Since the 1930's, railroads, motor carriers, and freight
forwarders have offered both trailer-on-flatcar (TOFC) and
container-on-flatcar (COFC) services, forms of mixed train and
truck transportation whereby loaded truck trailers or containers to
be placed on truck trailers are transported on railroad flatcars
and then hauled by trucks on the highways. A provision of the
Staggers Rail Act of 1980, 49 U.S.C. §10505(f), authorizes the
Interstate Commerce Commission (ICC) to exempt from state
regulation "transportation that is provided by a rail carrier as a
part of a continuous intermodal movement." In 1981, the ICC adopted
a regulation exempting from state regulation, and covering both the
motor and rail portions of, "Plan II TOFC/COFC service," which
involves door-to-door service by a railroad that moves its own
trailers or containers on flatcars. In 1982, petitioner railroad
companies petitioned the Texas Railroad Commission to apply the
ICC's exemption to Texas intrastate TOFC/COFC traffic. The State
Commission granted a partial exemption covering the rail portion,
but not the truck portion, of intrastate Plan II service. The
railroad companies then petitioned for review of that decision by
the ICC, which held that the State Commission's assertion of
regulatory jurisdiction over the truck portion of Plan II service
was inconsistent with the ICC's 1981 regulation. On review of the
ICC's order, the Court of Appeals reversed, holding that the truck
portion of the intrastate movements at issue was not
"transportation . . . provided by a rail carrier" within the
meaning of § 10505(f), but rather was "transportation provided by a
motor carrier" within the meaning of 49 U.S.C. § 10521(b)(1), which
reserves such intrastate transportation for state regulation.
Held: The grant of authority to the ICC under §10505(f)
encompasses the motor freight portion of a Plan II shipment
entirely within the State. Since all of the elements of the Plan II
service at issue are provided on equipment owned and operated by a
rail carrier over which the ICC has jurisdiction, the plain
language of § 10505(f) unambiguously supports
Page 479 U. S. 451
the ICC's position. Although § 10521(b)(1) can be read to
support a contrary result, the correct, and more natural, reading
of the statute is that all of the Plan II service provided by
interstate rail carriers on equipment that they own is
"transportation provided by a rail carrier" subject to the ICC's §
10505(f) jurisdiction. A contrary result would be inconsistent with
the ICC's historical treatment of Plan II service as "provided by a
railroad," and would make § 10521(b)(1) authorize state regulation
of TOFC/COFC services in areas where it has already been rejected.
Moreover, the ICC's special statutory authority to determine the
proper interrelationship of different modes of transportation
supports its interpretation of the Staggers Rail Act. In its
statement of rail transportation policy, Congress has unambiguously
expressed its interest in allowing free competition, to the maximum
extent possible, to govern the financial health of the railroad
industry. Pp.
479 U. S.
455-461.
770 F.2d 452, reversed.
STEVENS, J., delivered the opinion for a unanimous Court.
JUSTICE STEVENS delivered the opinion of the Court.
Trailer-on-flatcar (TOFC or "piggyback") service, a form of
mixed train and truck transportation, enables a carrier to
transport a trailer and its contents over rail on a flatcar and
then to haul the trailer on the highway. The goods need not be
unloaded and reloaded when they move from the rail mode to the
truck mode; the shipment remains within the trailer or container
during the entire journey. Various forms of
Page 479 U. S. 452
TOFC and container-on-flatcar (COFC) [
Footnote 1] service have been offered to the public by
railroads, motor carriers, and freight forwarders since the 1930's.
[
Footnote 2] These cases
concern the extent of the State of Texas' jurisdiction over what is
known as "Plan II TOFC/COFC service," which has long been defined
as follows:
"Plan II (All-Rail):"
"Door-to-door service performed by the railroad, which moves its
own trailers or containers on flatcars under open tariffs usually
similar to those of truckers."
See American Trucking Assns., Inc. v. Atchison, T. & S.
F. R. Co., 387 U. S. 397,
387 U. S. 403
(1967).
