Court Opinion

ID: 9478686
Source: CourtListenerOpinion
Date Created: 2023-08-05 06:54:52.730455+00
Date Added: 2024-06-11T17:46:33.297782
License: Public Domain

PATRICK E. HIGGINBOTHAM,
Circuit Judge, concurring in part and dissenting in part:
I join the panel majority with respect to the jurisdictional and procedural issues addressed in Parts I — III of the court’s opinion. I also agree with much of what the majority says about the standard of review appealable to the ICC’s ruling, and about *1562the reasonableness of that ruling. Ultimately, however, I believe that the ICC’s construction of the law twists precedent unreasonably. Indeed, at crucial junctures the ICC’s interpretation of the Motor Carrier Act contradicts itself. The consequence of the ICC’s ruling is an unjustified derogation from the federal division of regulatory power envisioned by Congress. For that reason, I dissent from Part IV of the majority opinion.
A. Standard of Review
The substantive issues in this case turn upon the meaning of 49 U.S.C. § 10521. Under 49 U.S.C. § 10521(a)(1)(A), the Interstate Commerce Commission “has jurisdiction over transportation by motor carrier ... to the extent that passengers, property, or both, are transported by motor carrier between a place in a State and a place in another State.” The ICC also has regulatory authority over motor carrier transportation of property “between a place in a State and another place in the same State through another State,” 49 U.S.C. § 10521(a)(1)(B), but the ICC’s authority to regulate interstate commerce does not, with some specified exceptions, “affect the power of a State to regulate intrastate transportation provided by a motor carrier.” 49 U.S.C. § 10521(b)(1).
The parties agree that Reeves holds a nationwide general commodity authority license issued by the ICC, and that Reeves may legitimately engage in the contested transportation if that transportation is in interstate commerce for purposes of 49 U.S.C. § 10521. The crucial question is whether the warehouse-to-destination leg of the carpet’s journey may be integrated into the longer Georgia-to-Texas leg of the journey.
As the majority correctly observes, the general legal rules governing this issue are clear. The determination of whether a movement between two points in a single state is in interstate commerce, and so subject to ICC regulation, depends on the essential character of the shipment. The shipper’s fixed and persisting intent at the outset of the transportation is the crucial factor in determining the character of a particular shipment. Baltimore & O.S.W.R. Co. v. Settle, 260 U.S. 166, 170, 43 S.Ct. 28, 67 L.Ed. 189 (1922). The parties dispute both the applicable standard of review and whether E & B has the requisite “fixed and persisting intent” to convert the Arlington-to-customer trips into interstate commerce.
The formula fixing our review of administrative decisions is a familiar one. “We may not set aside the Commission’s decision unless it exceeds statutory authority or is ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.’_ Even if an agency’s interpretation would not be the one we would adopt if looking at a statute completely afresh, we ordinarily accept that agency’s interpretation of its own statute if the interpretation ‘has a reasonable basis in law.’ ” American Trucking Ass’ns, Inc. v. I.C.C., 722 F.2d 1243, 1247-48 (5th Cir.1984), cert. denied, 469 U.S. 930, 105 S.Ct. 324, 83 L.Ed.2d 261 (1984).
The I.C.C. contends that because the Commission decision appealed from construes an operating certificate issued by the Commission, we should apply an especially deferential standard of review in this case. See, e.g., Jenkins Truck Line, Inc. v. United States, 318 F.Supp. 207, 209-10 (S.D.Iowa 1970) (three judge court) (deferring to ICC’s construction of an ICC certificate). It is true that the ICC’s declaratory order construes the scope of Reeves’ operating certificate. Because Reeves has a general certificate permitting it to engage in interstate trucking, however, the ICC’s order rests upon a construction of the Commission’s own jurisdiction. In this case, unlike in Jenkins, the Commission interpreted 49 U.S.C. § 10521, rather than more particular terms included by the Commission in the Reeves operating certificate.
