# Reply Brief — Mid-Con Freight Systems, Inc. v. Michigan Pub. Serv. Comm'n > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0743%3A04 ## Record - **Collection:** Supreme Court brief - **Document type:** Reply Brief - **Published:** January 1, 2005 - **Citation:** 545 U.S. 440 ## Text Suopre mec t.U ‘Ss ’ Tr S FILED ne No. 08-1284 MAW 14 2004 In The Supreme Court of the Gnited States ¢ Mib-CON FREIGHT SYSTEMS, INC. AND LAFGOND EXPRESS, INC., on behalf of themselves and all others similarly situated, Petitioners, v. MICHIGAN PUBLIC SERVICE COMMISSION, MICHIGAN DEPARTMENT OF TREASURY, MICHIGAN DEP: RTMENT OF COMMERCE, AND THE STaTE OF MICHIGAN, Respondents. -@ On Petition For A Writ Of Certiorari To The Michigan Court Of Appeals + PETITIONERS’ REPLY BRIEF ¢ JAMES H. HANSON* ANDREW K. LIGHT LYNNE D. LIDKE SCOPELITIS, GARVIN, LIGHT & HANSON, PC. 10 W. Market St., Suite 1500 Indianapolis, IN 46204 (317) 637-1777 *Counsel of Record COCKLE LAW BRIEF PRINTING CO. (800) 225-6964 OR CALL COLLECT (402) 342-2831 — wa Of The Issue Presented Here ii TABLE OF AUTHORITIES Page CASES Adams Fruit Co. v. Barrett, 494 U.S. 638 (1990)...........0.-- 5 American Trucking Ass’ns v. Scheiner, 483 U.S. 266 (RGF) «.ccvececececesesseosenneeuseeesusesneinninniiaaninnnnnnnnnnnn 8, 9, 10 Buckman Co. v. Plaintiffs’ Legal Committee, 531 oe NT: | ee 1 Central Machinery Co. v. Arizona State Tax Com- mission, 448 UB. 260 CRGGED .ccecscscessessesevestesssensmennnnninnn: 3 City of Detroit v. Murray Corp., 355 U.S. 489 (1958).......... 3 Gade v. National Solid Wastes Management Ass’n, BOS UG. GB CRBGED .cccrcccecsecsscescsssctconessinnennnnennnaaan 6 Geier v. American Honda Motor Co., 529 U.S. 861 CBB D ence ccccse1cs2ccscesesenesenenstonesssssinnsiansniiniiinsninnnnnnnnnnnnnnEEE 5 Hines v. Davidowitz, 312 U.S. 52 (1941)...........ccccceeeeeeeeeees 5 Jefferson County v. Acker, 527 U.S. 423 (1999) ...............0 3 Napier v. Atlantic Coast Line R. Co., 272 U.S. 605 CRIED .ecccocessvessncseseecesesestesisnsnsnsmmninanneessiananiannann nnn 8 New York v. FERC, 535 U.S. 1 (2003) vesdideiidieesniiesaadamaala 1 Perez v. Campbell, 402 U.S. 637 (1971) .............cccceecseeeee 5,6 Rice v. Santa Fe Elevator Corp., 331 U.S. 218 (1947) ............. 1 United States v. Locke, 529 U.S. 89 (2000) ............... eee 1 Xerox Corp. v. County of Harris, 459 U.S. 145 (1982)............. 4 STATUTES AND REGULATIONS 49 U.S.C. § 11506(c)(2)B)iv)(ID (1994 ed.)...........ccceeeeeeees 7 49 US.C. § 14504(c)(2)(B)(@ii) (2000 ed.)..........cccccceeeseesseeees 3 TABLE OF AUTHORITIES — Continued Page 49 U.S.C. § 14504(cX2)C) (2000 ed.) 20.0.0... eeeeceeeeceeeeceeeees 5 Mich. Comp. Laws Ann. § 478.6 (West 2002)...............000000. 4 Mich. Comp. Laws Ann. § 478.7(1) (West 2002) ................. 2 Mich. Comp. Laws Ann. § 478.7(5) (West 2002)................. 4 MISCELLANEOUS H.R. Conf. Rep. No. 102-404 (1991), reprinted in Ec 7 H.R. Rep. No. 89-253 (1965), reprinted in 1965 EE EL 7 1 PETITIONERS’ REPLY BRIEF Choosing to disregard this Court’s recent clarification that no presumption against preemption applies to mat- ters “inherently federal in character”’ or to state regula- tion in areas with “a history of significant federal presence,”* Respondents’ brief fails in its attempt to trivialize the importance of the ruling below. Neither a meaningless registration/regulatory fee distinction nor selective application of the $100 per-vehicle Interstate Decal Fee to Michigan-plated trucks lessens the fee's practical impact upon fee-paying interstate carriers. Thus, Respondents’ arguments do not rescue the fee from Con- gress’s express preemptive net or diminish the real threat the Michigan decision poses to interstate truckers across the nation. Further review is plainly warranted. A. The Illusory “Regulatory Fee” Label Does Not Yield An Answer To The Preemption Question Posed In an exercise in misdirection and pointless seman- tics, Respondents insist that only “registration” fees are preempted by the Single State Registration System (“SSRS”) and that the Interstate Decal Fee is saved from * Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341, 347- 348 (2001). * United States v. Locke, 529 U.S. 89, 108 (2000). Respondents advance Rice v. Santa Fe Elevator Corp., 331 U.S. 218 (1947) in support of “a general presumption against federal preemption,” Opp. 18, but Rice was expressly rejected as standing for that proposition in Locke, 529 U.S. at 108. Curiously, Respondents also cite New York v. FERC, 535 U.S. 1 (2003), which involved defining the proper scope of a federal agency's power and plainly has no bearing upon the question in this case. 2 preemption because it is a “regulatory” fee, not a registra- tion fee. This now-familiar refrain, borrowed as it is from the Michigan Court of Appeals