# Opposition Brief — Central Transport, Inc. v. Michigan Public Service Commission

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1998
- **Citation:** 525 U.S. 1018

## Text

> FILED |

ha “
C1 27 1998
No. 98-533

In the Supreme Court of the United Sfites °F se ‘er
October Term, 1998 | SUPREME COURT. US:

——_

CENTRAL TRANSPORT, INC. and
UNIVERSAL AM-CAN, LTD.,

Petitioners,
Vv.
MICHIGAN PUBLIC SERVICE COMMISSION,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI
TO THE MICHIGAN SUPREME COURT

BRIEF OF RESPONDENT IN OPPOSITION

FRANK J. KELLEY
Attorney General

Thomas L. Casey
Solicitor General
Counsel of Record

P. O. Box 30212
Lansing, Michigan 48909
(517) 373-1124

David A. Voges
Henry J. Boynton
Assistant Attorneys General

Attorneys for Respondent
Michigan Public Service
Commission

QUESTION PRESENTED

Whether section 601 of the Federal Aviation
Administration Authorization Act of 1994, which preempted
state economic regulation of motor carriers as to price, route
and services but which expressly excepted from that
preemption state regulation of matters pertaining to safety
and insurance, preempted the assessment of motor carriers’
fees to fund the non-preempted regulatory activities of the
Michigan Public Service Commission?

-ii-
TABLE OF CONTENTS

Pages
QUESTION PRESENTED) 0...iki ci eaienka. i
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OPTIONS . BELOW «iiss din ioacen a. 1
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CONSTITUTIONAL AND STATUTORY PROVISIONS
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ETRE EIEN © vsavesiincavsesvunninesepsvilcusabionigeacones siNthcanasabbilaadtiebiona 1
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A. THE MICHIGAN COURT OF APPEALS PROPERLY
AFFIRMED THE MPSC’S DECISION THAT NON-
ECONOMIC STATE REGULATION OF MOTOR
CARRIERS WAS NOT PREEMPTED BY FEDERA
LYY ici, viesaiiuscidesiinavesncrdnctihisvous abated taieasetetaarcdaiannies Raabe @

1. Federal Preemption Is Determined By
Congressional Intent, And Is Limited And
Strictly Construed With Respect To Statutes
Enacted Under The State's Police Powers ............ 7

2. The Express Language Of FAAAA Section 601
And Its Legislative History Establish That
Congress Did Not Intend To Preempt Non-
Economic State Regulation Of Intrastate
Transportation Of Property By Motor Carriers,
Including Safety and Fitness Regulation, And
The Issuance Of Certificates And Collection Of
Fees Related Exclusively To Such Non-Preempted
PORE saseseveisecsscseanplabnnecaetasdnbovsaleenngs saatpeishtbaasbe 9

-lii-

: 3. The Michigan Court of Appeals Correctly Held
That FAAAA Section 601 Does Not Preempt
The MMCA Fee Provisions ...............cccccsseseecsseee: 14

4. A Major Purpose Of The MMCA Extends To
Safety Regulation, Which Has Been Preserved
By FAAAA Section 601

Sear Tas I eA ao doi ch iS scabecdonk 20

-iV-

Pages
CASES

Cloverleaf Butter Co v Patterson,
315 U.S. 148; 62 S. Ct. 491;
Oh Te I ici aii crinccsewnerviinnn Rode baadben 8

Florida Lime & Avocado Growers v Paul,
373 U.S. 132; 83 S. Ct. 1210;
a I io Licasesiencushabeneevhaqeant 8

Fort Halifax Packing Co v Coyne,
482 U.S. 1; 107 S. Ct. 2211;
I Tie TIED: sinincshsoieshaniincessngsininicesapsiiinanitininvensn 8

Hillsborough County v Automated Medical Laboratories,
471 U.S. 707; 105 S. Ct. 2371;
ee oe SEIS Neen Ae 8

Interstate Circuit, Inc. v Dallas,
390 U.S. 676; 88 S. Ct. 1298;
Se i 1

Louisiana Public Service Comm. v Federal Communications
Comm,
476 U.S. 355; 106 S. Ct. 1890;
ie Eg | Se ree ce a Cee 7

Mabee v White Plains Publishing Co,
327 U.S. 178; 66 S. Ct. 511;
ee Ri I Beano cesdiacnainciiitiecdacesncesvensees 8

Morales v TransWorld Airlines,
504 U.S. 374; 112 S. Ct. 2031;
129 Be ee A AIRY nis. ied 12-13

-V-

STATUTES

1963 P.A. 181,
M.C.L. 480.11, et seq.; M.S.A. 9.1666(1a) et seq.

(Motor Carrier Safety Act) ...........c:cccseeeeeeeeeees 18-19
MBAS. BR eS. RRB he pind 1
Airline Deregulation Act of 1978 (ADA),

