Case Name: ILLINOIS COMMERCE COMMISSION and People of the State of Illinois, Petitioners, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents, National Association of Regulatory Utility Commissioners, Atchison, Topeka and Santa Fe Railway Company, et al., Alabama Public Service Company, Kansas Corporation Commission, Intervenors
Court: United States Court of Appeals for the District of Columbia Circuit
Jurisdiction: District of Columbia
Decision Date: 1984-12-11
Citations: 242 U.S. App. D.C. 197
Docket Number: No. 83-1120
Parties: ILLINOIS COMMERCE COMMISSION and People of the State of Illinois, Petitioners, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents, National Association of Regulatory Utility Commissioners, Atchison, Topeka and Santa Fe Railway Company, et al., Alabama Public Service Company, Kansas Corporation Commission, Intervenors.
Judges: Before TAMM and SCALIA, Circuit Judges, and SWYGERT, Senior Circuit Judge.
Reporter: United States Court of Appeals for the District of Columbia Circuit
Volume: 242
Pages: 197–215

Head Matter:
749 F.2d 875
ILLINOIS COMMERCE COMMISSION and People of the State of Illinois, Petitioners, v. INTERSTATE COMMERCE COMMISSION and United States of America, Respondents, National Association of Regulatory Utility Commissioners, Atchison, Topeka and Santa Fe Railway Company, et al., Alabama Public Service Company, Kansas Corporation Commission, Intervenors.
No. 83-1120.
United States Court of Appeals, District of Columbia Circuit.
Argued Dec. 6, 1983.
Decided Dec. 11, 1984.
James E. Weging, Chicago, 111., for petitioners.
Charles D. Gray, Washington, D.C., with whom Paul Rodgers and Genevieve Morelli, Washington, D.C., were on the brief, for intervenor National Association of Regulatory Utility Commissioners. Deborah A. Dupont, Washington, D.C., also entered an appearance for intervenor National Association of Regulatory Utility Commissioners.
John J. McCarthy, Jr., Atty., I.C.C., Washington, D.C., with whom John Broadley, Gen. Counsel, Lawrence H. Richmond, Deputy Associate Gen. Counsel, I.C.C., John J. Powers, III, and John P. Fonte, Attys., Dept, of Justice, Washington, D.C., were on the brief, for respondents. Laurence H. Schecker, Atty., I.C.C., Washington, D.C., also entered an appearance for respondents.
Betty Jo Christian, Washington, D.C., with whom Richard E. Weicher, Chicago, 111., John J. Paylor, Cleveland, Ohio, Howard D. Koontz, Richard J. Schreiber, Chicago, 111., James L. Howe, III, Richmond, Va., and Steven Reed, Washington, D.C., were on the brief, for intervenors Atchison, Topeka and Santa Fe Railway, et al. Charles N. Marshall, Atlanta, Ga., Hanford O’Hara, Washington, D.C., and Richard W. Kienle, Roanoke, Va., also entered appearances for intervenors Atchison, Topeka and Santa Fe Railway Company, et al.
Stanley W. Foy, Montgomery, Ala., was on the brief for intervenor Alabama Public Service Commission.
Dennis D. Ahlers, Wichita, Kan., was on the brief for intervenor Kansas Corporation Commission. Donald Low, Topeka, Kan., also entered an appearance for intervenor Kansas Corporation Commission.
David R. Richards, Austin, Tex., was on the brief for amicus curiae State of Texas urging reversal.
Before TAMM and SCALIA, Circuit Judges, and SWYGERT, Senior Circuit Judge.
Of the Seventh Circuit, sitting by designation pursuant to 28 U.S.C. § 291(a).

Opinion:
Opinion for the court filed by Senior Circuit Judge SWYGERT.
Dissenting opinion filed by Circuit Judge SCALIA.
SWYGERT, Senior Circuit Judge:
The Illinois Commerce Commission ("Illinois") petitions for review of a decision of the Interstate Commerce Commission ("ICC"). Ex Parte No. 388 (Jan. 27, 1983), State Intrastate Rail Rate Authority—Pub.L. 96-448, 367 I.C.C. 149. The decision certifies the State commission to regulate intrastate rail transportation provided that Illinois agrees to adopt automatically all ICC-ordered exemptions from the Interstate Commerce Act. Illinois contends that the decision to preempt state jurisdiction over exemption of intrastate railroad rate regulation exceeds the ICC's statutory authority and is contrary to the Staggers Rail Act of 1980 ("the Act"). Illinois further contends that the ICC's modification of Illinois' application for certification violates the commerce clause and the tenth amendment of the Constitution. We affirm the ICC's decision.
I
The federal government has. long regulated intrastate rail traffic on the theory that such traffic is part of an interstate rail network and can sufficiently affect interstate commerce to permit regulation under the commerce clause of the Constitution. See, e.g., Houston, E. & W.T. Ry. v. United States (Shreveport Rate Case), 234 U.S. 342, 350-53, 34 S.Ct. 833, 835-37, 58 L.Ed. 1341 (1914). Because the federal commerce clause power is plenary, see California Bankers Ass'n v. Shultz, 416 U.S. 21, 46, 94 S.Ct. 1494, 1510, 39 L.Ed.2d 812 (1974), Congress can invoke this power to preempt State regulation of intrastate rail traffic. See also Shreveport Rate Case, 234 U.S. at 350-53, 34 S.Ct. at 835-37. Before 1980, Congress empowered the ICC to preempt State regulation only where an intrastate rate set by the State unjustly discriminated against or imposed an undue burden on interstate commerce, or where the State was dilatory in acting upon a proposed intrastate rate change. See 49 U.S.C. § 11501 (Supp. III 1979). In 1980, the ICC's preemptive power was expanded considerably by the Staggers Rail Act, Pub.L. No. 96-448, 94 Stat. 1895 (1980) (codified at 49 U.S.C. § 10101-11917 (1982) ("Staggers Rail Act" or "the Act"). Whether the ICC acted ultra vires or unconstitutionally in its interpretation of its expanded preemptive power is the nub of this appeal.
