Interstate Commerce Commission v. Texas

Background

The dispute involves interstate rail companies that offer Plan II TOFC/COFC “piggyback” door-to-door service, the Railroad Commission of Texas, and the federal Interstate Commerce Commission (ICC). In Plan II service a railroad moves a loaded trailer or container on a flatcar and then hauls the trailer on the highway without unloading the goods. Congress’s Staggers Rail Act authorized the ICC to exempt “transportation that is provided by a rail carrier as a part of a continuous intermodal movement.” In 1981 the ICC adopted a rule exempting Plan II service from state regulation, covering both the rail and motor segments. Texas’ commission refused to exempt the motor segments and granted only a partial exemption, prompting the railroads to seek ICC review and a court challenge.

Reasoning

The central question was whether the ICC’s exemption power covers the in-state truck portion of interstate Plan II movements. The Court said yes, noting that the railroads at issue are interstate carriers and provide the equipment and service, and that the statute is more naturally read to treat all Plan II service by a rail carrier as rail-provided transportation. The opinion relied on the ICC’s long history of treating Plan II as rail carrier service, on how a narrower reading would conflict with other statutory provisions, and on Congress’s policy favoring competition and national uniformity in rail regulation. The Supreme Court reversed the Fifth Circuit and approved the ICC’s full exemption.

Real world impact

The ruling limits state power to regulate in-state truck legs of door-to-door piggyback shipments when the railroad owns and operates the equipment. Interstate rail carriers can rely on a federal exemption to keep Plan II movements governed uniformly. States still control wholly intrastate carriers, but not intrastate segments of interstate railroads’ Plan II service.