Be aR UEP icici caaduscixepnpbadtnanssietinimncdunannisvieashions 12
Federal Aviation Administration Authorization Act of

1994, (“Section 601”) 49 U.S.C. 14501(c) ........ passim
Wh APG Bs MAB SRG Ck tok 18
M.C.L. 478.1, 478.2(1) and 478.2(2) ..........cccecceseeeeeeeees 14
Michigan Motor Carrier Act (“MMCA”),

M.C.L. 475.1 et seq.; M.S.A. 22.531 et seq .......... passim
CONSTITUTION
U.S. Const., Art. VI., cl. 2 (Supremacy Clause) ................ 1
OTHER

House Conference Report No. 103-677,
page 84, reprinted in 1994 U.S.C.C.A.N. 1756 ... 11-14

OPINIONS BELOW

The order of the Michigan Supreme Court denying leave
to appeal is reported at 458 Mich. 852 (Pet. App. 30-31). The
opinion of the Michigan Court of Appeals affirming in part,
and reversing in part, the decision of the Michigan Public
Service Commission is reported at 223 Mich. App. 288, 566
N.W.2d 299 (1997) (Pet. App. 1-30). The decision of the
Michigan Public Service Commission is unreported (Pet. App.
32-78).

JURISDICTION

The order of the Michigan Supreme Court denying leave
to appeal was entered on June 29, 1998. The petition for a
writ of certiorari was filed September 28, 1998. The
jurisdiction of this Court is invoked under 28 U.S.C. 1257(a).
Although the petition incorrectly states that it seeks a writ of
certiorari to the Michigan Supreme Court, because that court
denied discretionary review (Michigan Court Rule 7.301(A)(2))
it is the judgment of the Michigan Court of Appeals which is
reviewable under 28 USC § 1257(a). Interstate Circuit, Inc. v
Dallas, 390 Us 676, 678 n.1 (1968); Stern, Gressman, Shapiro
& Geller, Supreme Court Practice, § 3.12, p. 115 (7th ed.
1993).

CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED

The Supremacy Clause, U.S. Const., Art. VI., cl. 2 is set
forth at Pet. App. 79. Section 601 of the Federal Aviation
Administration Authorization Act of 1994, (“Section 601”) 49
U.S.C. 14501(c) is set forth at Pet. App. 80-83.

STATEMENT

1. On August 23, 1994, President Clinton signed into
law the Federal Aviation Administration Authorization Act of
1994 (“FAAAA”). Section 601 of the FAAAA preempted
state economic regulation of motor carriers related to price,
route or services. Contrary to Petitioners’ statement of the
issue, Section 601 did not prohibit “virtually all state
regulation of intrastate motor carriers.” Instead, that section
effected only a partial preemption of state law, which is
evidenced by Section 601’s (49 U.S.C. 14501(c)(2))
description of matters not covered, wherein Congress stated
that the preemption:

(A) shall not restrict the safety regulatory
authority of a State with respect to motor
vehicles, the authority of a State to impose
highway route controls or limitations based on
the size or weight of the motor vehicle or the
hazardous nature of the cargo, or the authority
of a State to regulate motor carriers with regard
to minimum amounts of financial responsibility
relating to insurance requirements and self-
insurance authorization; and

(B) does not apply to the transportation of
household goods.

2. On September 8, 1994, the Michigan Public Service
Commission (“MPSC”) issued an order, with notice to all
interested parties including Petitioners, initiating a contested
case proceeding (MPSC Case No. T-1273) to examine the
effect of Section 601 of the FAAAA on the Michigan Motor
Carrier Act (“MMCA”), M.C.L. 475. 1 et seq. and rules
promulgated thereunder. In that September 8, 1998 order, the
MPSC indicated that following the submission of evidence and
testimony, it would issue a decision determining which
sections of the MMCA and its rules had been preempted and
which had not. The MPSC further stated the contested case
proceeding was not intended to address the FAAAA’s
constitutionality but rather was intended to provide a
framework for motor carriers to follow pending anticipated

action by the Michigan Legislature to conform the MMCA with
the FAAAA.

3. On January 11, 1995, following contested case
hearings and the submission of briefs by interested parties, the
MPSC issued its opinion and order in MPSC Case No. T-1273

(Pet. App. 32-78),! identifying those provisions of the MMCA
and rules promulgated thereunder, that were preempted by
Section 601 of the FAAAA as well as those sections that were
not preempted by Section 601 and which remained binding on
motor Carriers.