A. The Staggers Rail Act
The purpose of the Act was "to provide for the restoration, maintenance, and improvement of the physical facilities and financial stability of the rail system of the United States." Id. § 3. Concerned about the "financial plight" of the railroad industry, Congress concluded that overregulation as well as regulation based on antiquated premises had inhibited growth. Therefore, Congress overhauled the federal regulatory scheme and instructed the ICC to exempt rail traffic from any regulation where regulation was "not necessary to carry out the transportation policy" of the Act and where either "(A) the [railway] transaction or service is of limited scope, or (B) the application of a provision of this subtitle is not needed to protect shippers from the abuse of market power." Staggers Rail Act § 213 (codified at 49 U.S.C. § 10505(a)).
Congress' findings with respect to the harmful effects of federal regulations were equally applicable to State regulation. See, e.g., H.R.Rep. No. 1035, 96th Cong., 2d Sess. 128-30, reprinted in 1980 U.S.Code Cong. & Ad.News 3978, 4072-74. Furthermore, Congress found that the dual system of regulation caused delays in the approval of rate changes, which resulted in losses of approximately $400 million in additional revenues. Id. at 61, 1980 U.S.Code Cong. & Ad.News at 4006. Therefore, in order to "ensure that the price and service flexibility and revenue adequacy goals of the Act are not undermined by state regulation of rates, practices, etc.," the Act "preempted] state authority over rail rates, classifications, rules and practices." H.R.Conf.Rep. No. 1430, 96th Cong., 2d Sess. 106, reprinted in 1980 U.S.Code Cong. & Ad.News 4110, 4138.
Having totally preempted State authority, Congress then restored some of it as a matter of legislative grace. But the extent of the State authority was narrowly circumscribed. First, the States had to apply for federal permission to regulate intrastate rail commerce. If the States convinced the ICC that their proposed regulations were "in accordance with the standards and procedures applicable to regulation of rail carriers by the Commission under this title," then the ICC would "certify" the States. Staggers Rail Act § 214(b) (codified at 49 U.S.C. § 11501(b)(3)(A)). Once certified, the States were empowered to regulate intrastate traffic pursuant to the standards and procedures stated in its application. See id. § 214(b) (codified at 49 U.S.C. § 11501(b)(4), (5)). Second, even after certification, the ICC could review, upon petition by a rail carrier, the decision of any State authority for compliance with federal standards and procedures. Id. § 214(b) (codified at 49 U.S.C. § 11501(c)). Third, regardless of any authority granted pursuant to certification, States were absolutely precluded from regulating general rate increases, inflation-based rate increases, and fuel adjustment surcharges.
B. The Certification Proceedings
After the Act's passage in October 1980, Illinois and thirty-nine other States applied for certification. The ICC questioned the extent to which many of the States' proposed regulations complied with federal standards and procedures. Ex Parte No. 388 (April 22, 1981) at 2-4. Nevertheless, in order to comply with the statutory requirement that it act upon a certification request within ninety days of receipt, see 49 U.S.C. § 11501(b)(3)(A), the ICC decided to "provisionally certify" the forty States until June 29, 1981. Ex Parte No. 388 (April 22, 1981) at 7-8. On August 5, 1982, after several extensions of both filing deadlines and provisional certification, the ICC "tentatively" concluded that Illinois' proposed regulations complied with federal standards and procedures. Ex Parte No. 388 (Aug. 5, 1982), 365 I.C.C. 855 (1982).
In its proposal for certification, Illinois stated: "An exemption granted for a class of interstate traffic shall not automatically apply in Illinois." Ex Parte No. 388 (Aug. 5, 1982), 365 I.C.C. 855, 856 (quoting Illinois' First Amended General Order No. 219 at 861). Therefore, if the ICC concluded that a certain class of interstate rail traffic should be exempt from regulation, Illinois would not automatically exempt from State regulation the intrastate movement of that same class of traffic. Rather, Illinois would undertake its own independent examination of whether an intrastate exemption was appropriate. In making this determination, Illinois would apply the criteria enumerated in 49 U.S.C. § 10505, which the ICC also applied in granting or denying the federal exemption. In view of this commitment to the federal criteria and the ability of the ICC to review a State exemption decision that differed from the ICC's decision, the ICC stated its intent to certify Illinois unless public comment persuaded it otherwise. Ex Parte No. 388 (Aug. 5, 1982), 365 I.C.C. at 857-58.