The ICC's statutory authority includes jurisdiction to grant
exemptions from regulation as well as to regulate. In 1980,
Congress enacted the Staggers Rail Act, 94 Stat. 1896, 49 U.S.C. §
10101
et seq., which authorizes the ICC to exempt from
state regulation "transportation that is provided by a rail carrier
as a part of a continuous intermodal movement."
See §
10505(f). It is undisputed that the ICC may grant an exemption from
regulation to interstate TOFC/COFC transportation provided by a
rail carrier. The question
Page 479 U. S. 453
presented is whether the grant of authority to the ICC under §
10505(f) encompasses the motor freight portion of a Plan II
TOFC/COFC shipment entirely within the State of Texas.
I
In 1981, the Commission adopted a regulation exempting Plan II
service from state regulation. [
Footnote 3] The regulation unambiguously covers both the
motor portion and the rail portion of Plan II service. [
Footnote 4] In a separate case
involving interstate Plan II shipments, the Court of Appeals for
the Fifth Circuit upheld the regulation, specifically rejecting an
argument that the Commission had no authority to exempt the motor
portion of the intermodal service. It held that "rail-owned truck
TOFC/COFC service is
transportation that is provided by a rail
carrier.'" American Trucking Assns., Inc. v. ICC, 656 F.2d
1115, 1120 (1981).
On September 27, 1982, Missouri-Kansas-Texas Railroad Company,
Missouri Pacific Railroad Company, and Southern Pacific
Transportation Company (Railroads) petitioned the Railroad
Commission of Texas (RCT) to apply the ICC's exemption to their
Texas intrastate TOFC/COFC traffic. App. 7-10. The RCT took the
position that it retained the authority to regulate the motor
carrier segment of intrastate transportation provided by an
interstate rail carrier. The Staggers Rail Act provides that a
state commission may regulate intrastate transportation provided by
a rail carrier, but
Page 479 U. S. 454
only to the extent that it conforms with the federal Act, and
only if the ICC determines that the State's proposed regulatory
standards and procedures are consistent with federal standards and
procedures. [
Footnote 5] The
RCT granted a partial exemption which covered the rail, but not the
pre-rail and post-ex-rail, truck service portions of the intrastate
TOFC/COFC service.
Id. at 11-12.
The Railroads petitioned the ICC under 49 U.S.C. § 11501(c) to
review the RCT's decision and to grant the full TOFC/COFC
exemption. The ICC held that the State Commission's assertion of
regulatory jurisdiction over "incidental pre-rail and ex-rail
over-the-road movements" of Plan II TOFC/COFC service was
inconsistent with the federal standards contained in its 1981
regulation. [
Footnote 6] The
State of Texas sought review of the ICC's order in the Court of
Appeals for the Fifth Circuit. The Railroads intervened as
respondents. That court reversed, holding that the truck portion of
the intrastate movements at issue was not "transportation . . .
provided by a rail carrier" within the meaning of § 10505(f),
[
Footnote 7]
Page 479 U. S. 455
but rather was "transportation provided by a motor carrier"
within the meaning of § 10521(b)(1). [
Footnote 8]
Texas v. United States, 770 F.2d 452
(1985). The Court of Appeals distinguished
American Trucking
Assns., Inc. v. ICC, supra, as limited to TOFC/COFC shipments
that at some point in their journey crossed a state boundary. When
the service is purely intrastate, the Court of Appeals held, the
motor portions of TOFC/COFC service by railroad-owned trucks
constitute transportation provided by a motor carrier under §
10521(b)(1), and for that reason are expressly reserved for state
regulation. We granted the petitions for certiorari of the ICC and
the Railroads, 476 U.S. 1157 (1986). We are persuaded that the
Court of Appeals erred.