4. In its January 11, 1995 Opinion and Order, the
MPSC found that despite some parties’ assertions to the
contrary, the wording of Section 601 stops far short of
precluding the state regulation of all aspects of motor carriage.
Pet. App. 57. The MPSC’s order noted, for example, the
heading to Section 601 which reads “Preemption of State
Economic Regulation of Motor Carriers,” and stated:

This implies that, of the range of areas
presently covered by state regulation, economic
regulation (rather than regulation of safety,
fitness, insurance, etc.) was singled out by
Congress for at least partial preemption. Such
an implication is further supported by the
“General Rule” set forth in Section 601(h)(1),
which states only that_states “may not enact or
enforce a law, regulation, or other provision . .
. related to a price, route, or service” of any for-
hire or private motor carrier. (Emphasis
added.) Issues involving prices, routes, and

1 The MPSC’s January 11, 1995 Opinion is reprinted in the
Petitioners’ Appendix at pages 32-78. However, the Petitioners’
Appendix does not contain Exhibit A and Exhibit B that were
attached to the MPSC’s order which the MPSC refers to in its order
at Pet. App. 77. Exhibits A and B comprise 182 pages and sets forth
the text of all Michigan statutes and regulations pertaining to
motor carriers. In each Exhibit, the MPSC did a section-by-section
analysis of those rules and regulations, carefully lining out those
sections that were preempted by Section 601 of the FAAAA.

services have long been considered by the motor
carrier industry to fall within the definition of
economic regulation.

Pet. App. 57. The MPSC further found that Section 601 itself
provided a list of matters not covered by the preemption. The
MPSC stated that the finding of a partial preemption was
further supported by the FAAAA’‘s legislative history. Pet.
App. 58-59. The MPSC thus concluded:

Based on Section 601’s wording and
legislative history, the Commission concludes
that it preempts only those provisions of the
Act and the Rules relating to price, route, and
service. In reaching this conclusion, the
Commission specifically rejects Central's
argument that, because the primary focus of the
Act has always been on economic regulation, no
basis exists for continuing state regulation of
motor carriage. The Commission reaches this
conclusion for two reasons. First, Section 601
does not require that, to avoid preemption,
safety regulation must be the po velg focus of
any state statute regulating motor carriage.
Second, as correctly noted by the Staff, salary
concerns occupy at least co-equal status with
the economic regulation found in the Act.

5. Having determined that Congress intended only a
partial preemption of state motor carrier laws, the MPSC’s
January 11, 1995 Opinion and Order then addressed whether
specific areas of state motor carrier regulation were
preempted. They include: regulation of household goods
movers (Pet. App. 61-62); the certification process (Pet. App.
62-66); the assessment of annual registration fees (Pet. App.
66-68); jointly-established rates and classifications (Pet. App.
68-71); leasing requirements under M.C.L. (Pet. App. 71-72),
and; other miscellaneous issues (Pet. App. 73-76).

With regards to the assessment of annual registration
fees, the MPSC found that they were not preempted by
Section 601 of the FAAAA, stating:

The Commission agrees with the AAMA
and the Staff. As already discussed in detail,
the preemptive effect of Section 601 extends
only to issues of price, route, and service.
Neither the language of Section 601 nor the
Conference Report imply that fees imposed by
a state’s existing regulatory structure might fall
within that relatively narrow range of issues.
Thus, application of the annual registration fee
required by MCL 478.2 is not preempted.

Pet. App. 67. Importantly, the MPSC’s opinion also notes
that the MMCA does not require that revenue received (i.e.
from fees) under that law be used exclusively for economic
reasons. Id. Thus, the fees received can be used only to fund
non-preempted motor carrier regulatory activities performed
by the MPSC. |

In response to the argument that the motor carrier fees
should nonetheless be suspended or reduced the Commission
reasoned there was an insufficient legal or factual basis for
doing so. First, the MPSC noted that the amount of the fees
was set by statute. Because of this, the MPSC concluded that
it could not lawfully intrude in this area which was reserved to
the Legislature. Pet. App. 67. Secondly, the Commission
determined ‘that even if it was authorized to make such a
change, “the record provides an inadequate basis for doing
so.” Pet. App. 67.

6. Onappeal, the Michigan Court of Appeals upheld
the MPSC’s opinion and order with respect to fees, finding
that it was not only in keeping with Section 601’s partial
preemption but also supported by the record, as follows:

The PSC still has significant regulatory
obligations. For example, the PSC must
supervise and regulate the safety of motor
carrier operations. MCL 479.41; MSA
22.587(1). There is still a certification process.
It follows that the fees for obtaining a certificate
of authority, MCL 478.1; MSA 22.560, for
protesting an application for a certificate, MCL

478.1a; MSA 22.560(1), and for administering
the act, MCL 478.2(1); MSA 22.561(1), are
unaffected by the preemptive effect of § 601.
In fact, because the PSC is not using its resources to
enforce preempted portions of the Motor Carrier
Act, the fees collected by the PSC are not related to
the preempted provisions and rules. Indeed,
appellants Central Transport and Universal Am-
Can have not shown that the cost of the PSC’s
operations has ever been totally funded by the fees it
collects, and they have not provided any reason to
believe that the fees collected were or can be used
only for what is now preempted economic
regulation. (Emphasis added.)