Nonetheless, some deference is due the Commission’s decision despite our determination that the order appealed from construes 49 U.S.C. § 10521. According to the Supreme Court’s opinion in Chevron U.S.A., Inc. v. Natural Resources Defense, 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 *1563we must honor the agency’s interpretation of its statute so long as that interpretation is a reasonable one. We must uphold Congressional intent when that intent is clear, but in the absence of such clear intent, a court should “not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.” Id. 104 S.Ct. at 2781-82 (footnotes omitted). See also Commodity Futures Trading Commission v. Schor, 478 U.S. 833, 106 S.Ct. 3245, 3254-55, 92 L.Ed.2d 675 (1986).
No clear Congressional intention lights our path in this case. I therefore agree with the majority that we need consider only whether the ICC’s interpretation of its jurisdiction is a reasonable one. See supra, p. 1556 & n. 8. In doing so, we benefit from the guidance of several past decisions, by both courts and the agency, applying the Motor Carrier Act to hub-and-spoke distribution systems. Because the agency purports to follow, rather than depart from, earlier judicial and administrative constructions of the Act, we need not decide whether the ICC might reasonably reject interpretations which federal courts have applied in the past. See Chevron USA, 104 S.Ct. at 2792 (agency not bound by interpretations which it, or the Court of Appeals, adopted in the past); Sckor, 106 S.Ct. at 3254-55. We need only determine whether the proffered interpretation of the “hub-and-spoke” precedents, and the statute they construe, is reasonable.
B. The Agency’s General Theory
Determination of a shipper’s “fixed and persisting intent” depends upon an assessment of “all the facts and circumstances surrounding the transportation.” The ICC’s interpretation of the “hub-and-spoke” cases gives great weight to two factors. The first factor is whether the shipper makes use of a transit privilege, such as the storage-in-transit provision in Reeves’ tariff, designating the shipment as a unified, interstate journey. “The existence of a transit privilege under which the traffic moves, though not dispositive of the issue, is a strong indication of the through character of a movement, and it diminishes the significance of [other] factors.” Armstrong World Industries, Inc. — Transportation within Texas, 2 I.C.C.2d 63, 69 (1986). The second factor is whether the shipper commingles interstate and intrastate goods at the hub. A shipper’s control over a hub warehouse will not cancel the effect of a transit privilege so long as the shipper has “no opportunity to commingle local and interstate freight.” 2 I.C.C.2d at 73.
This general theory makes good sense of the law. The interpretation fits well with the “fixed and persisting intent” test. When a shipper identifies goods, at the time of a shipment, as destined to cross state lines, wait at a central warehouse, and then proceed onward to a further destination, that is certainly a strong indication that the shipper has a “fixed and persisting intent” to transport the goods in interstate commerce beyond the warehouse. The transit privilege effectively testifies to the shipper’s intent. That testimony, however, would be of little import if the shipper, taking advantage of its control over the hub warehouse, simply sold some of the carpet right at the warehouse. If the shipper regularly made such sales, the shipper could hardly have a “fixed and persisting intent” to ship the carpet beyond the warehouse: these later shipments would be contingent upon the shipper’s inability to find a buyer at the warehouse. Together, the ICC’s two factors give great weight to the shipper’s contemporaneous declaration of its intent, except when the shipper’s conduct is inconsistent with that intent.
The cases relied on by the parties challenging the ICC position can be reconciled with the ICC’s general interpretive principles. In Atlantic Coast Line Railroad v. Standard Oil of Kentucky, 275 U.S. 257, 48 S.Ct. 107, 72 L.Ed. 270 (1927), Standard Oil of Kentucky operated a hub-and-spoke distribution system to sell gasoline in Florida. Standard Oil of Kentucky purchased the gas from Standard Oil of Louisiana. The Louisiana company shipped the gas to *1564Port Tampa and Jacksonville in Florida, where the Kentucky company took delivery. The Louisiana company pumped the gas into large storage facilities maintained by the Kentucky company at Port Tampa and Jacksonville. The Kentucky company would then deliver gas from the storage facilities to bulk stations throughout Florida, and from those stations to retailers and consumers. The Atlantic Coast Line, which carried gas from the Port Tampa and Jacksonville facilities to the bulk stations, sought to charge intrastate rates for those shipments. Standard Oil of Kentucky sued in district court to force the railroad to accept interstate rates.
