:

But supposing only the rail portion is interstate and the motor portion is intrastate.

Under your view who has jurisdiction?

Fernando Rodriguez:

–Well, Your Honor, I think that’s an interstate movement.

I think that would be an interstate movement.

A purely intrastate movement would be something like a movement by truck from Brownsville, Texas to Houston, at which point it is placed on a flatcar.

The flatcar goes to Dallas, at which point the trailer comes off the flatcar, is attached to a truck, and is carried to, say, Wichita Falls.

It’s a purely intrastate movement.

That’s the type of movement we’re talking about in this case.

Fernando Rodriguez:

If there’s a leg of that transportation that crosses State lines, then we’re talking about an interstate movement, and that’s not involved here.

Sandra Day O’Connor:

But Mr. Rodriguez, if the motor portion of interstate TOFC movements can be exempted, why doesn’t that necessarily mean that the motor portion of intrastate movement is also transportation by a rail carrier?

Fernando Rodriguez:

Justice O’Connor, that’s… you’ve essentially grasped what this case is all about.

That is what it comes down to.

The ICC contends that under the definition, that the definition is so broad that it includes this type of traffic.

We contend that it does not for a number of reasons.

Number one, there is a specific statutory expression of power reserved to the States in 10521b, which says specifically, that nothing in this statute is meant to take away intrastate motor carriage regulation from the States; that’s a paraphrase.

But more importantly, transportation as defined in Section 10102… I think it’s section 25… does not mean what they say it means for a number of reasons.

Number one, it’s a recodification of the prior statutes in which the definition of transportation was different for motor carrier, water carrier, and freight forwarding.

Number two, it’s in the disjunction; it is not in the conjunctive.

It talks about X, Y, Z, or a different type of transportation.

Finally, Your Honor, transportation is defined broadly because it is used in the statute in many different contexts.

Clearly to me, and to the State of Texas, it has… while it’s defined broadly, it means different things in different contexts.

And that’s why it’s much too simplistic to say that transportation provided by a rail carrier includes any other type of ancillary transportation such as motor carrier traffic, which a railroad might seek to provide.

Sandra Day O’Connor:

Well, if there’s some question about it, don’t we owe some deference to the ICC as the Agency administering the Staggers Act?

Fernando Rodriguez:

Your Honor, I would agree that some deference is due the ICC.

But once again, we have a countervailing force because we’re apply preemption analysis to this type of case.

When we have… when we deal with a Congressional grant of authority to regulate interstate commerce that involves the State, in which the State is being preempted from a function which it has traditionally done, the cases say that there has to be a clear expression of intent on the Congress to do that.

And I think that comes about because the States are essentially different creatures.

They are not like a private party.

That is why we have a Tenth Amendment, and that’s why we have an Eleventh Amendment.

They stand in different stead than a private party.

I think there is something of a problem in that when we talk about Tenth Amendment cases, the Garcia case complicates things somewhat.

Previously, we had thought… we who represent the States had thought that there was a body of law which included–

John Paul Stevens:

Mr. Rodriguez, can I interrupt you just a second?

Fernando Rodriguez:

–Yes, sir.

John Paul Stevens:

Are you making a Constitutional argument in this case, or is it just a question of statutory construction?

Fernando Rodriguez:

Well, it’s a question of statutory construction, Your Honor.

But to do that, I think I need to refer to the type of preemption analysis that’s done in an interstate commerce case.

John Paul Stevens:

But you would not contest the power… if everything were spelled out just as the government, your opponent, says it is, you wouldn’t contest the power of Congress to deregulate this particular kind of transportation?

Fernando Rodriguez:

Absolutely not, Justice Stevens.

If Congress said, tomorrow, we want intrastate motor carriage either exempted from regulation or given to the ICC, we’d have no case.

We concede that.

Thurgood Marshall:

Doesn’t the Staggers Act do just about that?

Fernando Rodriguez:

Just about that, Your Honor.

That’s the key phrase.

If you look at the statutory… or the legislative history of the Staggers Act, there is clearly an intent on the part of Congress to improve the financial position of the railroads.

There is an intent on Congress to avoid, as much as possible, the system of dual regulation which applied to the railroads.

We do not contest that.

But the Staggers Act, Justice Marshall, was an accommodation.

There were those in Congress at the time that simply wanted to exclude the States from any and all regulation.

And Senator Broyhill’s compromise, which is… which found its way ultimately into the statute, was that there will be different levels of regulation.

They did do away with much of the red tape.

But the States can still regulate intrastate rail carriage, as long as they comply with the standards which the ICC sets.

