Yellow Freight System, Inc. v. State

Decision Date15 May 2001
Docket NumberDocket No. 113656, Calendar No. 11.
Citation464 Mich. 21,627 N.W.2d 236
PartiesYELLOW FREIGHT SYSTEM, INC., Plaintiff-Appellee, v. STATE of Michigan, Michigan Department of Treasury and its State Treasurer, Michigan Department of Commerce and its Director, and Michigan Public Service Commission and its Commissioners, Defendants-Appellants.
CourtMichigan Supreme Court

Dean & Fulkerson, (by John W. Bryant), Troy, MI, for the plaintiff-appellee.

Jennifer M. Granholm, Attorney General, Thomas L. Casey, Solicitor General, and David A. Voges and Henry J. Boynton, Assistant Attorneys General, Lansing, MI, for the defendants-appellants.



This case presents an issue of statutory interpretation. Plaintiff, Yellow Freight System, Inc., alleges that defendants collected registration fees in excess of the amount allowed under the 1991 Intermodal Surface Transportation Efficiency Act (ISTEA), 49 U.S.C. 11506, which restricts a state's registration fees to an amount "equal to the fee ... that such state collected or charged as of November 15, 1991," 49 U.S.C. 11506(c)(2)(B)(iv)(III). Specifically, plaintiff contends that in determining the amount of the fee charged or collected on November 15, 1991, one must consider the effect that any then existing reciprocity agreements had on the fees.

We reject plaintiff's claims and hold that in determining the "fee ... collected or charged" under 49 U.S.C. 11506(c)(2)(B)(iv)(III), Michigan's reciprocity agreements are irrelevant. We reverse the Court of Appeals decision affirming the Court of Claims order for summary disposition in favor of plaintiff and remand this case to the Court of Claims for further proceedings consistent with this opinion.


Congress has the power to "regulate Commerce ... among the several States" and "[t]o make all Laws which shall be necessary and proper for carrying into Execution" that power to regulate commerce. U.S. Const., art. I, § 8. Under the Commerce Clause, states can impose significant regulatory burdens on interstate motor carriers only when authorized to do so by Congress. Michigan Pub. Utilities Comm. v. Duke, 266 U.S. 570, 577, 45 S.Ct. 191, 69 L.Ed. 445 (1925). Over the years Congress has authorized the states to require registration of interstate motor carriers, subject to the supervision of the Interstate Commerce Commission. See Motor Carrier Act of 1935, P.L. 74-265, 49 U.S.C. 301 et seq. In 1991, Congress passed the ISTEA,1 which directed the Interstate Commerce Commission (ICC) to restructure the then existing regulations governing vehicle registration and registration fees. 49 U.S.C. 11506. As a result, the ICC issued the "single state" registration system (SSRS) in 1993, 49 C.F.R. 1023.2

A brief overview of the previous interstate motor carrier registration system is helpful in understanding the dispute now before this Court. Before 1991, states could require interstate motor carriers to annually register and pay fees on each vehicle that operated within its borders. Thirty-nine states, including Michigan, elected to participate in a "bingo card" system.3 Under the "bingo card" system interstate motor carriers attached a "bingo card" to each of their motor vehicles. States through which the vehicle traveled then issued each vehicle a registration "stamp" which was placed in a designated area on the bingo card. Participating states were allowed to charge no more than $10 per stamp.

While operating under the prior "bingo card" registration system, some states entered into reciprocity agreements, under which a state would discount or waive the registration fee for carriers based in the other's state. The motor carrier's principal place of business was most commonly used as the basis for determining reciprocity. Michigan, however, initially based its reciprocity agreements on the state in which the vehicle was "base-plated," i.e. where it was registered or license-plated.4

Seeking to "benefit the interstate carriers by eliminating unnecessary compliance burdens" and "to preserve revenues for the states which had participated in the bingo program," Congress replaced the old system by enacting the ISTEA.5 The SSRS was intended to serve as the sole avenue for state registration of interstate carriers.6 Nat'l Ass'n of Regulatory Utility Comm'rs v. Interstate Commerce Comm., 309 U.S. App. D.C. 325, 41 F.3d 721 (1994). Under the SSRS a motor carrier registers annually with only one state. This "registration state" is responsible for collecting the per-vehicle fees and distributing them to any participating states through which the carrier runs its motor vehicles. 49 U.S.C. 11506(c)(2)(A)(iii).