Pet. App. 18-19. Petitioners then sought leave to appeal the
decision of the Michigan Court of Appeals to the Michigan
Supreme Court, which unanimously denied in an order dated
June 29, 1998.

7. |The MPSC has not enforced any provision of the
MMCA or its Rules which the MPSC found preempted by
Section 601 in its January 11, 1995 order. However, the MPSC
has continued to enforce those non-preempted provisions of
the MMCA and its rules relating to such matters as safety,
fitness, etc. Furthermore, the MPSC has also utilized the fees
collected only for such non-preempted regulation conducted as
of January 1, 1995.

ARGUMENT

Petitioners contend that the Michigan Court of Appeals
erred in finding that Section 601 of the Federal Aviation
Administration Authorization Act of 1994 (“FAAAA”), 49
U.S.C. 14501(c) did not result in the preemption of virtually
all state motor carrier laws. The claim is without merit. As
the Michigan Court of Appeals correctly recognized, the
FAAAA, by its own terms, does not support the broad sweep
of federal motor carrier preemption, urged by the Petitioners.
Section 601 expressly excepts from its preemptive effect
significant aspects of regulation, including safety regulation,
regulation of size and weight of vehicles, regulation of

insurance requirements, and regulation of the transportation of
household goods.

The Petitioners erroneously contend that the sole focus
of the Michigan Motor Carrier Act (“MMCA”), M.C.L. 475.1
et seq.; M.S.A. 22.531 et seq. is the economic regulation of
competition. This is not true since the MMCA, from its very
inception, has had as a dual purpose to “protect and conserve
the highways and protect the safety and welfare of the
traveling and shipping public in their use of the highways.”
M.C.L. 475.2; M.S.A. 22.532. Because the Petitioners’ claim
lacks merit and because this case does not involve an
important question of federal law that has not been, but
should be, settled by this Court, or has been decided in a way
that conflicts with relevant decisions of this Court, the petition
for writ of certiorari should be denied.

A. THE MICHIGAN COURT OF APPEALS
PROPERLY AFFIRMED THE MPSC’S
DECISION THAT NON-ECONOMIC STATE
REGULATION OF MOTOR CARRIERS
WAS NOT PREEMPTED BY FEDERAL LAW.

1. Federal Preemption Is Determined By
Congressional intent, And Is Limited
And Strictly Construed With Respect To
Statutes Enacted Under The State's
Police Powers.

Congressional intent determines whether federal law
preempts state law. “[T]he critical question in any preemption
analysis is always whether Congress intended that federal
regulation supersede state law." Louisiana Public Service Comm.
v Federal Communications Comm., 476 U.S. 355, 369 (1986)
("Louisiana PSC”). This Court in Louisiana PSC identified when
Congress can be understood to have preempted state law:

Pre-emption occurs when Congress, in enacting
a federal statute, expresses a clear intent to
pre-empt state law..., when there is outright or
actual conflict between federal and state law...,
where compliance with both federal and state is

in effect physically impossible..., where there is
implicit in federal law a barrier to state
regulation..., where Congress has legislated
comprehensively, thus occupying an entire field
of regulation and leaving no room for the States
to supplement federal law..., or where the state
law stands as an obstacle to the
accomplishment and execution of the full
objectives of Congress.... (Citations omitted).

476 U.S. at 368-369.

Petitioners erroneously argue that Congress has occupied
virtually the entire field of regulation. However, federal
occupation of a field will not be lightly inferred:

The principle to be derived from [Supreme
Court] decisions is that federal regulation of a
field of commerce should not be deemed
preemptive of state regulatory power in the
absence of persuasive reasons - either that the
nature of the regulated subject matter permits
no other conclusion or that the Congress has
unmistakably so ordained.

Florida Lime & Avocado Growers v Paul, 373 U.S. 132, 147
(1963).

Moreover, preemption of matters "within the traditional
police power of the State should not be lightly inferred." Fort
Halifax Packing Co. v Coyne, 482 U.S. 1, 21 (1987). A federal
statute will be read to supersede a State's historic powers only
if this is “the clear and manifest purpose of Congress."
Hillsborough County v Automated Medical Laboratories, Inc., 471
US 707, 715 (1985).

This Court has also recognized that, in exercising its
power under the Commerce Clause, "Congress may weigh
relative needs and restrict the application of a legislative
policy to less than the entire field." Mabee v White Plains
Publishing Co., 327 U.S. 178, 184 (1946). In Cloverleaf Butter
Co. v Patterson, 315 U.S. 148, 155 (1942), this Court added

that, where there has only been a partial exercise of the federal
government's power over interstate commerce, "the state may
legislate freely upon those phases of the commerce which are
left unregulated by the nation."