decision, evades the legal question presented. The question before this Court is whether the label attached to the Interstate Decal Fee or even the use to which its revenues are put can legally distinguish it from the per-vehicle fees Congress capped at $10 under the SSRS and the predecessor “bingo card” law. The unmistakable answer to that question is “no.” Remarkably, Respondents claim that payment of the $100 Interstate Decal Fee to the Michigan Public Service Commission (“PSC”) is unlike payment of the $10 SSRS fee because it is “not a requirement to prove an interstate carrier is properly certified under federal authority or that its motor vehicles are legally registered or that the carrie is insured or that it has a named agent for service of process.” Opp. 6. In fact, just the opposite is true. Every interstate carrier, regardless of the state in which it plates its vehicles, is prohibited from engaging in the interstate transportation of property in Michigan “without first having registered with the [PSC] and paid the required registration and vehicle fees.” Mich. Comp. Laws Ann. § 478.7(1) (West 2002). The way all interstate carriers register with the PSC is through the SSRS, which requires each of them to do the same things to prove the lawfulness of their operations except that, under Michigan law, Michigan-plated carriers pay $90 per truck more for registration. Thus, prior to the 1994 implementation of the SSRS, Michigan-plated carriers paying $100 per truck — just like carriers plated elsewhere but paying $10 per truck — were required to file proof of their federal authority, register their motor vehicles, submit evidence of insurance, and 3 identify their agent for service of process. Since 1994, those same Michigan-plated carriers — just like carriers that purchase their license plates elsewhere — must still file proof of federal authority, submit evidence of insur- ance, and name their agent for service of process. The only difference between the two carriers is that Michigan’s SSRS form directs the Michigan-plated carrier to pay $100, instead of $10, per vehicle and to fill out another form identifying its trucks by make, model, and serial number to obtain a decal for each — even though the SSRS expressly prohibits decal requirements and the registra- tion or identification of specific vehicles operated by the carrier. 49 U.S.C. § 14504(c)(2B)iii) (2000 ed.). In short, Respondents cannot at once acknowledge that Congress has “preemptled] a State from charging more than $10 to register and operate within the borders of that State,”* yet disregard the fact that Michigan-plated interstate carriers pay $100 per truck to register and operate within Michigan’s borders while other carriers pay $10 per truck for the exact same privilege. Michigan- plated carriers “register” with Michigan for the price of $100, whether Michigan calls the assessed fee a “regula- tory” fee or not. See Central Machinery Co. v. Arizona State Tax Commission, 448 U.S. 160, 164 n.3 (1980) (transaction privilege tax was preempted by Indian trader statutes “regardless of the label” placed upon it). See also Jefferson County v. Acker, 527 U.S. 423, 439 (1999) (“prac- tical impact, not the State’s name tag,” determines whether tax violates Public Salary Tax Act); City of Detroit * Opp. 19. 4 v. Murray Corp., 355 U.S. 489, 492 (1958) (in determining constitutionality of a tax, “we must look through form and behind labels to substance”). Nor can the so-called “regulatory” use to which its revenues are put distinguish the Interstate Decal Fee from the $10 SSRS fee Michigan otherwise collects. Respon- dents emphasize witness testimony that the Interstate Decal Fee supports a whole host of laws governing com- mercial motor vehicles and carriers after it is “placed to the credit of the [PSC]” and “appropriated ... in such proportions as the legislature may determine.” Mich. Comp. Laws Ann. § 478.6 (West 2002). However, Respon- dents conveniently ignore that the $10 SSRS fee (along with every other fee collected by the PSC) is also “placed to the credit of the [PSC]” and, as Respondents’ own witness explains, combined with all other motor carrier fee reve- nue for appropriation to the same “regulatory” agencies for the same “regulatory” use Respondents so insistently assign to the Intestate Decal Fee alone.