On September 7, 1982 several railroads operating in Illinois (the "railroads") filed joint comments challenging Illinois' proposed regulations as not in accordance with federal standards and procedures. With respect to exemption procedures, the railroads contended that once the ICC exercised its jurisdiction to exempt traffic from regulation, that decision became a federal standard and procedure from which the States had no authority to deviate. Comments of Railroads Operating in the State of Illinois 17. On January 27,1983 the ICC adopted the railroads' position and modified the Illinois regulations to require automatic compliance with federal exemptions. Ex Parte No. 388 (Jan. 27, 1983), 367 I.C.C. 149, 152-54. The ICC stressed that because the exemption statute was "such a significant aspect of the Staggers Act, Congress could not have intended the practical problems and inconsistencies that would re-suit from States retaining jurisdiction over classes of traffic exempted nationwide by the Commission." Id. at 153. The ICC noted that if State conditions were sufficiently exceptional to warrant retention of intrastate regulation despite the federal exemption, the ICC could restructure the exemption order accordingly. Id. at 154. Illinois was "unconditionally certified" to regulate intrastate rail traffic pursuant to its proposed regulations as modified by the ICC. Id. at 156.
Two members of the Commission dissented, reasoning that Illinois had complied with federal standards and procedures simply by agreeing to apply federal criteria when considering an exemption. The ultimate exemption decision was merely the result of applying those standards and procedures, not a standard or procedure itself. Id. at 154-55 (Simmons, dissenting). Furthermore, there was good reason to have two separate, independent exemption determinations, as "transportation considerations solely within an individual State can be significantly different than those of the Nation as a whole with respect to a particular traffic segment." Id. at 155.
Illinois appealed by filing a petition to review the ICC's order on the date it was served. While the ICC modified Illinois' proposed regulations in several respects, Illinois confines its appeal solely to the propriety of the exemption modification. Appellant's Brief at 7. The Alabama Public Service Commission, the Kansas Corporation Commission, and the National Association of Regulatory Utility Commissioners ("NARUC") intervened on behalf of Illinois; the railroads jointly intervened on behalf of the ICC. The State of Texas filed an amicus brief challenging the ICC's order as violative of both federal statute and the Constitution.
II
Although the issue was not briefed by counsel, we note that we have jurisdic tion to review the decision below as a "final order" of the ICC. 28 U.S.C. § 2342(5) (1982). In a case arising from the same set of certification proceedings involved in this case, the Eleventh Circuit dismissed for want of jurisdiction an appeal from the ICC order granting Florida "provisional" certification and ordering certain modifications. Florida Public Service Commission v. ICC, 724 F.2d 1460 (11th Cir.), cert. denied, — U.S. -, 104 S.Ct. 1686, 80 L.Ed.2d 160 (1984). The court reasoned that the ICC had not issued a final appealable order concerning Florida's certification: the order granted only "provisional" certification pending comment and "final certification"; Florida retained jurisdiction to regulate intrastate rates in the interim. Id. at 1462.
In the instant proceedings, the ICC indicated that its order was final by "unconditionally" certifying Illinois; the time for considering further amendments or inviting public comment had already passed. The ICC denied Illinois leave to enforce its prior regulations pending further proceedings, but instead, ordered Illinois to modify its regulations to comply with the ICC's decision of January 27. Ex Parte No. 388 (March 4, 1983). Thus, Illinois was faced with the choice of abandoning intrastate regulations altogether or adopting the regulatory scheme approved by the ICC. Unlike the case before the Eleventh Circuit, here the ICC has determined the "rights or obligations" of the parties, "legal consequences will flow from the agency action," and "judicial review will not disrupt the orderly process of adjudication." See Florida Public Service Commission, 724 F.2d at 1462 (quoting Port of Boston Marine Terminal Association v. Rederiaktiebolaget Transatlantic, 400 U.S. 62, 71, 91 S.Ct. 203, 209, 27 L.Ed.2d 203 (1970)). In sum, the ICC's decision below is a final, appealable order.
Ill
Illinois argues that the ICC lacked the statutory power to force it to adopt federal exemptions automatically. Adopting the reasoning of the dissent below, Illinois contends that to comply with federal "standards and procedures," it had only to apply the federal criteria governing an exemption decision; the exemption decision was the result of the application of standards and procedures and was not itself a standard or procedure. Because we do not construe the Act in the first instance, we must first define the standard of review of the ICC's construction.
A. Standard of Review
An agency's interpretation of the statute it must administer is ordinarily accorded "great deference." National Wildlife Federation v. Gorsuch, 693 F.2d 156, 166 (D.C.Cir.1982) (quoting EPA v. National Crushed Stone Association, 449 U.S. 64, 83, 101 S.Ct. 295, 306, 66 L.Ed.2d 268 (1980)). "To satisfy this standard it is not necessary for a court to find that the agency's construction was the only reasonable one or even the reading the court would have reached if the question initially had arisen in a judicial proceeding." FEC v. Democratic Senatorial Campaign Commission, 454 U.S. 27, 39, 102 S.Ct. 38, 46, 70 L.Ed.2d 23 (1981). Of course, agency constructions that are "inconsistent with the statutory mandate or that frustrate the policy that Congress sought to implement" must be overturned as unreasonable. Id. at 32, 102 S.Ct. at 42.
Citing National Wildlife, 693 F.2d at 166-70, Illinois contends that this deferential standard should not be applied automatically and that three factors which are present here should persuade us to accord no deference to the ICC: (1) the ICC's construction was not contemporaneous with the statute's enactment, (2) its decision was not unanimous, and (3) its interpretation was inconsistent with prior decisions.