The Supreme Court held that the contested shipments from the hub to the bulk stations were intrastate in character. The Louisiana company, which shipped the gas to Florida, delivered the gas when it reached the ports. The Louisiana company had no intent to ship the gasoline beyond the Port Tampa and Jacksonville facilities; the subsequent shipments were the business of the Kentucky company. Moreover, the gasoline did not travel pursuant to any transit provision. Because there was no transit privilege, and because the shipper sold the gas when it reached the hub, the Supreme Court’s holding is consistent with the two-factor test outlined above.
Nor is Chicago, Milwaukee & St. Paul Ry. v. Iowa, 233 U.S. 334, 34 S.Ct. 592, 58 L.Ed. 988 (1914), relied on by the Atlantic Coast Court, inconsistent with the ICC’s rule. That case arose out of a hub-and-spoke system operated by Clark Coal and Coke Company. The Clark Company shipped coal from Illinois to Davenport, Iowa, via the Rock Island and Burlington railways. In Davenport, the Clark Company transferred some Rock Island and Burlington cars to an interchange track, and asked the Chicago, Milwaukee & St. Paul railway to haul the cars to consumers elsewhere in Iowa. The Milwaukee & St. Paul company refused, insisting that the coal first be unloaded into Milwaukee & St. Paul rail cars. The Clark Company sought and obtained an order from the Iowa State Railroad Commission compelling the Milwaukee & St. Paul Company to accept the Rock Island and Burlington cars. The state of Iowa then sued in state court to enforce the Commission’s order. The defendant railroad appealed, eventually to the United States Supreme Court, arguing, among other things, that the State Commission lacked jurisdiction because the coal was in interstate, not intrastate, commerce. The railroad claimed that the use of the Davenport hub, and the change of carriers at that point, was simply a device designed to obtain the benefit of intrastate rates, which in this instance were lower than the interstate alternative, for the final portion of the journey.
The Court upheld the decisions of the Iowa courts and agency. The Court drew attention to the findings of the Iowa adjudications, which concluded in part that the
certainty in regard to the shipments of coal ended at Davenport. The point where the same was to be shipped beyond Davenport, if at all, was determined after the arrival of the coal at Davenport. The coal was under the control of the consignee and he could sell it in transit or at Davenport or reconsign it to a point on respondent’s railway, or any other railway, at his own discretion. ... The [Iowa] court said that the facts showed the coal was originally consigned to the coal company in Davenport, that it was there held until sales were made, that the consignee had taken delivery, paying the freight to the initial carrier and assuming full control.
233 U.S. at 342-43, 34 S.Ct. at 594 (emphasis added). The Chicago, Milwaukee Court is less clear than the Atlantic Coast Court about whether the source-to-hub and hub-to-spoke movements involved a different shipper. Compare 233 U.S. at 340, 34 S.Ct. at 593 (“The Clark Coal & Coke Company ... have been making shipments from ... Illinois to Davenport_”) with 233 U.S. at 343, 34 S.Ct. at 594 (“the coal was originally consigned to the coal company at Davenport”). However, the factual determinations accepted by the Chicago, Milwaukee Court make clear that the coal might have been, and perhaps sometimes was, sold at Davenport, the hub point. *1565Any further shipment was contingent upon the absence of a willing buyer at Davenport. Coal destined for further transport was commingled at the hub with coal destined or available for sale at Davenport. The Supreme Court’s decision holding that the coal moved in intrastate commerce when it left Davenport is thus again consistent with the ICC’s interpretation of the Motor Carrier Act.
The ICC’s rule is likewise consistent with Southern Pacific Transportation Co. v. ICC, 565 F.2d 615 (9th Cir.1977). In that case, Del Monte shipped canned goods from California processing plants to a hub warehouse in Stockton, California. After arriving in Stockton, some goods were shipped to California destinations, while others were shipped across state lines. All of the goods travelled to the hub from the processing plants pursuant to transit privileges which enabled Del Monte to ship the goods according to the lower through rate if the goods were shipped across state boundaries. The ICC prohibited some small carriers, employed by Del Monte to transport goods on the plant-to-hub journey, from continuing to provide those services. The carriers lacked interstate operating authority, and the ICC determined that because the goods moved under the transit privilege, the goods were in interstate commerce even though the plant-to-Stockton trip took place entirely within California.