As is evident from its plain language, Congress in Section
601 effected only a partial preemption, while expressly
preserving other state regulation (safety, fitness, etc), which
necessarily includes the attendant fees used for such continued
regulation. Congress neither sought nor intended to occupy
virtually all motor carrier regulation (or to bar continued state
regulation in the areas not preempted). The MPSC’s decision,
as affirmed by the Michigan Court of Appeals, recognized
Section 601's preemption, and the Congressional intent not to
preempt areas relating to safety, fitness, certificates, fees,
among others.

2. The Express Language Of FAAAA
Section 601 And Its Legislative History
Establish That Congress Did Not Intend
To Preempt Non-Economic State
Regulation Of Intrastate Transportation
Of Property By Motor Carriers,
Including Safety and _ Fitness
Regulation, And The Issuance Of
Certificates And Collection Of Fees
Related Exclusively To Such Non-
Preempted Regulatior.

FAAAA Section 601 provides for only partial preemption
of traditional state authority to regulate intrastate motor
carrier matters, and did not preempt all state regulation of for-
hire carriers as Petitioners’ claim. By its own terms, Section
601 provides for only partial preemption of state regulation,
namely, economic regulation “related to a price, route, or
service of any motor carrier". Section 601(h) [49 U.S.C.
14501(c)}, in pertinent part, states:

(1) GENERAL RULE. -- Except as provided
in paragraphs (2) and (3), a State, political
subdivision of a State, or political authority of
2 or more States may not enact or enforce a

10

law, regulation, or other provision having the
force and effect of law related to a price, route,
or service of any motor carrier (other than a
carrier affiliated with a direct air carrier
covered by section 41713(b)(4) of this title) or
any motor private carrier with respect to the
transportation of property.
(2) MATTERS NOT COVERED.--Paragraph (1)--
(A) shall not restrict the safety regulatory
authority of a State with respect to motor vehicles,
the authority of a State to impose highway route
controls or limitations based on the size or weight of
the motor vehicle or the hazardous nature of the
cargo, or the authority of a State to regulate motor
carriers with regard to minimum amounts of
financial responsibility relating to insurance
requirements and self-insurance authorization; and
(B) does not apply to the transportation of
households goods. (Emphasis added).

Besides the plain language of Section 601's statutory
provisions, the legislative history also establishes that only a
partial preemption was intended by Congress, and not the
sweeping preemption that Petitioners suggest. The preemption
as stated pertains only to that which is “related to a price,
route, or service of any motor carrier." The legislative history
further indicates that the specific exemptions from preemption
listed in Section 601(h)(2)(A) (e.g., safety, financial fitness,
fees, size, weight, etc.) were not intended as a specific or
exhaustive list, but were meant as examples of the kind of
state regulation that remains. In other words, Congress
preempted only those matters which are expressly preempted
in the FAAAA, and nothing else. In this regard, the House
Conference Report No. 103-677, p. 84, reprinted in 1994
U.S.C.C.A.N. 1756 states:

Paragraph (4)(B) emphasizes that State
authority to regulate safety, financial
responsibility relating to insurance,
transportation of household goods, vehicle size
and weight and hazardous materials routing of
air carriers and carriers affiliated with a direct

11

air carrier through common controlling
ownership is unchanged, since State regulation

in those areas is not a price, route or service

and thus is unaffected. (This provision is
identical to the new subsection 11501(h)(2)(A)

discussed below.) This list is not intended to be

all inclusive, but merely to specify some of the

matters which are not “prices, rates or services” and

which are therefore not preempted. (Emphasis
added).

The House Conference Report No. 103-677, reprinted in
1994 U.S.C.C.A.N. 1757 further indicates that those matters
which are not a price, rate or service are not preempted,
stating as follows:

New subsection (h)(2) emphasizes that ~
State authority to regulate safety, financial
fitness and insurance, transportation of
household goods, vehicle size and weight and
hazardous materials routing of motor carriers is
unchanged since State regulation in those areas
is not a price, route or service and thus is
unaffected. This subsection is identical to
section 41713(b)(4)(B), described above.

The same House Conference Report also provides
compelling evidence that congressional intent is not to preempt
the ability of the states to issue statewide certificates of
authority applicable to motor carriers to demonstrate their
compliance with state and federal laws, or to interfere with
tax (or fee) laws, as follows:

Furthermore, neither preemption provision
would preempt the ability of a State to issue a
certificate or other documentation (in written or
electronic form) demonstrating that the carrier
complies with State requirements which are not
preempted by these sections and nothing in this
amendment is intended to change the
application of State tax laws to motor carriers.

12

House Conference Report, 103-677, p. 85, reprinted in 1994
U.S.C.C.A.N. 1757.