It is true that an agency interpretation of the statute it must administer does not in and of itself necessarily justify a deferential standard of review and that the factors listed by Illinois, among others, are also considered in determining the extent of deference owed. See National Wildlife, 693 F.2d at 167 (citing first and third factors listed above); cf Local 900, Int'l Union of Electrical, Radio and Machine Workers, AFL-CIO v. NLRB, 727 F.2d 1184, 1189 (D.C.Cir.1984) (noting NLRB's unanimity as a factor in court's decision to grant enforcement). But to define the presence or absence of any of these additional factors as dispositive misreads National Wildlife. First, the presence of the first and third factors — contemporaneous and consistency — heightens deference. National Wildlife, 727 F.2d at 167 & n. 31. If those factors were absent, the court would not be justified in according the agency's decision "no deference," as Illinois urges. Rather, to the extent those factors are absent, the deference generally accorded agency judgment will not be heightened still further. Second, because the general rule is to defer to the reasonable statutory interpretations of agencies, Illinois must show compelling reasons for an exception. We are not persuaded by the argument that we should focus on three factual distinctions from National Wildlife at the exclusion of considering the many other factors enumerated in that ease and in the face of our strong predilection for applying the general rule of deference.
In any event, Illinois is incorrect in arguing that two of the factors it enumerates are absent in this case. As for the third factor, the ICC's interpretation was not "inconsistent" with its prior decisions. There were no prior decisions with which to be inconsistent. While the ICC had preliminarily concluded that Illinois' exemption procedures were acceptable, that determination was only one facet of a deliberative process, not a final decision of any significance. That the ICC was deliberate enough to test its preliminary conclusions by soliciting public comment and open-minded enough to respond to public comment should be commended, not penalized by according its ultimate judgment less deference. As for the contemporaneousness factor, Illinois ignores that the underlying reason for deferring to agency interpretations contemporaneous with the enactment of a statute is that the interpretation is necessary to set in smooth motion the machinery of a new statute. See Udall v. Tollman, 380 U.S. 1, 16, 85 S.Ct. 792, 801, 13 L.Ed.2d 616 (1965) (quoting Power Reactor Co. v. Electricians, 367 U.S. 396, 408, 81 S.Ct. 1529, 1535, 6 L.Ed.2d 924 (1961)). While over two years passed before the agency rendered a final interpretation of the statute governing certification, this was nevertheless the first interpretation, and the certification process was as yet "untried and new." Id.
In addition, three other factors in this case militate in favor of great deference. The agency interpretation here was "thorough"; Congress intended that the ICC's interpretation be given considerable deference inasmuch as it gave the ICC substantial discretion in administering the certification process and in defining federal "standards and procedures," and the ICC based its ruling on commercial policy considera tions that implicated the agency's expertise. See National Wildlife, 693 F.2d at 167-70 (thoroughness of agency's reasoning, intent of Congress to grant agency substantial discretion in administering a statute, and extent to which agency's interpretation is infused with the agency's expertise are factors justifying great deference). In sum, Illinois has failed to demonstrate any convincing reason to abandon in this case the general rule that an agency's interpretation of the statute it administers must be accorded substantial deference.
Intervenor NARUC, however, offers a forceful, but ultimately unpersuasive, alternative reason for not according the ICC's decision substantial deference. Citing North Carolina v. United States, 325 U.S. 507, 511, 65 S.Ct. 1260, 1263, 89 L.Ed. 1760 (1945), NARUC contends that where an agency decision preempts State regulation of intrastate commerce, a strict standard of review is required. "A scrupulous regard for maintaining the power of the state" in the field of intrastate commerce "has caused this Court to require that Interstate Commerce Commission orders giving precedence to federal rates must meet 'a high standard of certainty.' Illinois Central R. Co. v. Public Utilities Commission, 245 U.S. 493, 510 [38 S.Ct. 170, 176, 62 L.Ed. 425] [(1918)]." Id. Because the ICC's action preempted the State's traditional regulatory power, "justification for the 'exercise of the federal power must clearly appear.' Florida v. United States, 282 U.S. 194, 211-12 [51 S.Ct. 119, 123-24, 75 L.Ed. 291] [(1931)]." Id.
NARUC errs in characterizing the North Carolina decision as governing the standard of review of agency decisions. Rather, that decision simply enunciated a well-established rule of statutory construction: the "clear statement" rule. That rule provides that a "court cannot find a federal law preempts state regulation of an activity historically regulated by the states, unless Congress has given a 'clear statement' of its intent to preempt." Texas v. United States, 730 F.2d 339, 347 (5th Cir.1984) (citing Jones v. Rath Packing Co., 430 U.S. 519, 525, 97 S.Ct. 1305, 1309, 51 L.Ed.2d 604 (1977)); see generally L. Tribe, American Constitutional Law § 6-25 (1978). Where an agency interprets the statute in the first instance, as is the case both here and in North Carolina, the rule simply requires the agency to determine that "justification for the 'exercise of the Federal [preemptive] power . clearly appear[s].' " North Carolina, 325 U.S. at 511, 65 S.Ct. at 1263. What standard of review to apply to this determination is an entirely separate question, about which North Carolina is completely silent. We need not decide what that standard of review should be since we find, as the Fifth Circuit did in Texas, 730 F.2d at 347-48, that Congress' intent to preempt State power is unmistak able. The Conference Committee stated that the Act "preempts state authority over rail rates, classifications, rules, and practices." H.R.Conf.Rep. No. 1430, at 106, 1980 U.S.Code Cong. & Ad.News at 4138. This is the kind of "clear statement" that overcomes the rule's presumption that Congress did not intend to assert the full measure of its commerce clause and supremacy clause power to preempt State regulations. We hold that great deference is owed the ICC's decision below. We therefore must affirm the order unless the ICC rendered an unreasonable interpretation of the Act.