The Ninth Circuit set aside the ICC’s order, stressing that no “fixed and persisting intent” to put the goods into interstate commerce existed before the goods arrived at the hub warehouse, since interstate and intrastate goods were commingled at the hub. “Inasmuch as it cannot be determined whether goods are committed to interstate or foreign commerce until they are shipped from the warehouse, the Commission’s decision would lead to retroactive imposition of its jurisdiction, turning on whether particular goods are committed to interstate or foreign commerce upon subsequent shipment.” 565 F.2d at 620. This rule accords with the ICC interpretation sketched above: when interstate and intrastate commerce are commingled at the hub warehouse, there can be no fixed and persisting intent to ship beyond the hub. Indeed, the second of the two constituent factors we have identified derives from the ICC’s discussion of Southern Pacific. See 2 I.C.C.2d at 72.
The ICC’s reading of these cases is of course not the only possible one. The Atlantic Coast opinion, for example, includes the broad statement that the
important controlling fact in the present controversy, and what characterizes the nature of the commerce involved, is that the plaintiff’s whole plan is to arrange deliveries of all its oil purchases on the seaboard of Florida so that they may all be there stored for convenient distribution in the state to the [bulk stations and consumers].
275 U.S. at 269, 48 S.Ct. at 110-11. The Southern Pacific opinion suggests that the shipper’s control of the hub warehouse may in and of itself negate the possibility of a “fixed and persisting intent” to ship the goods beyond the warehouse. 565 F.2d at 618. By focusing on these passages, together with the holding in Chicago, Milwaukee, it would be possible to construct an interpretation according to which a transit privilege could not suffice to demonstrate a “fixed and persisting intent” to ship goods in interstate commerce beyond a hub warehouse if the hub was under the shipper’s control. This alternative interpretation of the case law would require us to reverse the ICC’s order.
Under the Chevron USA standard, however, we are not free to reject the ICC’s interpretation of the law merely because we prefer another, similarly reasonable interpretation. We must defer to the ICC if its interpretation is reasonable. The cases applying the “fixed and persisting intent” standard to hub-and-spoke distribution systems are complex and fact-specific. More than six decades of litigation has failed to produce a clean principle to govern these controversies. Under such circumstances, it is unsurprising that there is no single, dispositive reading of the law. As we have seen, the ICC’s interpretation of the law is in fact consistent with the cases relied on *1566by Texas and the intervenors who object to the ICC ruling. It also draws support from past agency decisions which take a similar view of storage-in-transit provisions. In Railroad Commission of Texas v. Oil Field Haulers Association, Inc., 325 I.C.C. 697 (1965), the Oil Field Haulers carried pipe into Texas and to storage yards maintained by the Haulers within Texas. The pipe was held at the yards pursuant to a storage-in-transit provision. Within two years, the Haulers would deliver the pipe to a customer somewhere in Texas. Texas sought to regulate the yard-to-customer trips, claiming that the trips were intrastate in character because entirely within Texas. Texas contended that “the shipper’s intent is to stockpile the pipe at the transit point for future sale to a consumer, whose identity is unknown at the time the pipe leaves the originating point. The whole purpose of these distribution points is to provide a concentration of goods at a central place within a local area from which goods are to be shipped as the need arises.” 325 I.C.C. at 700-01. The ICC held that the contested transport was interstate in character. The ICC reasoned that Texas had overlooked “the critical fact that this pipe is transported by defendants pursuant to the terms of the storage-in-transit provision.” See also Baltimore & O.S.W.R. Co. v. Settle, 260 U.S. 166, 171, 43 S.Ct. 28, 30, 67 L.Ed. 189 (1922) (recognizing relevance of transit privileges to determinations of intent).
C. Specific Interpretation
Our inquiry cannot, however, end here. We must determine not only whether the ICC has advanced a general theory that is reasonable, but also whether the specific interpretation relied upon in this case is likewise reasonable. I must now part company with the panel majority’s holding, for the ICC’s specific interpretation does not follow from — indeed, it contradicts — the ICC’s more general interpretive principles.