Petitioners, however, claim that a broad preemptive
purpose can be ascertained by looking at the language
Congress has used to deregulate the airline industry (citing
Airline Deregulation Act of 1978 (ADA), 49 U.S.C. 41713).
Petitioners indicate that the ADA prohibited the states from
enacting or enforcing Laws "relating to rates, routes, or
services." Citing the House Conference Report on Section 601,
Petitioners claim that this Court’s decision in Morales v
TransWorld Airlines, 504 U.S. 374; 112 S. Ct. 2031; 119 L. Ed.
2d 157 (1992) should be the starting point for any
determination of the preemptive effect of the FAAAA.

The Morales case, however, involved a different issue,
under a different Act, relating to solely to airlines.
Furthermore, the FAAAA, adopted in August 1994, and
effective January 1, 1995, was simply not before this Court in
Morales in 1992. As with any other statutory construction
issue, and as the Michigan Court of Appeals below held, any
analysis of Section 601 of the FAAAA should start with the
plain language of the FAAAA itself. The Michigan Court of
Appeals properly addressed itself to the plain language of the
FAAAA in determining its preemptive scope. Moreover, a
review of House Conference Report 103-677 indicates that the
Michigan Court ef Appeals’ reading of the language of the
FAAAA was correct.

It should also be noted that Section 601 was expressly
given prospective, not retroactive, effect. By its terms, Section
601 is effective January 1, 1995. The FAAAA did not
transform this Court's ruling in Morales, applicable to an
airline, into a retroactive preemption of state law relative to
motor carrier regulation. Moreover, the MPSC prior to the
adoption of Section 601 had already ruled that economic
regulations related to rates, routes, or services do not apply to
air Carriers, or to motor carrier operations integrated with air
carriers, but would apply only to ground-only motor carrier

13

functions, not having a connection with air carriers.2 Thus, the
MPSC has always regulated in a manner consistent with the
1992 Morales decision.

Also, in Morales, the airlines sued to enjoin various State
attorneys general from enforcing state guidelines requiring that
airline advertisements contain certain disclosures as to fare
terms, restrictions and availability. The Court concluded that
the airlines’ advertisements "relat[ed] to rates" and were
therefore preempted by the ADA. This Court, however, in
Morales emphasized the limited reach of its holding:

Nor need we address whether state regulation
of the non-price aspects of fare advertising (for
example, state laws preventing obscene
depictions) would similarly 'relat[e] to’ rates;
the connection would obviously be far more
tenuous. ... ‘[s]ome [S]tate actions may affect
[airline fares] in too tenuous, remote, or peripheral a
manner’ to have pre-emptive effect. (Emphasis
added).

504 U.S. at 390.

Both Section 601 itself and House Conference Report
103-677 thus indicate that with the preemption of state
regulation "related to a price, route, or service of a motor
carrier” that Congress listed, by example and not limitation,
several major areas of state regulation which were not
preempted. Such examples included, inter alia, the major area
of safety related regulation and the ability of states to review
and issue (or deny) statewide certificates of authority to
ensure compliance with state and federal law. Similarly,
Section 601 contains no language suggesting that the collection
of fees is in any way altered. In fact, the presumption is that
the fee collection power was continued in order to provide

2 The MPSC in its August 25, 1992 Order In Re Federal Armored,
MPSC File No. 23409, Case No. 5, determined that the economic
regulation of motor carrier air-ground services were subject to
preemption under Section 1305 of the Airline Deregulation Act, but
the carrier's strictly ground-based services were not preempted.

14

revenues to ensure proper safety related regulation, and to
ensure that the motor carrier industry pays its fair share of
services rendered by the states, which benefit motor carriers.

The legislative history indicates that a primary intent
behind Section 601's preemption was to provide a level
playing field relative to economic regulation of motor carriers
and air carriers, and not to impact safety or other non-
economic motor carrier regulation. House Conference Report,
103-677, pp. 85-87, reprinted in 1994 U.S.C.C.A.N. 1757-
1759. Thus, the overriding goal of Section 601 was to put all
motor carriers on an equal competitive footing regardless of
whether their services did or did not include an air carrier
component. Therefore it may be seen that the FAAAA’s
preemption relates to the economic regulation relating to a
“price, route, or service" and not to other regulatory areas, and
not to areas of state regulation that Section 601 expressly
exempted from preemption (safety, fitness, etc).

3. The Michigan Court of Appeals
Correctly Held That FAAAA Section
601 Does Not Preempt The MMCA Fee
Provisions.

Petitioners argue that M.C.L. 478.1, 478.2(1) and
478.2(2), which provide for the collection of fees, were
preempted by Section 601 as of January 1, 1995. The
Petitioners’ entire theory, however, is based upon the
erroneous premise that the fees are to be impliedly swept into
preemption as relating to "a price, route, or service of any
motor carrier." As noted, however, neither the issuance and
renewal of statewide certificate authority, nor the state fees at
issue, were intended to be preempted by Congress, as they are
not related to "a price, route, or service" of a motor carrier.

