Interstate Commerce Commission v. Texas
The Court ruled that the Interstate Commerce Commission's power to exempt railroad-run trailer-on-flatcar service from state regulation covers the trucking leg of the trip too, even when the whole shipment never leaves Texas.
Because the service is provided entirely by the interstate railroad on its own equipment, the Court held it counts as transportation by a rail carrier rather than by a separate motor carrier, so Texas cannot regulate the truck portion on its own.
“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.”
The Court's core reasoning for why federal authority covers the whole rail-and-truck shipment.
How it got here: The ICC overturned the Texas Railroad Commission's partial exemption; the Fifth Circuit reversed the ICC, and the ICC and the railroads sought Supreme Court review.
The Case in Depth
What happened
Railroads offer "Plan II" service in which a single company hauls a trailer by rail and then drives it the rest of the way by truck under one bill of lading. Several railroads asked Texas regulators to apply a federal exemption from state regulation to their in-state Plan II shipments. Texas agreed to exempt the rail portion but insisted it could still regulate the trucking segments before and after the rail trip.
The question before the Court
Could Texas regulate the trucking portion of a "piggyback" rail-and-truck shipment that stayed entirely within the state, even though a federal agency had exempted that same service from state regulation?
Why it matters
Railroads offering combined truck-and-rail delivery within a single state can rely on one federal exemption instead of complying with separate, possibly conflicting, state trucking rules. Shippers benefit from more uniform, competition-driven rates, while state regulators lose authority over the highway leg of rail-owned door-to-door delivery service.
What changes now
The Fifth Circuit's judgment is reversed, meaning the ICC's exemption applies to the entire Plan II service, truck segments included, within Texas. This is a final merits ruling, not a temporary order. Texas regulators can no longer separately regulate the trucking legs of these intrastate rail-carrier shipments, and the case does not return for further fact-finding.
What this does not decide
The Court noted its holding applies only to intrastate service provided by interstate rail carriers on their own equipment; it does not extend to purely intrastate railroads, over which the ICC has no jurisdiction at all, so state regulation of those carriers is unaffected.
Concurrences and dissents
How the Justices voted
Majority (1). Justice Stevens (author).
How the Court got there
The legal reasoning, step by step
- The Court examined whether the Staggers Rail Act's exemption provision, which lets the ICC exempt 'transportation that is provided by a rail carrier as part of a continuous intermodal movement,' covers the truck leg of an all-in-state shipment or only the rail leg.
- Because every piece of the disputed service — both the rail car and the truck — was owned and operated by an interstate railroad, the Court read the statute's plain language as treating the whole trip, truck segment included, as transportation provided by a rail carrier.
- The Court found this reading consistent with the ICC's long-standing practice of treating this kind of door-to-door rail-plus-truck service as railroad service rather than motor-carrier service, reasoning that Congress legislated against that established backdrop.
- The Court also tested Texas's competing reading against the powers Texas conceded it lacked, and found that reading produced results Texas itself did not accept — either giving Texas power it disclaimed over interstate shipments, or letting it regulate rail service it disclaimed, showing the State's interpretation could not be squared with the statute as a whole.
- Finally, the Court applied the statute's declared preference for letting competition, rather than a patchwork of state rules, govern the railroad industry, resolving any remaining doubt in favor of the ICC's broader exemption authority.
Doctrinal impact
Cases affected by this decision
Reaffirms American Trucking Assns., Inc. v. ICC (656 F. 2d 1115)
The Court relied on this earlier ruling that rail-owned truck service counts as transportation provided by a rail carrier.
Reaffirms American Trucking Assns., Inc. v. Atchison, T. & S. F. R. Co. (387 U.S. 397)
The Court cited this case to support deferring to the ICC's judgment on how transportation modes interrelate.