According to the fact pattern considered by the ICC, all of the carpet shipped to the Arlington hub, and later transported to Texas destinations by Reeves, moved pursuant to a transit privilege. 2 I.C.C.2d at 66, 73, 74; Docket No. MC-C-10963 at 4. Yet while a transit privilege was used, it is much less clear that the Arlington-to-customer trips are interstate in character under the second factor recognized by the ICC’s test, which requires that the shipper not commingle interstate and intrastate commerce at the hub warehouse. As the ICC itself recognized, more than six-sevenths of the carpet leaves the hub on intrastate carriers charging intrastate rates. The ICC concluded that the carpet carried by Reeves nonetheless moved in interstate commerce:
we indicated that Reeves ... is able to handle only 14 percent of the traffic moving out of Arlington. Intrastate carriers move the other 86 percent. Central argues that, because Armstrong’s intent apparently disappears on 86 percent of the traffic once it leaves Arlington, our reasoning contains a fatal inconsistency. We disagree. The fact that some shipments do not continue movement from Arlington under the transit tariff has no bearing on the shipper’s intent concerning those shipments that do continue, and it is these continuing shipments and their movement that are in issue here. At the time the carpet leaves Dalton, Armstrong clearly intends all of it to continue movement in interstate commerce from Arlington. This intent is thwarted on some traffic at Arlington due only to Reeves’ lack of sufficient equipment and to Armstrong’s inability to find other interstate carriers willing to participate. In any event, it is clear that Armstrong forms its intent at Dalton, the point of initial departure, and that this intent, through circumstances beyond Armstrong’s control, is thwarted only later on some traffic at Arlington.
No. MC-C-10963 at 4-5.
Armstrong’s “fixed and persisting” intent to ship its carpet in interstate commerce beyond the Arlington warehouse thus dissolves for some — indeed, the vast majority — of the carpet sent to the warehouse. This carpet, which Armstrong at *1567some point intends to — and does — transport in intrastate commerce, is commingled with the carpet which allegedly continues in interstate commerce. I fail to see how Armstrong can maintain a “fixed and persisting” intent to ship its carpet in interstate commerce beyond the Arlington warehouse when Armstrong so clearly changes its mind about so much of what it ships.
Nor do I comprehend the ICC’s apparent distinction between an intent that expires and an intent that persists but is “thwarted.” The ICC cites no cases to justify this distinction. It makes no sense in light of existing case law. It contradicts the ICC’s general theory of the law. Would Armstrong’s intent also be “thwarted” if an unexpected buyer — for example, a supplier, who operates his own fleet of trucks and so needs no transportation services, left without adequate stock after a labor strike at another carpet company — offered to purchase carpet at the warehouse at a price higher than other Armstrong customers would pay? The absence of a competitive buyer interested in Armstrong’s “delivered rate” program would be a “circumstance beyond Armstrong’s control.” The ICC’s test effectively eliminates the requirement that a shipper’s intent be “fixed and persisting.” The test likewise destroys the requirement of the Southern Pacific case, which limits the effect of a transit privilege upon the character of transportation in a hub-and-spoke system when the goods covered by the privilege move in both interstate and intrastate commerce after leaving the warehouse.
The dissolution or thwarting of Armstrong’s intent at the warehouse distinguishes this case from the Eighth Circuit’s recent Middlewest Motor Freight decision, 867 F.2d 458 (8th Cir.1989). The Eighth Circuit does not mention any local sales at the warehouse, any shipments via intrastate carrier, or any concept of “thwarted intent.” The ICC’s reasonable general interpretation suffices to decide Middlewest Motor Freight.