II
It is undisputed that the Commission's power to grant these
exemptions from state regulation is coextensive with its own
authority to regulate, or not to regulate, these intermodal
movements by rail carriers. [
Footnote 9] We therefore focus our
Page 479 U. S. 456
review on the extent of the Commission's jurisdiction over the
trucking segment of intrastate TOFC/COFC activities. Since all of
the railroads interested in this proceeding are engaged in
interstate commerce, the Commission has authority over the
intrastate transportation, as well as the interstate
transportation, provided by such carriers. [
Footnote 10] All of the elements of the Plan II
TOFC/COFC service at issue are provided on equipment owned and
operated by a rail carrier over which the ICC has jurisdiction.
Thus, the plain language of § 10505(f) unambiguously supports the
ICC's position. [
Footnote
11]
It is true, of course, that the text of § 10521(b)(1) can be
read to support the contrary result, because it is possible to
Page 479 U. S. 457
regard the rail carrier as a "motor carrier" during the truck
portion of the intermodal movement. We believe, however, that the
correct, and certainly the more natural, reading of the statute is
that all of the TOFC/COFC service provided by interstate rail
carriers on equipment which they own is "transportation provided by
a rail carrier" subject to the jurisdiction of the ICC. [
Footnote 12]
The position urged by respondents encounters three serious
difficulties. First, it is inconsistent with the agency's
historical treatment of Plan II TOFC/COFC service as "provided by a
railroad." In
Ex parte 230, Substituted Service Charges and
Practices of For-Hire Carriers and Freight Forwarders (Piggyback
Service), 322 I.C.C. 301, 304-305, 309-312 (1964), the
Commission stated:
"Under plan II, the railroad holds out to provide a complete
door-to-door service under a single bill of lading. Neither the
shipper nor the consignee intervenes in any way in the overall
transportation activities or does anything beyond tendering the
shipment to the railroad at origin or at the shipper's loading
dock."
Id. at 311. The Commission.recognized that the
distinctive element of Plan II service was not the use of trailers
or containers to offer door-to-door pickup and delivery service via
rail and
Page 479 U. S. 458
highway, but rather the identity of the carrier offering this
service:
"[A]ll three -- rail carrier, motor carrier, and freight
forwarder -- are even today providing, through the use of
piggyback, services which in physical characteristics are
substantially similar. Any one of the three can offer a
transportation service which includes door-to-door pickup and
delivery, movement of loaded trailers between a shipper's premises
and a rail yard, and line-haul transportation of the loaded
trailers by rail. The railroad does this under its plan II TOFC
tariff; the trucker does it under plan I, in which it is encouraged
by the railroads . . . and the freight forwarder does it through
use of plans III and IV rail tariffs."
Id. at 330. In none of the plans was a rail carrier
treated either as a hybrid or as a motor carrier during the truck
segment of the intermodal movement. Presumably, in enacting §
10505, Congress was aware of the Commission's consistent practice
of regulating railroads as "rail carriers" even when they performed
Plan II intermodal service.
Second, the State's interpretation of § 10521(b)(1) would make
that section authorize state regulation of TOFC/COFC services in
areas where it has already been rejected. The term "intrastate
transportation provided by a motor carrier" must refer either to
the intrastate motor portion of any TOFC/COFC movement or to the
entire intrastate movement when a portion of it is performed by
truck service. If the term refers only to the motor portion, the
State's reading of the statute would preserve the State's power to
regulate the intrastate motor portion of an interstate Plan II
TOFC/ COFC shipment. But Texas acknowledges that it has no such
power. [
Footnote 13]
Alternatively, if the term refers to every intrastate
Page 479 U. S. 459
shipment that includes a motor segment, the railroad must be
regarded as a "motor carrier" even during the rail portion of the
intermodal movement, and the RCT would retain the power to regulate
the entire intrastate movement. Again, Texas does not claim that
authority. We think it clear that the only way to square the words
of the statute with those aspects of the ICC's jurisdiction that
the State does accept is to hold that the ICC's authority over
intrastate transportation provided by an interstate rail carrier
encompasses the entire movement, even when it includes a truck
segment under Plan II. [
Footnote
14]
Third, the special statutory authority of the Commission to
determine the proper interrelationship of different modes
Page 479 U. S. 460
of transportation supports its interpretation of the Staggers
Rail Act. [
Footnote 15] The
statute was a response to the concern that differing state and
federal standards applying to the industry and excessive
governmental regulation by both federal and state authorities had
contributed to the financial difficulties of major railroads.
