Tuesday’s Argument in American Trucking Associations v. Michigan Public Service Commission

In the consolidated cases of American Trucking Associations, Inc., and USF Holland, Inc. v. Michigan Public Service Commission and Mid-Con Freight Systems, Inc. v. Michigan Public Service Commission, trucking companies have challenged various provisions of the Michigan Motor Carrier Act (MCA) that require them to pay two types of annual fees for their vehicles. One provision mandates a $100 fee for vehicles that are used at least partially for intrastate commerce. A second set of provisions requires a $100 fee for vehicles that are registered in the state and “operat[e] entirely in interstate commerce.”

The questions presented in these cases are whether the intrastate fee violates the Commerce Clause, and whether the interstate fee is preempted by 49 U.S.C. 14504, which limits states’ ability to charge certain fees for motor carriers.

Two federal statutes in particular bear on the types of fees that states can charge motor carriers. In 1991, Congress passed 49 U.S.C. 14504, which authorized the Interstate Commerce Commission (ICC) to create the Single State Registration System (SSRS). Under the SSRS, motor carriers register with only one state, and each state that participates in the SSRS is only permitted to charge up to a $10 fee per vehicle. Congress also passed 49 U.S.C. 14501, which prevents states from enacting laws regulating the “price, route, or service of any motor carrier,” with certain exceptions.

Based on these statutes, plaintiffs Westlake Transportation, Inc., et al., filed a class action in January 1995 against the Michigan Public Service Commission (MPSC), which is responsible for administering the MCA. The companies asserted that the MCA’s intrastate and interstate fee requirements were preempted by 49 U.S.C. 14501, and 49 U.S.C. 14504, respectively. Soon afterward, American Trucking Associations and USF Holland (ATA) filed a complaint asserting that the intrastate fee violated the Commerce Clause. All of the parties then adopted each others’ claims by amending their complaints, and the Michigan Court of Claims consolidated the cases and certified the classes.

The Court of Claims granted summary judgment to the MPSC. The trial court concluded that the safety interests furthered by the intrastate fee did not have an adverse impact on interstate commerce and did not implicate the Commerce Clause. The court also held that the intrastate fee did not violate Section 14501, because it was not being used by the state for preempted economic regulation. Moreover, the court determined that the interstate fee did not violate Section 14504, construing the $10 fee limitation in that provision as not applying to regulations of vehicles in their registered states.

The Michigan Court of Appeals affirmed the lower court decision. The court held that the intrastate fee implicated the dormant Commerce Clause but that it was constitutional because it applied even-handedly. It also held that the intrastate fee did not violate Section 14501 on similar grounds as the trial court. With respect to the interstate fee, the court read the $10 limitation within Section 14504 differently, concluding that it applied to all states including the registering one. Nonetheless, the court upheld the fee because it “could reasonably be classified as . . . regulatory” rather than for registration. The Michigan Supreme Court then denied an appeal of the case, and the U.S. Supreme Court granted certiorari on the Commerce Clause and Section 14504 issues.

In its brief on the merits, petitioner ATA focuses only on whether the intrastate fee violates the Commerce Clause. The company asserts that the Michigan tax is not fairly apportioned and nondiscriminatory, because “flat taxes bear much more heavily in the aggregate on a firm that does business in many places than on an otherwise identical company that operates in only one state.” In making its argument, ATA relies heavily on American Trucking Associations, Inc. v. Scheiner, a 1987 case in which the Court invalidated a state flat tax placed on trucks traveling interstate. ATA also contends that the lower court’s distinction between regulatory fees and general taxes is improper and irrelevant to Commerce Clause analysis.

Mid-Con Freight Systems also wrote a petitioner’s brief on the merits, and its brief focuses on whether Section 14504 preempts the interstate fee. The company asserts that the Michigan Court of Appeals decision “reads a non-existent ‘regulatory fee’ exception into the SSRS.” It argues that “Congress’s preemptive rule would soon be subsumed by costly and diverse exceptions if States were permitted to circumvent the SSRS by merely labeling flat per-vehicle registration fees as ‘regulatory’ in purpose.”

In response, the Michigan Attorney General and Solicitor General rebut ATA’s Commerce Clause challenge by asserting that Scheiner holds that “a flat state tax or fee will not be held to be discriminatory when [, as in this case,] it is the only practicable means of collecting revenues from users and the use of a more finely gradated userfee schedule would pose genuine administrative burdens.” Moreover, they argue that ATA is relying on a “calculus of hypothetical facts” and that its reading of the statute would jeopardize “broad categories of flat, unapportioned state fees.” In response to Mid-Con’s argument, they assert that the “Michigan interstate fee has nothing to do with the registering of the motor carrier’s federal authority with the State,” and thus the “Michigan Court of Appeals correctly interpreted Section 14504.”

At the Court’s invitation, the United States previously submitted a brief at the cert. stage. It also has submitted merits amicus briefs for both cases. In its brief on the merits for the Mid-Con case, the U.S. comes out in favor of petitioner, arguing that Section 14504 preempts the Michigan interstate fee requirement. In its brief on the merits for the ATA case, the U.S. comes out in favor of respondent, contending that the intrastate fee does not violate the Commerce Clause. In this brief, the U.S. argues that the “Court has long recognized the authority of States and municipalities to require payment of flat fees by commercial motor carriers that make point-to-point deliveries within the local jurisdiction.”

Additionally, other third parties have written amicus briefs. Various trucking companies and the Chamber of Commerce of the United States have filed amicus briefs in favor of petitioners. The National Conference of State Legislatures and a number of states have filed amicus briefs in favor of respondents.

The parties’ briefs are available here. The amicus briefs are only available on paid services.

Robert Digges, Jr., will argue on behalf of petitioner ATA, and James H. Hanson will argue on behalf of petitioner Mid-Con. Michigan Assistant Solicitor General Henry J. Boynton will argue for the state, and Assistant to the Solicitor General Malcolm L. Stewart will argue on behalf of the United States.