The ICC gives two deeper explanations for why some of Armstrong’s carpet leaves Arlington on intrastate carriers. First, the ICC notes that traffic in the Dallas-Fort Worth commercial zone is handled by local carriers because, although that traffic moves in interstate commerce, transit within the zone is exempt from the ICC’s economic regulation under 49 U.S.C. 10526(b). 2 I.C.C.2d at 67 & n. 5. Were this jurisdictional point the only reason for Armstrong’s recourse to intrastate carriers, I might well agree with the majority’s treatment of the ICC’s declaratory order. It would be reasonable to construe all the carpet leaving Arlington to be in interstate commerce, while recognizing that some of the carpet was not subject to the ICC’s control. Some of the carpet remaining in the Dallas-Ft. Worth area is, however, sold at the warehouse itself: the carpet’s departure occurs by “customer pick-up.” Moreover, the jurisdictional reason is not the primary one for Armstrong’s use of intrastate carriers; indeed, Reeves’ apparently carries only 14 percent of the traffic leaving Arlington for points in Texas outside the Dallas-Ft. Worth commercial zone. 2 I.C.C.2d at 67. Armstrong attributes the absence of interstate carriers willing to take these shipments to “the regulatory policy of the [Texas] Railroad Commission. Armstrong claims that, for years, the Railroad Commission has vigorously monitored transportation activities within Texas, and through innumerable enforcement proceedings, levying of fines, and a constant program of investigating carriers’ records, the Railroad Commission has created an intimidating climate in the Texas transportation industry.... [Armstrong] claims that the Railroad Commission’s regulatory policies deter interstate carriers from implementing innovative transportation services that might compete with Texas intrastate carriers.” 2 I.C.C.2d at 67.
The Texas Railroad Commission’s regulatory policies do not authorize either Armstrong or the ICC to transform what would otherwise be intrastate commerce into interstate commerce. If Texas is wrongfully regulating transportation, by exceeding its jurisdiction or by violating constitutional rights, the subjects of that regulation have a remedy before the ICC or in the federal courts. No such wrongful regulation has *1568even been alleged in this case. On the other hand, if Texas is simply regulating intrastate commerce in a manner not approved by the ICC, the ICC lacks the power to expand its jurisdiction to interfere with Texas’ regulation. Any contrary interpretation of the Motor Carrier Act would contravene the clear intent of Congress. Congress did not give the ICC a regulatory power as broad as Congress’ own power under the commerce clause. Instead, Congress explicitly preserved the power of states to regulate goods in intrastate commerce. See 49 U.S.C. § 10521(b)(1). See also Louisiana Public Service Commission v. Federal Communications Commission, 476 U.S. 355, 106 S.Ct. 1890, 90 L.Ed.2d 369 (1986) (federal agency may not expand its own jurisdiction to defeat state regulation it believes damaging when Congress has deliberately preserved a role for state regulation).
Nor do the state’s regulatory efforts trap Armstrong within a “catch-22.” True, Armstrong contends that Texan regulation deprives it of the opportunity to hire enough interstate carriers to cover its Arlington operation, and thus renders the operation intrastate and so subject to Texan regulation. But Armstrong is free to petition the ICC for a declaratory order relevant to a purely interstate delivery program which it plans to inaugurate. If Texas were to harass carriers after the ICC declared the proposed program to the interstate, that harassment would presumably be unlawful. But again, no unlawful harassment has been alleged here. Armstrong complains only that Texas exercises its power too vigorously. The statutory division of power enacted by Congress permits and even invites the states to govern vigorously.
For these reasons, any effort to distinguish “transient” intent from “persisting but thwarted” intent on the ground that Armstrong would have acted differently absent Texas Railroad Commission regulatory policies must fail. Such a distinction would ignore the clear intent of Congress. Once we reject this distinction, however, the hub-to-customer journeys appear intrastate under the rule of Southern Pacific: although the carpet travels under a transit privilege, the shipper commingles interstate and intrastate freight at the hub warehouse.
The ICC and the panel majority offer an alternative interpretation of Southern Pacific which would distinguish that case from this one. The ICC contends that in Southern Pacific the contested transport was intrastate because some of the traffic in the hub-and-spoke system never crossed a state boundary and so never entered interstate commerce, while in this case all of the traffic arriving at Arlington arrives in interstate commerce. This distinction misunderstands the analogy between the two cases. The California system is in many respects a “mirror image” of Armstrong’s Texas system. In Southern Pacific goods travel within California to the hub, and then onward, in some cases crossing state lines. In this case, goods travel across state lines, and then onward within Texas, in some cases by interstate carrier and in some cases by intrastate carrier. In both cases, the issue is the character of the transport between the hub and a point within the hub’s state. In both cases, the shipper controls the hub warehouse. In both cases, the question is whether control exercised at the warehouse will negate a transit privilege’s apparent testimony to a shipper’s intent. It simply begs the question to point out that in this case all of the goods have crossed state lines: everyone agrees that the journey to the hub is interstate in character; the question is whether the later journey from the hub — which crosses no state lines — is likewise interstate.