The Petitioners fail to acknowledge that Congress, by
expressly preserving significant aspects of state motor carrier
regulation such as safety, fitness, etc., adopted only a partial
preemption of state law. Moreover, the part of regulation
preempted by Section 601 does not affect the regulatory fees
in this case as the MPSC has not engaged in any economic or

15

other regulation preempted by Section 601. Since January 1,
1995, the MPSC has only engaged in regulatory activity, such
as safety, which is expres 1y not preempted by Section 601,
and has used all collected regulatory fees only for said activity
or to reimburse the state for motor carrier related costs.

The Michigan Court of Appeals below correctly found
that the clear and unambiguous language of Section 601
expressed Congressional intent not to preempt all state
regulation of the trucking industry. The Court of Appeals
characterized Section 601’s preemptive effect as follows:

Congressional intent is the cornerstone of
preemption analysis. Ryan v Brunswick Corp,
454 Mich 20, 27; __ NW2d ___ (1997).
Regardless of the similarities between the
Airline Deregulation Act of 1978 and § 601 of
the FAAAA, it is clear and unambiguous from
the language of § 601 that the congressional
intent was not to preempt all state regulation of
the trucking industry. Section 601 expressly
excepts from its preemptive effect significant
aspects of regulation, including safety
regulation, regulation of size and weight of
vehicles, regulation of insurance requirements,
and regulation of the transportation of
household goods. If the language of a statute is
clear and unambiguous, the plain meaning of
the statute reflects the legislative intent. (223
Mich App 288, 301). (Pet. App. 17).

[T]he House Conference Report indicates that
“economic regulation” is intended to be
preempted and that states retain their authority
to regulate various aspects of the
transportation industry. See H R Conf Rep No
677, 103rd Cong, 2nd Sess, pp 84-85. The title
given to 49 USC 11501(h) is “Preemption of
State Economic Regulation of Motor Carriers.”
(Emphasis added.) Appellants’ argument that
Congress intended to preempt the entire field of
regulation of motor carriers fails in the face of

16

the language of the legislation and its history.
The PSC’s determination that § 601 was
intended to preempt only economic regulation is
consistent with the language and history of the
legislation. (Pet. App. 17).

Although the Petitioners’ claim that preemptive effect of
the FAAAA was more extensive than what the Michigan
Court of Appeals found, they have failed to address or rebut
major underpinnings of the Michigan Court of Appeals
decision. For example, the Court of Appeals found that the
FAAAA, by its own terms, does not support the “broad sweep
of the federal motor carrier preemption”, urged by the
Petitioners.

,

The Petitioners fail to come to grips with the fact that
the Michigan Court of App -als finding with respect to the
extent of the FAAAA’s preemption comes from a plain
reading of that Act. In essence, what the Michigan Court of
Appeals found is that because the statute is clear and
unambiguous, no statutory interpretation is necessary. Thus,
the language of the statute controls.

Additionally, the Petitioners have failed to contest two
critical findings made by the Michigan Court of Appeals, 223
Mich. App. 288, 302-303, where the Court states:

In fact, because the PSC is not using its
resources to enforce preempted portions of the Motor
Carrier Act, the fees collected by the PSC are not
related to the preempted provisions and rules.
Indeed, appellants Central Transport and
Universal Ameritech-Can have not shown that
the cost of the PSC’s operations has ever been
totally funded by the fees its collects, and they
have not provided any reason to believe that the fees
collected were or can be used only for what is now
preempted economic regulation. (Pet. App. 18-
19).

In summary, Section 601 contains no language that
preempts the continued authority of the states to grant

17

statewide certificates to ensure continued compliance with
state and federal laws applicable to motor carriers, and to
collect applicable fees to fund non-preempted regulation such
as safety and fitness. Moreover, Congressional intent,
discussed supra, indicates that no preemption of statewide
certificates or fees was intended.

Pet. App. 59-60.

4. A Major Purpose Of The MMCA
Extends To Safety Regulation, Which
Has Been Preserved By FAAAA Section
601.

Petitioners erroneously contend that the sole focus of
the MMCA state economic regulation of motor carriers.
Petitioners are incorrect because the MMCA, since its
enactment in 1933, has had the dual purpose of not only
economic regulation, but also, importantly, safety regulation.

The very first titled purpose of the Motor Carrier Act is
"to promote safety upon and conserve the use of public
highways of the state..." This is restated in the purpose and
policy section of the Act, M.C.L. 475.2; M.S.A. 22.532, which
states in part as follows:

It is hereby declared to be the purpose and
policy of the Legislature in enacting this law to
confer upon the Commission the power and the
authority and to make it its duty to supervise
and regulate the transportation of property by
motor vehicle for hire upon and over the public
highways of this state in all matters whether
specifically mentioned herein or not, so as to...
(b) protect and conserve the highways and protect
the safety and welfare of the traveling and shipping
public in their use of the highways;... (emphasis
added).