[
Footnote 16] In its
statement of rail transportation policy, Congress unambiguously
expressed its interest in allowing free competition, to the maximum
extent possible, to govern the financial health of the railroad
industry. [
Footnote 17] The
importance of that policy is confirmed by the fact that the
Page 479 U. S. 461
statement of general transportation policy applicable to all
types of carriers, which generally prescribes the impartial
regulation of all competing modes of transportation, is introduced
by an exception providing that the special policy statement
endorsing competition in railroad transportation shall prevail when
transportation policy has an impact on rail carriers. [
Footnote 18] Even if the question of
the extent to which § 10521(b)(1) restricts the Commission's power
under § 10505 in these cases were in doubt, the statutory statement
of policy priorities would lead us to agree with the ICC's view
that the ambiguity should be resolved in favor of competition,
rather than partial state regulation of Plan II TOFC/COFC
service.
The judgment of the Court of Appeals is reversed.
It is so ordered.
* Together with No. 85-1267,
Missouri-Kansas-Texas Railroad
Co. et al. v. Texas et al., also on certiorari to the same
court.
[
Footnote 1]
The petitions for certiorari include both TOFC and COFC service.
Pet. for Cert. in No. 85-1222, p. 1; Pet. for Cert. in No. 85-1267,
p. i. A container, unlike a trailer, cannot itself be hauled on the
highway by a tractor rig; it must first be placed on a suitable
truck trailer. For the purposes of this opinion, however, there are
no relevant differences between TOFC and COFC service.
"TOFC service is inherently bimodal, in that its basic
characteristic is the combination of the inherent advantages of
rail and motor transportation: the railroad's ability to provide
efficient line-haul transportation of huge volumes of freight for
great distances at high speed, and the motor carrier's ability to
provide door-to-door, and if necessary job- or farm-site, pickup
and delivery."
Ex parte No. 230, Substituted Service-Charges and Practices
of For-Hire Carriers and Freight Forwarders (Piggyback
Service), 322 I.C.C. 301, 329 (1964).
[
Footnote 2]
See generally id. at 305-309 (describing growth of TOFC
service).
[
Footnote 3]
See 49 CFR § 1039.13 (1986).
See also Improvement
of TOFC/COFC Regulation, 364 I.C.C. 731,
aff'd, American
Trucking Assns., Inc. v. ICC, 666 F.2d 1115 (CA6 1981).
[
Footnote 4]
The exemption encompasses "[r]ailroad and truck transportation
provided by a rail carrier as part of a continuous
intermodal movement." 49 CFR § 1039.13 (1986) (emphasis added). In
some plans, the motor portion of an intermodal movement is
performed by a trucking company, freight forwarder, or shipper.
See American Trucking Assns., Inc. v. Atchison, T. & S. F.
R. Co., 387 U. S. 397,
387 U. S. 403
(1967). In such plans, the exemption applies only to the rail
portion of the intermodal service.
[
Footnote 5]
See 49 U.S.C. § 11501. At the time it issued the
decision at issue in this case, the Railroad Commission of Texas
had provisional certification to regulate intrastate transportation
provided by a rail carrier. The Commission no longer has this
statutory authority to regulate intrastate rail rates,
classification, rules, and practices of interstate carriers,
because it was denied certification by the ICC in
Ex parte No.
388 (Sub-No. 31), State Intrastate Rail Rate Authority --
Texas, 1 I.C.C.2d 26 (1984),
aff'd, Railroad
Comm'n of Texas v. United States, 246 U.S.App.D.C. 352, 765
F.2d 221 (1985).