The section of the ISTEA at issue in the present case is subsection 11506(c)(2)(B)(iv). It provides that each state "shall establish a fee system" that "result[s] in a fee for each participating state that is equal to the fee, not to exceed $10 per vehicle, that such State collected or charged as of November 15, 1991...."

In 1991, before the implementation of the SSRS, the Michigan Public Service Commission (MPSC) altered its reciprocity agreements. The MPSC adopted the more common "place of business" method of determining reciprocity, instead of the "base-plated" system that the MPSC had been using. This change was scheduled to become effective in February 1992. The MPSC mailed renewal applications reflecting this change to all interstate motor carriers, including the plaintiff, in September 1991. Plaintiff paid its 1992 fees7 in September of 1991, under protest. Subsequently, plaintiff instituted this litigation.

Plaintiff contended that Michigan could not alter its reciprocity agreements, arguing that under the federal statute those agreements were frozen at their November 15, 1991, levels. Ruling on cross motion, the Court of Claims agreed with plaintiff and granted its motion, in part, for summary disposition.8 In a two-to-one decision, the Court of Appeals affirmed the Court of Claims ruling. 231 Mich.App. 194, 585 N.W.2d 762 (1998). This Court granted leave to appeal, 461 Mich. 1009, 611 N.W.2d 796 (2000).


There is no dispute that 49 U.S.C. 11506(c)(2)(B)(iv)(III) froze the registration fees that a state can charge as of November 15, 1991. The parties dispute the proper interpretation of a key phrase in that section of the ISTEA: "equal to the fee, not to exceed $10 per vehicle, that such State collected or charged as of November 15, 1991." The fundamental question before us is whether Michigan's reciprocity agreements should be considered in determining what fees were charged or collected as of November 15, 1991. We conclude that under the plain language of the statute, reciprocity agreements are not relevant in making that determination.


This is an issue of first impression for this Court; nor have any other state courts addressed it. The only court that has considered it is the District of Columbia Circuit Court of Appeals, Nat'l Ass'n of Regulatory Utility Comm'rs, supra. That court followed the ICC's decision9 to ban states from charging registration fees in excess of preexisting reciprocal discounts, saying:

[W]e think the Commission was correct in concluding that the plain language of the statute precludes petitioners' interpretation. It does not matter whether Congress actually focused on the reciprocal discount practice or even was aware of it. Nor is it of any significance that the Commission initially misread the statute; that is what comment periods are for. Id., at 729.

We are not bound to follow that decision,10 and, for the reasons given below, we do not agree with the federal court's decision to defer to the ICC's interpretation of the ISTEA.


Plaintiff contends that in interpreting the ISTEA we must give deference to the ICC's interpretation. Because the issue is the interpretation of a federal statute and the deference due a federal agency's construction of that statute, we will apply the rules of construction set out by the federal judiciary.11 The seminal case is Chevron, USA, Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). There the United States Supreme Court established that a court must first determine whether the statute's meaning is clear; if so, then the court must apply the statute as written. If the statute is ambiguous, then the court must give deference to the agency's interpretation.

When a court reviews an agency's construction of the statute which it administers, it is confronted with two questions. First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute. Id. at 842-843, 104 S.Ct. 2778.

Here we find that the plain meaning of the terms of the ISTEA is clear, and we apply the statute as written. Because we find that the statute is not ambiguous,12 we need not proceed to the second step of Chevron, supra, and we do not reach the agency's interpretation.


The question before us is whether any then-existing reciprocity agreements should be considered when determining what fee the state charged or collected as of November 15, 1991. The ISTEA itself refers only to the fee collected or charged, and contains no reference to reciprocity agreements. 49 U.S.C. 11504(c)(2)(B)(iv)(III) directs the ICC to "establish a fee system" that "resul...

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