YELLOW TRANSPORTATION, INC. v. STATE, DEPARTMENT OF TREASURY

• Decision Date: 18 September 2003
• Docket Number: Docket No. 194703.
• Parties: YELLOW TRANSPORTATION, INC., Plaintiff-Appellee, v. STATE of Michigan, Department of Treasury, Department of Commerce, and Michigan Public Service Commission, Defendants-Appellants.
• Court: Court of Appeal of Michigan — District of US

669 N.W.2d 553

257 Mich. App. 602

YELLOW TRANSPORTATION, INC., Plaintiff-Appellee, v. STATE of Michigan, Department of Treasury, Department of Commerce, and Michigan Public Service Commission, Defendants-Appellants.

Docket No. 194703.

Court of Appeals of Michigan.

Submitted March 14, 2003, at Lansing.

Released for Publication September 18, 2003.

Decided July 22, 2003, at 9:05 a.m Dean & Fulkerson (by John W. Bryant), Troy, for the plaintiff.

Michael A. Cox, Attorney General, Thomas L. Casey, Solicitor General, and David A. Voges and Michael A. Nickerson, Assistant Attorneys General, for the defendants.

Before: GRIFFIN, P.J., and JANSEN and O'CONNELL, JJ.

ON REMAND

GRIFFIN, P.J.

This case is before us for the second time. On remand, the Michigan Supreme Court has directed us to reconsider this matter in light of the United States Supreme Court decision in Yellow Transportation, Inc. v. Michigan, 537 U.S. 36, 123 S.Ct. 371, 154 L.Ed.2d 377 (2002) (Yellow Transportation IV),

and to address certain other issues. 468 Mich. 862, 659 N.W.2d 229 (2003). After doing so, we again affirm the judgment of the Court of Claims and remand for further proceedings consistent with this opinion.

I

The factual background of this case was summarized as follows by Judge McDonald writing for this Court on the initial appeal, Yellow Freight Sys., Inc. v. Michigan, 231 Mich.App. 194, 196-199, 585 N.W.2d 762 (1998) (Yellow Freight II):¹

Plaintiff, an interstate commercial carrier, brought this action asserting that defendants (the state) had collected registration fees pursuant to M.C.L. § 478.7(4); MSA 22.565(1)(4) in excess of the amount allowed by federal law, specifically the single-state registration system (SSRS)....

In 1991, Congress passed the Intermodal Surface Transportation Efficiency Act (ISTEA), PL 102-240, which substantially amended 49 USC 11506² and directed the Interstate Commerce Commission (ICC) to reform the licensing and registration system existing in the states. The statute mandated the creation of a new system, the SSRS. The statute required the ICC to prescribe amendments of the previously existing standards and set forth certain requirements for the new standards.

The provision at issue, 49 USC 11506(c)(2)(B)(iv)(III), stated that the amended standards shall establish a fee system that "will result 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." The regulations promulgated by the ICC repeated the phrase "collected or charged as of November 15, 1991" without further explanation. See 49 CFR 1023.4(c)(4)(ii) (1995), later redesignated as 49 CFR 367.4(c)(4)(ii) (1996).

Because the statute essentially froze the fees a state could collect at the level existing as of November 15, 1991, the fee system in effect in this state at that time is pertinent to understanding the issues raised in this case. For the 1991 and 1992 registration years, the state collected fees by requiring interstate carriers to buy cab card stamps, also known as "bingo stamps," for each of the carrier's vehicles operating within the state. Each stamp cost $10. Pursuant to M.C.L. § 478.7(4); MSA 22.565(1)(4), the state had reciprocity agreements with certain other states so that each would waive the fees for vehicles from the other. The dispute arises in part because the state changed the method it used for determining reciprocity. For 1991, the state used the "base-plating system," which means that reciprocity was determined by the state of the vehicle's registration. In early 1991, the Public Service Commission (PSC) decided that it would quit using the base-plating system. Instead, for the 1992 registration year, fees and reciprocity were determined by the carrier's principal place of business. The revised renewal applications were mailed to all interstate motor carriers in September 1991. Importantly, the 1992 fees to be "collected or charged" by the state were based on a calendar year and therefore were not due and owing until January 1, 1992.

The change in the method of determining reciprocity resulted in a substantial increase in the fees plaintiff owed the state for the 1992 registration year. Under the base-plating system used for 1991, plaintiff paid the state $50 for five vehicles that were "base-plated" in Oklahoma, but paid nothing for 3,730 vehicles "base-plated" in Illinois and Indiana, because those states did not charge fees for vehicles based in Michigan. However, plaintiff's principal place of business is Kansas, which had no fee waiver agreement with Michigan. Therefore, for 1992, plaintiff paid $10 a vehicle, a total of $ 37,850 under the new system. Plaintiff sent, and the state received, the fees for 1992 before November 15, 1991. Plaintiff voluntarily paid its 1992 fees early in order to prevent any disruption of its trucking activities at the commencement of the 1992 calendar year.