Even if they comply with the standards which the ICC sets, an appellant can take a decision from a State regulatory body to the ICC on the grounds that it contravenes an ICC policy.

But furthermore, there is still that specific expression of… or that express reservation of powers to the States in 10521b.

And that is what the Fifth Circuit went off on in this case, and that is what we contend prevents the ICC from exerting regulatory control–

xxx which–

Fernando Rodriguez:

–No, Your Honor, they haven’t.

Thurgood Marshall:

–The ICC is better able to interpret that Act than you or the Fifth Circuit.

Fernando Rodriguez:

To a certain extent, I would agree, Your Honor.

There is a measure of deference which is owed the ICC.

But that measure of deference disappears when you have an express statutory reservation of power, as you have in 10521b.

0 xxx.

Fernando Rodriguez:

Well, that’s all part of the same Act.

Your Honor.

The point I was trying to make, Justice Stevens, when I was talking about the Garcia case, is that previously we had thought that in an interstate commerce case, when you’re talking about interstate commerce, Congress can legislate against the States, can intrude upon what normally would be considered State sovereignty, as long as there is no Constitutional impedient to that.

After Garcia, where we are now told that there are no traditional notions of what is a government function, that in fact we have to participate in the political process to safeguard whatever prerogatives we would like to have, we are left essentially between a xx a hard place.

We have to go… we have to depend on Congress not Overregulate.

And yet we have to go to Congress to preserve our own prerogatives.

Fernando Rodriguez:

What that says to me… and we also are still acknowledging the facts that States are different; that they constitute or they hold a special position in our Federal system.

John Paul Stevens:

Well, I don’t think it’s correct to say you go to Congress to preserve your power to regulate.

What you’re saying is, your adversaries did not persuade Congress to take that power away from you.

And they say that the statute clearly did take it away if you read it literally.

Fernando Rodriguez:

That’s correct.

John Paul Stevens:

But you didn’t have to have the initiative to go to Congress to preserve your regulatory power.

You’re really saying they didn’t accomplish what they say they did.

Fernando Rodriguez:

Well, in part that’s true, Your Honor.

And perhaps the States were lucky in that this particular section, 10521b, is in the statute, particularly in light of what Garcia v. San Antonio Metropolitan Transit Authority says.

The point of all this, Your Honor, is that–

John Paul Stevens:

Of course that 10521b says except as provided in these other sections.

And those are the very sections that the ICC relies on as taking it away, isn’t it?

Fernando Rodriguez:

–No, Justice Stevens, I think you’re talking about the three sections which are specifically referred to in–

John Paul Stevens:

11501e and… yes.

Fernando Rodriguez:

–Those three sections refer to intrastate motor carriage of passengers.

Those talk about busses.

John Paul Stevens:

I see.

Fernando Rodriguez:

They do not talk about intrastate motor carriage of property.

John Paul Stevens:

Oh, no, the question is whether this is intrastate transportation provided by a motor carrier.

That’s what 1025b(1) exempts.

So you still boil down to the question, is this transportation provided by this railroad, quote, transportation provided by a motor carrier, within the meaning of 10521b.

Fernando Rodriguez:

I think probably that’s correct, Your Honor.

What that leads us to, then, is a question of statutory interpretation.

John Paul Stevens:

Right.

Is this a rail carrier or a motor carrier?

Fernando Rodriguez:

And is our statutory interpretation better than the ICC’s?

In this particular case… clearly; I mean I’m here to win the case… I submit that ours is the best interpretation.

And I think ours is the best interpretation because it goes and turns on the plain meaning of the words.

To my way of thinking, the ICC’s interpretation, how they get to what constitutes transportation provided by a rail carrier, is tortured and arduous.

Our interpretation, on the other hand, basically is very clear.

Fernando Rodriguez:

It says a truck is a truck, and a train is a train.

William H. Rehnquist:

And they say a railroad is a railroad.

Fernando Rodriguez:

They say a truck is a railroad, Mr. Chief Justice.

At some point… at some point I think you have to look at the common meaning of words.

If you look at Section 10102, I think there are four definitions which basically foreclose this issue.

I’ve already gone over section 25 which defines transportation.

The next one I’d like to discuss is Section 10102, Sections 12 and 13, which talk about what is a motor common carrier, and what is a motor contract carrier.

And essentially both of those are persons who hold themselves out to the public to provide motor vehicle transportation for compensation over highways.

Antonin Scalia:

That isn’t the issue.

The issue is, what is transportation by a motor common carrier, and what is transportation by a railroad?

Does it mean… it’s easy to identify what’s a railroad or what’s a motor carrier.