The Southern Pacific Court held that when the shipper decides at the warehouse whether goods will continue on in interstate or intrastate commerce, the shipper cannot have had, at the time it sent the goods to the hub, a “fixed and persisting” intent to ship the goods from the warehouse in interstate commerce. The ruling accords with common sense. And again, to adopt the interpretation proposed by the ICC would effectively eliminate the “fixed and persisting intent” requirement entirely. *1569Armstrong could ship carpet to Arlington, sell as much as it liked on the spot, ship as much as it liked on intrastate carriers, and ship what remained on interstate carriers. Armstrong’s “intent” would be a pure fiction, bearing no relation at all to the actions Armstrong takes when the carpet reaches the warehouse.
This analysis of the Ninth Circuit’s Southern Pacific decision draws additional support from a related line of cases: Texas & N.O.R.R. Co. v. Sabine Tram Co., 227 U.S. 111, 33 S.Ct. 229, 57 L.Ed. 442 (1913); Long Beach Banana Distributors, Inc. v. Atchison, T. & S.F.Ry. Co., 407 F.2d 1173 (9th Cir.1969); and Burlington Northern, Inc. v. Weyerhaeuser Co., 719 F.2d 304 (9th Cir.1983). These cases involve the relation between one transportation leg that is geographically intrastate, and a second, connecting leg moving the goods to or from a foreign country. The cases fall under 49 U.S.C. § 10501 and its statutory predecessors, of the Interstate Commerce Act, rather than the provisions at issue in this case. Nonetheless, these cases, like those discussed above, seek to determine when movement to or from a “hub” port, over a geographically intrastate route, is interstate in character. In all three cases, the shipper controlled the goods at the hub port. The holdings in the three cases rest in part upon whether the shipper had an opportunity to, or did, divert some goods into intrastate commerce at the hub. Sabine Tram, 227 U.S. at 128-29, 33 S.Ct. at 235 (distinguishing Gulf, Colorado & S.F. Ry. Co. v. Texas, 204 U.S. 403, 27 S.Ct. 360, 51 L.Ed. 540 (1907), on the ground that in Gulf Colorado the shipper could have transferred the goods to intrastate commerce at the storage point); Burlington Northern, 719 F.2d at 309-10 (distinguishing Sabine Tram and Long Beach Banana from Southern Pacific and Burlington Northern on the ground that in the latter cases the shipper sometimes diverted goods into intrastate commerce).
Because the ICC’s evaluation of Armstrong’s reliance upon interstate carriers has no basis in the ICC’s otherwise reasonable interpretation of the statute, I would reverse the ICC’s ruling in this case. The concept of “thwarted intent” invoked by the ICC to justify its conclusions is defensible, even if one accepts the ICC’s general principles. When a shipper transports goods to a hub warehouse pursuant to a transit privilege, the subsequent hub-to-customer trip is likely to be interstate in character unless the shipper commingles interstate and intrastate goods at the warehouse. Because Armstrong has done so here, the contested transport is intrastate in character.
D. Conclusion
The ICC may regulate commerce that is interstate in character. Texas may regulate commerce that is intrastate in character. The character of commerce depends upon the “fixed and persisting intent” of the shipper. The ICC reasonably interprets this rule to imply that when a shipper transports goods across state lines to a hub warehouse pursuant to a transit privilege, the later hub-to-customer transport will be interstate in character, even if it does not again cross state lines, so long as the shipper does not commingle interstate and intrastate goods at the warehouse. These reasonable principles do not help Armstrong’s cause, however, for Armstrong decides at its Arlington hub whether the carpet will continue on in intrastate rather than interstate commerce. The ICC’s more specific interpretation, holding that the traffic out of Arlington is nonetheless interstate, is indefensible.
If Texas subjects a carrier to regulatory proceedings on the basis of transport which the carrier believes to be interstate, the carrier may ask the ICC to determine the character of the contested transportation. On the other hand, the ICC may not simply expand its jurisdiction in order to undo the effects of state regulation when it disagrees with state policy. If the ICC attempts to do so, we should restrain it. I would do so now. I therefore respectfully dissent from Part IV of the majority opinion, and from the corresponding portions of Part V.