B. Reasonableness of the Agency's Interpretation
The railroads urged the ICC to hold that exemption decisions as well as all other ICC decisions that fix policy are themselves federal standards and procedures that States are bound to apply. Illinois argued that only the criteria used to reach an exemption decision are federal standards and procedures, and, therefore, the States are bound only to apply that criteria in an independent determination of whether to grant an intrastate exemption. The ICC chose a middle course. The ICC reasoned that the Act did not require the States "to follow each Commission regulation and every Commission precedent in all subject matters." Ex. Parte No. 388 (Jan. 27, 1983), 367 I.C.C. at 150. The ICC was concerned, however, that the States comply with the underlying policies of the Act. Id. at 151. Because the exemption statute was "such a significant aspect of the Staggers Act," and because continued State regulation would frustrate federal deregulation efforts pursuant to an exemption order, the ICC concluded that an exemption order was a federal standard and procedure that bound the State regulators. Id. at 153. We believe this was a reasonable interpretation of the Act.
We need not review the wisdom of refusing to adopt the railroads' broad interpretation of what constitutes binding "standards and procedures." The only issue before us is whether "standards and procedures" should be interpreted broadly enough to include federal exemptions. We note, however, that two circuits have adopted the broad reading urged by the railroads and that their reasoning would a fortiori support our narrower holding with respect to exemptions. See Wheeling-Pittsburgh v. ICC, 723 F.2d 346, 354-55 (3d Cir.1983); Illinois Central Gulf R. Co. v. ICC, 702 F.2d 111, 115 (7th Cir.1983).
Deregulation and modernization of the regulations that were retained are the ethos of the Act. Congress found that both overregulation and regulation based on antiquated premises had caused the "financial plight" of the railroad industry. The statutory vehicle for deregulation was the exemption process:
The conferees anticipate that through the exemption process the Commission will eventually reduce its exercise of authority to instances where regulation is necessary to protect against abuses of market power where other Federal remedies are inadequate for this purpose. Particularly, the conferees expect that as many as possible of the Commission's restrictions on changes in prices and services by rail carriers will be removed and that the Commission will adopt a policy of reviewing carrier actions after the fact to correct abuses of market power.
H.R.Conf.Rep. No. 1430 at 105, 1980 U.S. Code Cong. & Ad.News at 4137.
Here, the ICC found that retention of State regulations despite a federal exemption would defeat the federal policy of easing regulatory restrictions on the economic behavior of railroads. The ICC recognized that unique State conditions could conceivably justify State regulation despite a federal exemption. But, in the expert judgment of the ICC, such an occurrence would be exceedingly rare and could best be addressed by federal authorities when framing or modifying the federal exemption. See Ex Parte No. 388 (Jan. 27, 1983), 367 I.C.C. at 154.
In view of the overriding importance of the exemption provisions, it was reasonable for the ICC to conclude that the statute required States to give immediate and automatic effect to federal exemptions. Congressional findings supported the ICC's judgment that continued regulation by States could subvert a federal effort of deregulation through an exemption. Even if the States eventually granted an exemption, the continued application of State regulations in the interim would tax the railroads' resources. Indeed, Congress found that disparate treatment of railroads by federal and State regulations, in particular the delay in rate increases caused by the intervention of State regulation, had in the past cost the railroads $400 million in additional revenue.
Illinois contends that it has a statutory entitlement to render an independent exemption decision. We are unable to discern such an entitlement from either the text or policy of the Act. First, it must be stressed that no State commercial interests are prejudiced by the ICC's decision. The reason that the ICC has jurisdiction to regulate intrastate rail traffic to begin with is that such traffic is part and parcel of a larger system of interstate rail traffic. It is in keeping with the realities of the marketplace to regulate rail traffic as an interstate system; the geographical boundaries of the States in this regard are economically artificial. In considering an exemption, the ICC will give proper heed to intrastate conditions, but in keeping with economic realities it will consider those State conditions as only one facet of a cohesive interstate network. This, in addition to the ICC's willingness to modify exemptions to accommodate special circumstances shown by States, persuades us that no legitimate State commercial interests will be prejudiced.
Second, Illinois ignores that it has been preempted from asserting jurisdiction over intrastate rail commerce. To be sure, the House of Representatives rejected an earlier version of the bill that would have completely precluded States from asserting any jurisdiction over intrastate rail rates. Nevertheless, the certification process accords States jurisdiction only as a matter of legislative grace and essentially requires the States to act as regulatory agents of the federal government insofar as they must regulate according to federal standards and procedures. We fail to see how the very limited regulatory role accorded the States justifies an independent State exemption procedure that the ICC has found to frustrate an overriding purpose of the Act: deregulation through the exemption process.
Indeed, even if section 214(b) of the Act can be read to confer some entitlement on the part of the States to render an independent exemption decision, we note that the plenary nature of the exemption statute would allow the ICC to exempt railroads from the application of that section — if it made the two necessary findings. Section 213 of the Act allows the ICC to exempt a railroad from the application "of a provision of this subtitle" where that application is (1) not necessary to carry out the transportation policy of the Transportation Title of the U.S. Code and (2) where the rail traffic is of limited scope or where the application of the provision is not necessary to protect shippers from the abuse of market power. The "subtitle" referred to is Subtitle IV, which governs interstate commerce and, of course, includes the certification procedures of section 214.
In sum, given the importance of the exemption procedures and the support for the ICC's judgment that the smooth and effective operation of those procedures would be threatened by independent State exemption procedures, we hold that the ICC reasonably interpreted the Act when it found that a federal exemption decision is a federal "standard and procedure" to which States must defer. We do not reach the question, thus far addressed by two circuits, of whether all other ICC decisions and rules should also be considered standards and procedures binding on the States.