The current title to the MMCA also provides for the collection
of fees and taxes from motor carriers to promote highway
safety and conservation as follows:

18

[T]o provide for the levy and collection of
certain privilege fees and taxes for such carriers
for such purposes and the disposition of such
fees and taxes; ... (emphasis added).

The MMCA extensively addresses safety, fitness, and
insurance issues. M.C.L. 475.5; M.S.A. 22.533(3) tailors the
duration of evidentiary proceedings to accommodate fitness
issues, and M.C.L. 476.3; M.S.A. 22.536 requires Commission
review of applications for certificates of authority to verify the
physical condition of the equipment and property of the
applicant as well as to ascertain that the vehicles of the
applicant have passed an inspection within the proceeding 12
months pursuant to the requirements of the Motor Carrier
Safety Act, 1963 P.A. 181, M.C.L. 480.11, et seq.; M.S.A.
9.1666(1a) et seq.

Sections 476.5, 476.10, 478.7, 479.9, 479.10, 479.11,
479.12 and 479.13 all underscore and amplify the
Commission's regulatory duties relating to public safety as
they apply to motor carriers. These sections spell out the
Commission's responsibilities ranging from insurance
monitoring and other record checking to leasing, contested case
evidentiary presentations, rulemaking responsibilities, and
collection of assessments. The MPSC is also granted
“authority to prevent evasion of this act through any device or
arrangement" [Title and M.C.L. 475.2(1)] and to do "all things
necessary to carry out and enforce this act." (M.C.L. 476.10).

Both the MPSC and the State Police also act in concert,
in many instances, to enforce both the MMCA and the
Michigan Motor Carrier Safety Act, 1963 P.A. 181, M.C.L.
480.11, et seq.; M.S.A. 9.1666(1a), et seq. In addition, a recent
act, 1993 P.A. 352, effective January 13, 1994, now Article VI
of the MMCA, M.C.L. 479.41; M.S.A. 22.587(1) ("Art VI"),
which expands the MPSC jurisdiction and authority relative to
motor carrier safety, in conjunction with the State Police,
states:

Sec. 1. The commission shall supervise and
regulate the safety of operations of each motor
carrier. The commission may promulgate rules

19

for the purpose of promoting safety upon the
highways and the conservation of their use.
[M.C.L. § 479.41; M.S.A. 22.587(1)].
\ + + *
Sec. 2. Upon request of the commission, the
department of state police shall review the
operation of an intrastate motor carrier to
determine whether the carrier is in compliance
with applicable safety related laws and rules
and issue a report within 60 days after
completion of its review to the commission.
[M.C.L. § 479.42; M.S.A. 22.587(2)].
* + *

Sec. 3. The public service commission, in
cooperation with the department of state
police, will develop and implement by rule or
order a motor carrier safety rating system
within 12 months after the effective date of this
article. In the rating system, an unsatisfactory
rating shall not be imposed without an on-site
safety review being conducted by the
department of state police. [M.C.L. § 479.43;
M.S.A. 22.587(3)].

MMCA Art VI thus explicitly authorizes cooperative functions
between the MPSC and State Police in furthering motor carrier
related public safety. Pursuant to Art. VI, the MPSC may
request State Police review of the operations of particular
motor carriers for compliance with safety related iaws and
rules. Moreover, the two agencies are directed to cooperate in
developing a motor carrier safety rating system which is now
in place and is being administered by the MPSC.

In light of the foregoing, the Petitioners contention that
the MMCA’s sole focus was the economic regulation of motor
carriers lacks merit. Instead, the MMCA contains numerous
provisions related to safety and other matters not preempted
by Section 601 of the FAAAA. The MPSC has made a good
faith effort to comply with federal law and has done so by
identifying those provisions of the MMCA that were
preempted by the FAAAA and which would no longer be
enforced by the MPSC pending anticipated action by the

20

Michigan Legislature to conform the MMCA with the FAAAA.
The determinations made by the MPSC are consistent not only
with the plain language of Section 601 of the FAAAA but also
with the legislative history underlying that enactment. The
Michigan Court of Appeals’ decision affirming the MPSC’s
decision and the Michigan Supreme Court’s denial of the
Petitioners’ Application for Leave to Appeal to that Court
were correct.

CONCLUSION
The Petition for Writ of Certiorari should be denied.

FRANK J. KELLEY
Attorney General of Michigan

THOMAS L. CASEY
Solicitor General of Michigan
Counsel of Record

DAVID A. VOGES

HENRY J. BOYNTON

Assistant Attorneys General

760 G. Mennen Williams Building
P.O. Box 30212

Lansing, MI 48909

Telephone: (517) 373-1124

Attorneys for Respondent
Michigan Public Service
Commission

Dated: October, 1998

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386008_1668%3A2. Public record. Not legal advice.