‘ The $10 SSRS fee is just as “regulatory” in nature as the $100 Interstate Decal Fee, and the Interstate Decal Fee serves no more “regulatory” purpose than any other fee collected by the PSC from any motor carrier in Michigan. Therefore, whatever differences there may be between the $10 SSRS fee and the $100 Interstate Decal Fee, “they are distinctions without a legal difference.” Xerox Corp. v. County of Harris, 459 U.S. 145, 154 (1982). The only real * Opp. App. 8b-14b. In addition, under Mich. Comp. Laws Ann. § 478.7(5), a portion of the SSRS fee is designated for deposit in the Michigan Truck Safety Fund for use in “regulatory” endeavors. Opp. App. 13b. SS 5 difference between the two fees is $90, and it is that distinction that makes the Interstate Decal Fee incom- patible with Congress’s proclamation that “[t]he charging or collection of any fee under this section that is not in accordance with the fee system established [herein] shall be deemed to be a burden on interstate commerce.” 49 U.S.C. § 14504(c)(2)(C) (2000 ed.). B. The Interstate Decal Fee’s Practical Impact, Not Its Name Or Its Purpose, Determines the Out- come Of This Controversy It makes no difference that Congress did not make specific reference to “regulatory fees” in adopting the SSRS or its predecessor “bingo card” program. State law yields under Supremacy Clause analysis if it “stands as an obstacle” to full implementation of the federal law, Hines v. Davidowitz, 312 U.S. 52, 67 (1941), or otherwise frustrates the accomplishment of a federal objective. Geier v. Ameri- can Honda Motor Co., 529 U.S. 861, 873 (2000). Thus, by way of example only, Perez v. Campbell, 402 U.S. 637 (1971) did not require an express reference to state high- way safety laws before construing the Bankruptcy Act to bar application of a state statute suspending the driver’s licenses of uninsured tortfeasors. Nor did federal law make express reference to state registration standards for aliens when the Federal Alien Registration Act was deemed preemptive of state registration laws in Hines, supra. Whether or not Congress has made an express preemptive pronouncement on a particular topic, state regulation must yieid to the extent it actually conflicts with federal law. See Adams Fruit Co. v. Barrett, 494 U.S. 638, 648-649 (1990). 6 Furthermore, it matters not whether the Michigan legislature : ended by its adoption of the Interstate Decal Fee to serve some purpose other than to frustrate the goals of the SSRS. Over three decades ago, this Court declared that it could no longer “adhere to the aberrational doctrine ... that state law may frustrate the operation of federal law as long as the state legislature in passing the law had some purpose in mind other than one of frustra- tion.” Perez, 402 U.S. at 651-52. Differently stated, “[w]hatever the purpose or purposes of the state law, pre- emption analysis cannot ignore the effect of the challenged state action on the pre-empted field.” Gade v. National Solid Wastes Management Ass’n, 505 U.S. 88, 107 (1992). Accordingly, the “key question” is “at what point the state regulation sufficiently interferes with federal regulation that it should be deemed pre-empted.” Jd. That the Interstate Decal Fee blatantly interferes with and frustrates Congress’s purpose in limiting per- vehicle fees imposed on interstate carriers cannot be seriously debated. Every Michigan-plated motor carrier seeking to engage in interstate trade on Michigan’s high- ways must pay the PSC $100 per truck for the privilege of conducting its business. The fee, therefore, stands as a $100 obstacle for each truck the interstate motor carrier hopes to operate in and out of the state even though Congress declared that no more than $10 should be paid to clear the roadway for each such truck. Under such circum- stances, the Interstate Decal Fee unquestionably frustrates the purpose of Congress when, through implementation of the original “bingo card” program, it sought to afford interstate carriers “relief from [a] multiplicity of different State registration requirements” and to establish uniform registration requirements imposed by state regulatory ee 7 commissions. H.R. Rep. No. 89-253 (1965), reprinted in 1965 U.S.C.C.A.N. 2923, 2929. Similarly, the Interstate Decal Fee interferes with Congress’s goal in enacting the SSRS, which was to establish “a fee system ... that [would] minimize the costs of complying with the registra- tion system,” 49 U.S.C. § 11506(c\2)(B)iv(IT) (1994 ed.), and “benefit the interstate carriers by eliminating unnec- essary compliance burdens” so that consumers would also profit from cost savings. H.R. Conf. Rep. No. 102-404 (1991), reprinted in 1991 U.S.C.C.A.N. 1679, 1817. No evidence was required for the lower courts to reach such conclusions. Nor was evidence required to rebut Respondents’ new-found contention that the Interstate Decal Fee is somehow justified by “actual vehicular ‘pres- ence’ in Michigan” allegedly evidenced by “commercially license plating the fee paying vehicle in [Michigan].” Opp. 17. Setting aside for the moment that the Michigan Court of Appeals made no mention of any “vehicular pres- ence” justification for the Interstate Decal Fee, Petitioners previously demonstrated that Michigan may be the base- plating state pursuant to the International Registration Plan (“IRP”) under circumstances that have little to do with a “regulatory presence” within the state’s borders.