What’s hard, and there’s really no… you could go either way… is whether transportation by a railroad means only rail transportation by a railroad or truck transportation by a railroad; then, likewise, whether transportation by a motor carrier means… would any problems arise if we adopted the government’s meaning for transportation by a railroad, by a rail carrier, I assume you’d have to adopt the same position for the meaning of transportation by a motor carrier, wherever it appears in the Act; that is, wherever the Act says anything relating to transportation by a motor carrier, it would include rail transportation by a motor carrier, so long as the rails are owned by a motor carrier.

Fernando Rodriguez:

Your Honor–

Antonin Scalia:

Would that make the government uncomfortable in any way?

Fernando Rodriguez:

–I don’t know if it would make the government uncomfortable.

But I think what you’re saying follows logically.

And I think that’s the incongruity.

It simply can’t mean everything for everyone.

Transportation means–

Antonin Scalia:

It could.

Fernando Rodriguez:

–Well, I hope not, Your Honor.

Antonin Scalia:

It lends itself to that meaning, certainly.

Transportation provided by a rail carrier means any form of transportation the rail carrier provides.

Fernando Rodriguez:

Well, that’s clearly the position that the ICC is taking in this case.

Put Your Honor, we contend that… that that simply does not jibe with what the prior legislative… or prior legislative enactments.

You had three separate definitions of transportation, all of which were codified and combined in the section.

Now, we’re talking about the whole statute.

And through the statute, the term “transportation” is discussed.

Now, clearly it can’t mean everything for everybody.

In the context of transportation provided by a motor carrier, does it also talk about… does it also include the term, vessel?

Fernando Rodriguez:

Are we talking about barges?

I submit to the Court that it does not.

And at some point you have to impose some level of logic and clarity on this.

Another reason which I believe augurs in our favor and against the government is that if, in fact… if, in fact, transportation provided by a motor carrier… excuse me, transportation provided by a rail carrier includes transportation which otherwise would be motor carrier traffic, then I submit there would have been absolutely no reason to include in 10505f the specific reference to intermodal movements.

xxx.

Fernando Rodriguez:

10505f, Your Honor.

Antonin Scalia:

I don’t have it readily in mind.

Fernando Rodriguez:

If I may, Your Honor, 10505f says, the Commission may exercise its authority under this section to exempt transportation that is provided by a rail carrier as a part of a continuous intermodal movement.

If in fact the ICC is correct, and the phrase, transportation provided by a rail carrier includes motor carrier traffic, there would have been absolutely no sense in including that section.

That section specifically recognizes intermodal traffic.

And it was put there for a purpose.

And yet, even though it was put there for a purpose, we still have Section 10521b staring us in the face, which is the express reservations of power to the States to regulate intrastate motor carriage.

What that says to me is that the Congress intended the ICC have the power to regulate, or to exempt from regulation, on an interstate basis, motor carrier traffic that’s part of TOFC service.

The express reservation of power–

Antonin Scalia:

Well, now, wait a minute.

Do you say 10505f refers to–

Fernando Rodriguez:

–Intermodal.

Antonin Scalia:

–It doesn’t refer to… you’re not saying that refers to the truck portion of what the railroad provides?

Fernando Rodriguez:

That’s what intermodal movements are.

It’s combined movements.

Antonin Scalia:

But then you’ve given away your case.

Because they use the same language in f that they do in a, that is, transportation that is provided by a rail carrier.

And you’re saying, in f, it means truck transportation provided by a rail carrier?

Fernando Rodriguez:

Only as modified by the term, intermodal movement, Your Honor.

There is no reference to intermodal movement in 10505a.

Antonin Scalia:

It isn’t modified by that.

It says, except transportation that is provided by a rail carrier, which phrase, you assert, includes only rail transportation, as a part of a continuous intermodal movement.

That would mean only the rail portion of the continuous intermodal movement.

Fernando Rodriguez:

Your Honor, we believe that the inclusion of the word, intermodal movement, is an express… it’s an expression by Congress that there is a type of movement which will be allowed.

That type of movement is an intermodal movement involving TOFC, involving trains, involving trucks–

Antonin Scalia:

yes, but is it the truck portion of it?

If it can be the truck portion of it there, then you can read it the same way up in a.

I thought your whole case hinges upon the fact that the phrase, transportation that is provided by a rail carrier, means rail transportation.

And if it means that up in a, then it must in f.

Fernando Rodriguez:

–Your Honor, it would, except for the fact that f contains the phrase, intermodal movement.

Antonin Scalia:

It just says, as a part of a continuous intermodal movement.