IV
Illinois and amicus challenge the constitutionality of the ICC's order requiring Illinois to adopt federal exemptions. Specifically, amicus contends that the federal commerce clause power is not sufficiently broad to permit this preemption of State authority to regulate intrastate trade. Amicus and Illinois both contend that the ICC's order circumscribed State sovereign ty in violation of the tenth amendment, as interpreted in National League of Cities v. Usery, 426 U.S. 833, 96 S.Ct. 2465, 49 L.Ed.2d 245 (1976). We find both contentions to be without merit.
We agree with the Fifth Circuit that the certification procedures of section 214 of the Act are facially constitutional. Texas, 730 F.2d 339. As for the limits imposed by the commerce clause, it is well-established that Congress may regulate intrastate rail traffic where that traffic substantially affects interstate commerce by virtue of its being part of an interstate rail network. E.g., Shreveport Rate Cases, 234 U.S. at 350-53, 34 S.Ct. at 835-37; cf. Wickard v. Filburn, 317 U.S. 111, 127-28, 63 S.Ct. 82, 90-91, 87 L.Ed. 122 (1942) (purely intrastate activity may be regulated by Congress if the cumulative effect of the activity substantially affects interstate commerce). Courts must uphold legislation where there is any rational basis to support Congress' finding that the regulated activity substantially affects interstate commerce and where there is a reasonable connection between the regulatory means selected and the asserted ends. Texas, 730 F.2d at 348 (citing Hodel v. Indiana, 452 U.S. 314, 323-24, 101 S.Ct. 2376, 2382-83, 69 L.Ed.2d 40 (1981); Hodel v. Virginia Surface Mining & Reclamation Ass'n, 452 U.S. 264, 276, 101 S.Ct. 2352, 2360, 69 L.Ed.2d 1 (1981); Heart of Atlanta Motel, Inc. v. United States, 379 U.S. 241, 258, 85 S.Ct. 348, 358, 13 L.Ed.2d 258 (1964)). Here, congressional hearings and investigations produced substantial evidence to show (1) the decline of the railroad industry and (2) the comparative overregulation, by State and federal authorities, of that mode of transportation. It was rational for Congress to conclude that there was a causal connection between the two and to prescribe deregulation of intrastate trade as a cure for the substantial negative effect on interstate commerce. The State certification process was a reasonable means to achieve deregulation. By reforming federal standards and procedures and then requiring States to adhere to them, Congress was able to deregulate on both the interstate and intrastate level.
As for the tenth amendment challenge, that amendment, and the Usery holding, are not implicated unless the challenged statute regulates "States as States." Texas, 730 F.2d at 353 (citing EEOC v. Wyoming, 460 U.S. 226, 237, 103 S.Ct. 1054, 1061, 75 L.Ed.2d 18 (1983)). Federal legislation that preempts State regulation of private activities, such as railroads, does not regulate "States as States." Id. at 357 (citing Hodel, 452 U.S. at 288, 101 S.Ct. at 2366). Therefore, the tenth amendment is violated only if the State is compelled to administer federal law with respect to the regulated private activity. Id. at 356. Sec tion 214 of the Act does not compel States to adopt federal standards and procedures; States have the option to forego any regulation by refusing to petition for certification. Id. at 357. Congress, could have constitutionally preempted all State regulation of intrastate traffic. We fail to see why the Act should become constitutionally flawed simply because Congress chose to allow the States a narrowly-circumscribed regulatory role. Hodel, 452 U.S. at 290, 101 S.Ct. at 2367 (applying precisely the same reasoning to a similar statutory framework governing surface mining).
Nor have appellants demonstrated any reason for holding section 214 unconstitutional as applied in this case. As for the commerce clause, it suffices to state that defining exemptions as a federal "standard and procedure" was a reasonable means to facilitate deregulation on the federal and State levels. As for the tenth amendment, we see nothing inherent in the intrastate exemption process that makes its preemption a regulation of "States as States."
y
In sum, we hold that (1) the decision below was a final, appealable order; (2) the decision below must be accorded substantial deference and enforced if it was a reasonable interpretation of the Act; (3) the ICC reasonably interpreted the Act when it found that a federal exemption decision is a "standard and procedure" to which States must defer; (4) the certification procedures of the Act are facially constitutional; and (5) the certification procedures as applied here — specifically the modification of Illinois' proposed regulations to require automatic adoption of federal exemptions — were constitutional.
Accordingly, the ICC's order is affirmed.
. See H.R.Rep. No. 1035, 96th Cong., 2d Sess. 34, reprinted in 1980 U.S.Code Cong & Ad.News 3978, 3979. This financial plight was manifested by an anticipated capital shortfall of between sixteen and twenty billion dollars by 1985 and a poor rate of return on equity when compared to other major modes of transportation. Id. at 34-36, 1980 U.S.Code Cong. & Ad.News at 3979-81.
. Congress found that while regulation had been essential to prevent the abuse of monopoly by railroads earlier in the century, the competition provided by the rise of other modes of transportation rendered the old regulatory framework antiquated and inefficient. See Staggers Rail Act § 2(1) — (5). Indeed, a "significant reason" for the decline of the industry was the "inflexibility" of the existing regulation. See H.R.Rep. No. 1035 at 38, 1980 U.S.Code Cong. & Ad.News at 3983. Furthermore, regulation, however enlightened, itself adversely affected the ability of railroads to compete with substantially unregulated or deregulated modes of transportation. See id. at 115, 1980 U.S.Code Cong. & Ad.News at 4059.