[
Footnote 6]
See ICC No. 39627, Petition Under 49 U.S.C. 11501(c) by
Missouri-Kansas-Texas Railroad Company,
et al., for Review
of an Order of the Railroad Commission of Texas, decided Jan. 19,
1984 (Service Date Jan. 23, 1984); ICC, No. 39704, Petition of
Road-Rail Transportation Company, Inc., Under 49 U.S.C. 11501(c)
for Review of an Order of the Railroad Commission of Texas, decided
Apr. 11, 1984 (Service Date Apr. 13, 1984).
[
Footnote 7]
Section 10505(f) provides:
"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."
[
Footnote 8]
Section 10521(b)(1) provides:
"(b) This subtitle does not -- "
"(1) except as provided in sections 10922(c)(2), 10935, and
11501(e) of this title, affect the power of a State to regulate
intrastate transportation provided by a motor carrier."
Sections 10922, 10935, and 11501(e) are not relevant to the
issue.
[
Footnote 9]
The ICC found that the Railroad Commission of Texas' refusal to
apply the entire TOFC/COFC exemption violated federal standards and
procedures binding upon the State Commission, and authorized the
Railroads
"to establish any rate, classification, rule, or practice
pertaining to intrastate rail or motor transportation provided by a
rail carrier as part of a continuous intermodal movement within the
State of Texas, to the same extent and in the same manner that they
establish rates, classifications, rules, or practices for similar
interstate movements."
App. to Pet. for Cert. in No. 85-1222, pp. 21a-22a. The Court of
Appeals stated:
"The thrust of the argument of the State of Texas is that the
I.C.C. lacks jurisdiction over the trucking segment of the totally
intrastate TOFC activities of the
intrastate
[
sic] rail carriers. Without this jurisdiction, Texas
maintains, the I.C.C. could not exempt the intrastate highway
transportation from state regulation. We are constrained to
agree."
Texas v. United States, 770 F.2d 452, 463 (CA6 1986)
(emphasis added).
This quotation reveals an incompleteness in the Court of
Appeals' reasoning. If the rail carriers were "
intrastate
rail carriers," the ICC would not have had jurisdiction over either
the rail or the motor portion of their intrastate movements. But
this conclusion does not necessarily extend to the rail and motor
portions of intrastate movements by all other rail carriers,
specifically those that operate across state boundaries. In fact,
the Railroads in this proceeding are all
interstate rail
carriers, and the ICC has consistently exercised jurisdiction over
their intrastate, as well as their interstate, movements.
See n 14,
infra. Nevertheless, the Court of Appeals did not err in
its underlying conclusion that the ICC's authority to grant an
exemption from federal regulation coincides with its authority to
grant an exemption from state regulation. In its argument in this
case, the State of Texas also recognizes that the scope of the
ICC's authority over exemptions from state regulation is
coextensive with its own jurisdiction either to impose federal
regulation or to grant an exemption from federal regulation. Thus,
although this case involves the ICC's effort to grant exemptions
from regulation, the same legal question would be presented if the
ICC were trying to regulate the rates for an interstate rail
carrier's intrastate movements, and the carrier asserted that only
the state commission had such power.
[
Footnote 10]
See 49 U.S.C. §§10601 and 11601. The Commission does
not assert jurisdiction over wholly intrastate carriers; nor does
it assert the authority to exempt such carriers from state
regulation.
[
Footnote 11]
See n 7,
supra.
[
Footnote 12]
Our holding that the ICC's jurisdiction under §10505(f) includes
the intrastate portions of Plan II TOFC/COFC service applies
whether or not a State has been certified under 49 U.S.C. § 11501.
Because the Railroad Commission of Texas is not now certified to
regulate railroads, the statute independently places the truck
portion of intra-Texas TOFC/COFC service within the jurisdiction of
the ICC:
"Any intrastate transportation provided by a rail carrier in a
State which may not exercise jurisdiction over an intrastate rate,
classification, rule, or practice of that carrier due to a denial
of certification under this subsection shall be deemed to be
transportation subject to the jurisdiction of the Commission under
[§ 10501
et seq.]."