° In any event, whatever Michigan’s professed purpose for the Interstate Decal Fee might be, that purpose is no * Pet. 23-24. Despite its heavy dose of sarcasm (Opp. 21), Respon- dents’ brief does not dispute the inherent truth of our point that small Michigan-based carriers imposing little regulatory burden upon the State cannot avoid the fee because they have no out-of-state terminals while large carriers with a significant Michigan presence and a terminal out of state can escape fee payment altogether. 8 more determinative than the fee’s name. Preemption analysis turns not on whether federal and state laws “are aimed at distinct and different evils,” but whether they “operate upon the same object.” Napier v. Atlantic Coast Line R. Co., 272 U.S. 605, 612 (1926). In this case, the object upon which federal and state law both operate is the same interstate truck, and the Interstate Decal Fee’s application to any interstate truck — paid as it is for the mere privilege of traveling upon the state’s highways — does not square with the $10 per-vehicle fee cap imposed by federal law. The Interstate Decal Fee must therefore yield to Congress’s express preemptive strike. C. The Importance Of The Issue Presented Here Should Not Be Trivialized Notwithstanding their characterization of our position as “erroneous, speculative and exaggerated,” Opp. 18, Respondents’ argument acknowledges that the issue presented here is a potentially recurring one of great practical importance. Both the Michigan Court of Appeals and Respondents maintain that, because the SSRS does not prohibit flat per-vehicle “regulatory” fees, Michigan may charge Petitioners $100 per vehicle every year for whatever “regulatory” purpose it desires. That rationale, if true, proves our point that the Michigan court ruling opens the floodgates for other States to assess any and all per-vehicle “regulatory” fees they see fit to impose in any amount for any “regulatory” reason. The adverse impact upon interstate trucking interests, in that event, could be monumental. Seventeen years ago in American Trucking Ass’ns v. Scheiner, 483 U.S. 266 (1987), this Court recognized that 9 plating fees imposed under the IRP and fuel taxes as- sessed under the International Fuel Tax Agreement, both of which are apportioned based upon a motor vehicle’s mileage within a state, readily satisfy dormant Commerce Clause jurisprudence. Jd. at 282-283. In contrast, however, flat unapportioned per-vehicle fees imposed on interstate carriers penalize some travel within the free trade area.... [T)heir inevitable effect is to threaten the free movement of commerce by placing a fi- nancial barrier around the State.... If each State imposed flat taxes for the privilege of mak- ing commercial entrances into its territory, there is no conceivable doubt that commerce among the States would be deterred. Id. at 284. Scheiner thus teaches that States requiring “regulatory” revenue must collect it on an apportioned basis that measures the fee-payer’s use of State facilities because a flat unepportioned per-vehicle fee “exerts an inexorable hydraulic pressure on interstate businesses to ply their trade within the State that enacted the measure rather than ‘among the several States.’” Jd. at 286-287. The words of Scheiner echo back at interstate truckers when they hear Respondents’ hollow claim that any State is free to impose a flat per-vehicle “regulatory fee” in any amount it chooses. Congress, as the federal authority with preeminent power over matters involving interstate commerce and interstate trucking in particular, saw fit to authorize flat per-vehicle fees of no more than $10 and declared anything higher than that charge to be a burden upon interstate commerce. Nevertheless, Respondents’ position and the lower court ruling both demonstrate that the SSRS may be read by state regulatory commissions as 10 Congressional authority for flat, per-vehicle “regulatory fees” in any amount, and, if so, interstate carriers will be required to revisit and fight again the same flat fee battles they fought so hard to win in Scheiner. The Michigan court’s ruling, therefore, should not be permitted to stand. For the foregoing reasons and those stated in the petition, the petition for a writ of certiorari should be granted. Respectfully submitted, JAMES H. HANSON* ANDREW K. LIGHT LYNNE D. LIDKE SCOPELITIS, GARVIN, LIGHT & HANSON, PC. 10 W. Market St., Suite 1500 Indianapolis, IN 46204 (317) 637-1777 *Counsel of Record --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0743%3A04. Public record. Not legal advice.