.Finding a need for the "modernization of economic regulation of the railroad industry," Staggers Rail Act § 2(9), Congress gave the railroads substantially more freedom to set rates. Specifically, the ICC was given jurisdiction to review the reasonableness of rates only where a rail carrier had market dominance and the rate exceeded the applicable revenue-variable cost percentage threshold. See id. § 201-09; H.R. Conf.Rep. No. 1430, 96th Cong., 2d Sess. 79-80, reprinted in 1980 U.S.Code Cong. & Ad.News, 4110, 4111-12. In addition, the new regulatory framework "affirmatively encourage[d] railroads to use new marketing practices by permitting contracts between carriers and shippers; permissive limited liability rates; business entertainment expenses; efficient marketing through faster implementation of rates; and premium charges to encourage better car utilization," H.R.Conf.Rep. No. 1430 at 80, 1980 U.S. Code Cong. & Ad.News at 4111-12, and provided for new accounting and reporting systems, see Staggers Rail Act § 301-03.
. The Act preempted State regulation of intrastate rail commerce by stating:
A State authority may only exercise jurisdiction over intrastate transportation provided by a rail carrier providing transportation subject to the jurisdiction of the Commission under subchapter I of chapter 105 of this title if such State authority exercises such jurisdiction exclusively in accordance with the provisions of this subtitle.
Staggers Rail Act § 214(b) (codified at 49 U.S.C. § 11501(b)(1)). To the extent that the ICC does not have jurisdiction to begin with — e.g., to the extent that the relevant aspect of intrastate commerce does not cause sufficient interstate effects to be deemed "interstate commerce" within the meaning of the commerce clause — the State does, of course, have plenary power to regulate.
. A denial of certification vested the ICC with plenary jurisdiction to regulate the intrastate commerce of the uncertified State. See Staggers Rail Act § 214(b) (codified at 49 U.S.C. § 11501(b)(4)). Once certified, a State could not change its certified standards and procedures without the express permission of the ICC. Id. § 214(b) (codified at 49 U.S.C. § 11501(b)(5)(B)).
. Notwithstanding any other provision of this subtitle, a State authority may not exercise any jurisdiction over general rate increases under section 10706 of this title, inflation-based rate increases under section 10712 of this title, or fuel adjustment surcharges approved by the Commission." Id. at § 214(b) (codified at 49 U.S.C. § 11501(b)(6)). Cf. Indianapolis Power & Light Co. v. ICC, 687 F.2d 1098, 1100 n. 2 (7th Cir.1982) (interpreting meaning of "general rate increases").
. Presumably, a rail carrier aggrieved by the State's exemption decision would invoke the ICC's jurisdiction by petitioning the ICC to review that decision "on the grounds that the standards and procedures applied by the State were not in accordance with the provisions of this subtitle," pursuant to 49 U.S.C. § 11501(c).
. As in National Wildlife, 693 F.2d at 168-69, we find nothing in the record to show that the agency's decisionmaking process has been inadequate in this instance. The ICC's deliberative process began with a determination that the State's proposals required more specificity. When Illinois resubmitted its proposal, the ICC tentatively approved it pending public comment. After reviewing the comments of the railroads, the ICC rendered a final decision that analyzed both the language and policies behind the statute.
. The Act provides:
. [T]he Commission shall certify such State authority for the purposes of this subsection if the Commission determines that such standards and procedures are in accordance with dle standards and procedures applicable to regulation of rail carriers by the Commission under this title. If the Commission determines that such standards and procedures are not in such accordance, it shall deny certification to such State authority, and such State authority may resubmit new standards and procedures to the Commission for review in accordance with this subsection.
Staggers Rail Act § 214(b) (codified at 49 U.S.C. § 11501(b)(3)(A)). Such a broad delegation of power to the ICC to interpret the standards and procedures required by Title 49 of the U.S. Code indicates that Congress intended the ICC's interpretation of that title to be accorded substantial deference.
. The underlying reason for deference to agency interpretations is that agencies possess special expertise. Where the agency's interpretation is based on its scientific expertise or its unique ability to assess the policies with which it must grapple on a day-to-day basis, then the interpretation manifests an expertise to which courts must defer; where the interpretation rests not on policy considerations but on a narrow dissection of statutory language, the courts are equally skilled in making such an interpretation, and reduced deference is owed. National Wildlife, 693 F.2d at 169-70.
Here the ICC based its decision on policy considerations: "Based upon the goals of the Staggers Act, the rail transportation policy, and serious practical considerations, we conclude that, once a particular category of traffic is exempted by the Commission, this becomes a standard from which States cannot deviate____" ' Ex Parte No. 388 (Jan. 27, 1983), 367 I.C.C. at 152. Because this conclusion required the agency to exercise its expert knowledge of commercial policy, an area in which the agency possesses a comparative advantage vis-a-vis the courts, this court should accord substantial deference to the agency's interpretation.
. We therefore disagree with the Third Circuit's suggestion that North Carolina, 325 U.S. at 511, 65 S.Ct. at 1263, requires that ICC orders preempting State regulatory power be subjected to a more rigorous standard of review. Wheeling-Pittsburgh Steel Corp. v. ICC, 723 F.2d 346, 351 (3d Cir.1983). But see infra note 12 (an argument can be made, on grounds unrelated to those expressed in Wheeling-Pittsburgh, that a rigorous standard of review should be applied to agency findings with regard to the clear statement rule).