49 U.S.C. § 11501(b)(4)(B).
[
Footnote 13]
And of course the Fifth Circuit so held in
American Trucking
Assns., Inc. v. ICC, 656 F.2d 1115 (1981). The reason why
Texas does not have that power is that the statute plainly
authorized the ICC either to regulate, or to exempt from
regulation, such continuous interstate movements. We think it clear
that the ICC's authority over intrastate rail transportation by an
interstate rail carrier encompasses the entire movement, even when
it includes a truck segment. This conclusion was at least implicit
in the Fifth Circuit's opinion in
American Trucking Assns.,
Inc. v. ICC, supra, at 1120:
"[R]ail-owned truck TOFC/COFC service is 'transportation that is
provided by a rail carrier.' Had Congress intended to limit the
Commission's exemption authority to rail transportation, it could
easily have done so by using that language. Instead, it chose the
broad 'transportation-that-is-provided-by-a-rail-carrier' language,
and presumably did so with knowledge that it previously had defined
'transportation' to include the movement of passengers or property
by motor vehicle."
(Citations omitted; footnotes omitted.)
[
Footnote 14]
The Court of Appeals based its conclusion that "transportation
provided by a rail carrier" should be defined more narrowly for
intrastate traffic than for interstate commerce on the "potential
mischief " of exempting intrastate rail travel from regulation. The
Court of Appeals focused on the hypothetical example of a small
intrastate rail carrier that provides minimal rail service within a
city and extensive truck service to convey goods to and from the
city, and is exempt from state regulation.
See 770 F.2d at
464-466. This scenario could only occur, however, if the ICC had
authority to exempt such transportation from regulation. But
because the hypothetical railroad is only an
intrastate
carrier, the ICC would not have any jurisdiction over it, and the
speculative potential for mischief would not exist. In this case,
by contrast, the Railroads are interstate carriers whose TOFC/COFC
services include some segments entirely within Texas.
See
Guide to Piggyback Routes, Distribution 190, 196 (July 1982) (route
diagrams for TOFC/COFC service).
See also n 9,
supra.
[
Footnote 15]
"[W]e cannot accept arguments based upon arguable inference from
nonspecific statutory language, limiting the Commission's power to
adopt rules which, essentially, reflect its judgment in light of
current facts as to the proper interrelationship of several modes
of transportation with respect to an important new
development."
American Trucking Assns., Inc. v. Atchison, T. & S. F.
R. Co., 387 U.S. at
387 U. S. 410.
The reading of the Act proposed by respondents impermissibly limits
the ICC's power to implement national transportation policy in the
evolving area of intermodal transportation.
[
Footnote 16]
See H.R.Rep. No. 96-1035, pp. 38, 61, 128-130 (1980);
H.R.Conf.Rep. No. 96-1430, p. 79 (1980).
[
Footnote 17]
Section 10101a "establishes a specific rail transportation
policy to guide the Commission in its duties in regulation of the
railroad industry." H.R.Conf.Rep. No. 96-1430,
supra, at
80. Section 10101a provides, in part:
"10101a. Rail transportation policy"
"In regulating the railroad industry, it is the policy of the
United States Government -- "
"(1) to allow, to the maximum extent possible, competition and
the demand for services to establish reasonable rates for
transportation by rail;"
"
* * * *"
"(4) to ensure the development and continuation of a sound rail
transportation system with effective competition among rail
carriers and with other modes, to meet the needs of the public and
the national defense;"
"(5) to foster sound economic conditions in transportation and
to ensure effective competition and coordination between rail
carriers and other modes;"
"
* * * *"
"(7) to reduce regulatory barriers to entry into and exit from
the industry."
[
Footnote 18]
Section 10101 provides in part:
"(a) Except where policy has an impact on rail carriers, in
which case the principles of section 10101a of this title shall
govern, to ensure the development, coordination, and preservation
of a transportation system that meets the transportation needs of
the United States, including the United States Postal Service and
national defense, it is the policy of the United States Government
to provide for the impartial regulation of the modes of
transportation. . . ."