So it’s the rail portion of a continuous intermodal movement.

Fernando Rodriguez:

Well, Your Honor, I think we read it differently from the way you read it.

Antonin Scalia:

We sure do.

What else do you have?

Fernando Rodriguez:

Your Honor, the problem is, I think, the States are being whipsawed.

In Garcia, you’ve got the States having to rely on the political process to preserve their own initiatives.

And yet we have to go to Congress and depend on Congress not to overregulate in areas which are traditionally left to the States, such as this.

Nonetheless, we still have a recognition that the States, as States, hold a special place in the Federal system.

I believe there is a necessary corollary to that.

And the corollary is, if a statute is at all confusing, if a statute is at all ambiguous, then that ambiguity must be resolved in favor of the States.

That’s the only conclusion which I can draw from the interstate commerce cases and the Garcia case–

And what we have here, Your Honor, is demonstrated by the fact that the ICC uses such a tortured interpretation to get to where it’s going, is the fact that Congress did not make the statute clear.

In that case, the dispute, the ambiguity must be resolved in favor of the States.

If it’s not, it is for Congress to clarify.

And Congress can clarify very easily by simply referencing in 10521b, one other section, perhaps 11501, where they could say that there’s a specific… there’s a specific power to exempt intrastate motor carriage when part of a TOFC movement.

They have not done that.

I do not think that it is for the ICC to put that there when they are faced with the specific reservation of power in 10521b.

If I might just respond to a couple of points that Mr. Roper made, as I stated when I started, the Railroad Commission of Texas has regulated motor carrier traffic in Texas intensively.

And unless this Court tells us that we cannot do so, they intend to continue to do that.

But that does not mean that they intend to provide an unfair competitive advantages… advantage to motor carriers.

Part of their legislative mandate, under Article 911b, which is the Texas statute which controls their jurisdiction, is the fostering of a motor carrier… the motor carrier industry as a viable alternative for shippers.

But that does not mean that they want to impose an unfair competitive advantage on railroads providing TOFC service intrastate.

There is no unfair disadvantage imposed on the–

John Paul Stevens:

I assume the interest of the State of Texas is to prevent this intermodal transportation from cutting the rates below the floor that applies to the motor carriers, isn’t that right?

Fernando Rodriguez:

–I’m sorry, Your Honor.

John Paul Stevens:

They want to protect the motor carriers from cut-rate competition by the intermodal carrier; isn’t that what it is?

Fernando Rodriguez:

There is economic regulation involved in this, Your Honor.

John Paul Stevens:

I mean, it’s an attempt to protect the carriers from what they would regard as unfair competition by an unregulated carrier.

Fernando Rodriguez:

That’s correct, Your Honor.

But they as motor carriers would not pay anything less, or anything more, than other similarly situated motor carriers providing that type of service in the State.

That is not an unfair competitive advantage.

That is an attempt to create equal markets for everybody competing in the same type of service.

There is no infirmity in that.

There is no Constitutional infirmity.

There is nothing which transgresses the policies of the Staggers Act or the Interstate Commerce Act.

Byron R. White:

Well, I would think you would be making the same argument if it’s an interstate movement, but the truck portion of it is wholly intrastate; but you aren’t.

Fernando Rodriguez:

Your Honor, if it’s an interstate movement, while we might… while the State of Texas or the Railroad Commission might like to do something, they simply do not have the ability to do so.

Because if it’s an interstate movement, it is without the regulation of the Railroad Commission of Texas.

Byron R. White:

Just because of the… just because you concede that’s what the Act says?

Fernando Rodriguez:

That’s what the Act says, Your Honor.

In closing, we would simply, respectfully pray that this Court affirm the judgment or the opinion of the Fifth Circuit in this case.

The Fifth Circuit opinion was ably reasoned, and it distinguished the prior ATA case; and it recognizes the specific reservation of power under 10521b, which is the exact same type… the exact same type of reservation of power which this Court affirmed in the Louisiana Public Service case, which involved the FCC.

In that case, we had section 152b, which said that the Federal Communications Commission had no authority over intrastate rates, charges or practices.

This Court held that that was a specific reservation of power for the States to regulate intrastate depreciation rates.

I submit to the Court that that is precisely what we have here.

And based on that reasoning, I think that the Fifth Circuit opinion should be affirmed.

Thank you.

William H. Rehnquist:

Thank you, Mr. Rodriguez.

Mr. Taranto, do you have anything more?

You have three minutes remaining.

Richard G. Taranto:

Nothing further.

William H. Rehnquist:

Very well.

The case is submitted.

The honorable court is now adjourned until monday next at ten o’clock.