. Where the reviewing court would reach the same conclusion as the agency reviewed had the court been able to decide the issue in the first instance, the standard of review issue is moot. The standard of review is in essence a measure of the willingness of courts, for a variety of institutional reasons, to defer to the resolution of issues it may have decided differently in the first instance. In the instant case, we agree that Congress clearly stated its preemptive intent, and therefore there is no reason to assess the extent to which we would be willing to affirm an agency decision we disagreed with.
We note, however, that in National Wildlife, 693 F.2d at 170, we stated that "deference is not a unitary concept, to be applied with equal force to all issues in a case." Given the comparative competence of the court to assess preemptive intent, it is possible that the "clear statement" issue should be reviewed with less deference than other issues in the case.
. The clear statement rule simply requires the agency to presume that Congress intended no preemption. See L. Tribe, supra, at § 6-25. That presumption is easily rebutted where Congress expressly states that it intends preemption.
It is true that Congress did return some regulatory power to States that could persuade the ICC to certify their regulations as in compliance with federal standards and procedures. There is no reason to reapply the clear statement rule to the ICC's certification decisions. There can be no question that Congress clearly intended to preempt State authority subject to the ICC's decision, in the exercise of its sound discretion, to certify State standards and procedures. See supra notes 4-6 and accompanying text. We agree with the Third Circuit's suggestion, however, that the ICC should clearly state its reasons for denying certification. See Wheeling-Pittsburgh, 723 F.2d at 353.
. See supra notes 1-4 and accompanying text.
. See supra text accompanying notes 3-4.
. The ICC noted that if State conditions were exceptional enough to warrant retention of intrastate regulations despite the federal exemption, the ICC could restructure the exemption order accordingly. Ex Parte No. 388 (Jan. 27, 1983), 367 I.C.C. at 154. The ICC further stated that it would entertain State petitions to so modify exemptions. Id.
. See supra notes 4-6 and accompanying text.
. See H.R. 7235, 96th Cong., 2d Sess. § 210, 126 Cong.Rec. 18287 (1980). In order to "achieve a better balance between Federal regulation and State regulation," Congressman Broyhill offered an amendment substantially similar to the certification provisions eventually enacted. See 126 Cong.Rec. 18298 (1980). The balance struck by Congress, however, accorded the States a distinctly junior role in the regulatory scheme. See infra note 19 and accompanying text.
. See supra notes 4-6 and accompanying text.
. Staggers Rail Act § 213 (codified at 49 U.S.C. § 10505).
. Congress intended that exemption authority would be invoked frequently and would be applied to a broad range of statutory regulations. See supra text accompanying notes 14-15. Congressman Staggers stressed the breadth and importance of the exemption provisions:
The exemption authority has been carefully drafted to limit regulation to the bare essentials necessary to protect against abuses of market power. It is the intent of the conference committee that this standard would permit the exemption of any provision in the act, except as specified in the exemption section.
126 Cong.Rec. 28431 (1980) (remarks of Rep. Staggers) (emphasis added). Therefore, exemption authority is sufficiently plenary to allow the ICC to exempt railroads from the application of certification authority itself.
Of course, one of the findings necessary to support such an exemption is that the provision is "not necessary to carry out the transportation policy" of the Act. Staggers Rail Act § 213 (codified at 49 U.S.C. § 10505(a)(1)). One of the policies of the Act is to "cooperate with the States on transportation matters." Id. at § 101(a) (codified at 49 U.S.C. § 10101a(9)). Therefore, in exempting State certification authority, the ICC would have to balance this policy goal against the many other policy goals of the Act — e.g., "to allow, to the maximum extent possible, competition and the demand for services to establish reasonable rates for transportation by rail." Id. at section 101(a) (codified at 49 U.S.C. § 10101a(1)). Inasmuch as cooperation with the States is not subverted by exempting just one aspect of regulation — exemption hearings — the ICC could probably legitimately conclude that other policy goals of the Act are controlling.
.See Wheeling-Pittsburgh, 723 F.2d at 354-55; Illinois Central Gulf R. Co., 702 F.2d at 115.
.In distinguishing between the constitutional prerogatives of the ICC and Congress, Illinois appears to raise a third constitutional issue: that of overbroad delegation. See Appellant's Reply Brief at 9-10. The delegation of authority to the ICC to determine whether State agencies complied with federal standards and procedures was not the kind of "standardless" delegation of power proscribed by principles of separation of powers. See, e.g., American Power & Light Co. v. SEC, 329 U.S. 90, 67 S.Ct. 133, 91 L.Ed. 103 (1946). Congress expressly stated that federal standards and procedures must be defined in accordance with the provisions of the transportation title of the U.S. Code. See Staggers Rail Act § 214(b) (codified at 49 U.S.C. § 11501(b)(3)(A) ("the Commission shall certify [States] . if [it] . determines that [the proposed] . standards and procedures are in accordance with the standards and procedures applicable to regulation of rail carriers by the Commission under this title"). We believe the intricacies of the text and policy of the transportation code provide adequately intelligible standards to guide the ICC in its exercise of delegated power.
. Illinois contends that the rational basis test applies only to Congress, not to agencies. Appellant's Reply Brief at 9. Illinois is correct only insofar as it suggests that agencies require "express or implied authorization from Congress." Id. But this is a statutory issue that we have already decided. Having concluded that the ICC acted in accordance with the statute, the question then becomes whether Congress had a rational basis for authorizing the ICC's action. In short, Illinois confuses the statutory issue with the constitutional one.
. See supra notes 1-6 and accompanying text. Accord Texas, 730 F.2d at 349.