Plaintiff filed this action in 1995 in the Court of Claims seeking a refund of registration fees it had paid to the state pursuant to M.C.L. § 478.7(4).³ Plaintiff alleged that, because the ISTEA froze fees at the level "collected or charged as of November 15, 1991," subsection 11506(c)(2)(B)(iv)(III), defendants could not levy a fee for registration year 1994⁴ and beyond on plaintiff's vehicles registered in states with which Michigan had entered into reciprocity agreements as of that date. On cross-motions for summary disposition, the Court of Claims entered judgment for plaintiff, relying on the ICC's declaratory order in American Trucking Associations—Petition for Declaratory Order—Single State Insurance Registration, 9 ICC2d 1184, 1192, 1195 (1993), in which the agency held that the ISTEA had capped fees at the level "collected or charged" for registration year 1991, not those fees levied in advance for registration year 1992. Yellow Freight System, Inc v. Michigan, Court of Claims Docket No. 95-015706-CM, March 13, 1996 (Yellow Freight I).

In a two-to-one decision, this Court affirmed, ruling that the ICC's interpretation of the ambiguous ISTEA fee-cap provision was reasonable and entitled to deference. Yellow Freight II, supra at 199-203, 585 N.W.2d 762. Judge O'Connell dissented from that part of the majority opinion that found the statutory provision to be ambiguous. Id. at 209-210, 585 N.W.2d 762 (O'Connell, J., concurring in part and dissenting in part). Judge O'Connell would have accorded no deference to "the ICC's strained construction" of 49 USC 11506(c)(2)(B)(iv)(III), and instead would have read the statute's plain language "as fixing fee levels by reference to what the state charged on, or had actually collected by, November 15, 1991." Id. at 209, 211, 585 N.W.2d 762.

The Michigan Supreme Court reversed and remanded to this Court, holding that "Michigan's reciprocity agreements are not relevant in determining what fee was `charged or collected' as of November 15, 1991." Yellow Freight Sys. Inc. v. Michigan, 464 Mich. 21, 33, 627 N.W.2d 236 (2001) (Yellow Freight III).

The Court expressly rejected the ICC's interpretation of the ISTEA, finding it to be contrary to the plain language of the statute, and, consequently, unworthy of deference. Id. at 29-31, 627 N.W.2d 236. The Court reasoned that Michigan's new fee system was based not on the fees collected from one individual company, such as Yellow Freight, in any given year, but on the generic fee system that the state had in place on November 15, 1991. Id. at 31, 627 N.W.2d 236.

The United States Supreme Court granted certiorari to determine whether the Michigan Supreme Court erred in holding that, for purposes of determining the fee that was "collected or charged as of November 15, 1991," only a state's generic fee is relevant. 534 U.S. 1112, 122 S.Ct. 918, 151 L.Ed.2d 883 (2002). In a decision delivered by Justice O'Connor, the United States Supreme Court held that the Michigan Supreme Court had erred in so holding because states may not renounce or modify a reciprocity agreement so as to alter any fee charged or collected as of that date. Yellow Transportation IV, supra.⁵

The Court further held that the ICC's interpretation of the ISTEA fee-cap provision reasonably resolved any ambiguity in the statute and the interpretation therefore was entitled to deference under Chevron USA Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). Yellow Transportation IV, supra at 44-48. The Court reversed the decision of the Michigan Supreme Court in Yellow Freight III and remanded to the Michigan Supreme Court for "further proceedings not inconsistent with this opinion." Id. at 48, 585 N.W.2d 762.

On remand from the United States Supreme Court, the Michigan Supreme Court vacated its Yellow Freight III opinion and remanded to this Court for reconsideration in light of Yellow Transportation IV, and to reconsider other preserved arguments of the parties not directly addressed by the Michigan Supreme Court or the United States Supreme Court. 468 Mich. 862, 659 N.W.2d 229 (2003). We were further directed to address the effect, if any, on this matter of certain representations made by the Solicitor General in the amicus curiae brief of the United States submitted to the United States Supreme Court in Yellow Transportation IV. Id.

II

In Yellow Transportation IV, supra at 44, 123 S.Ct. 371, the United States Supreme Court acknowledged the limited issue before the Court:

The Michigan Supreme Court did not consider respondents' argument that the fees petitioner paid Michigan for the 1992 registration year were "collected or charged as of November 15, 1991." 49 USC § 14504(c)(2)(B)(iv)(III). Nor did that court reach the question whether Michigan had "canceled its reciprocity agreements with other States in 1989." Brief for the United States as Amicus Curiae 23. The only issue before this Court, therefore, is whether States

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