Court Opinion

ID: 7851090
Source: CourtListenerOpinion
Date Created: 2022-09-08 17:29:36.288372+00
Date Added: 2024-06-11T16:29:09.723044
License: Public Domain

SCALIA, Circuit Judge,
dissenting:
There may or may not be validity to the ICC’s judgment, approved by the majority here, that “continued regulation by States could subvert a federal effort of deregulation through an exemption.” Maj. op. at 884. I dissent because I think it not the function of the ICC or of this court to assure that the principal goal of a statute is pursued with maximum efficiency, but rather to assure that it is pursued with that degree of efficiency that Congress intended — which may well be less than the maximum, in order to accommodate other interests. The deregulatory provisions of the Staggers Act were a compromise between what is for present purposes maximum efficiency, i.e., total federal preemption, and maximum inefficiency, i.e., continued deferral to traditional state regulation of intrastate carriage. Since the nature of that compromise is best found in the language of the statute; and since that language simply does not bear the meaning the Commission has assigned it; I think today’s decision ultimately frustrates rather than furthers the full purpose of the legislation.
The majority facilitates its task by describing the legal situation as follows: “Having totally preempted State authority, Congress then restored some of it as a matter of legislative grace.” Maj. op. at 878. This notion of total preemption and cede-back has no basis in reality. The Staggers Act provides that “[a] State authority may only exercise jurisdiction ... if such State authority exercises such jurisdiction exclusively in accordance with the provisions of this subtitle.” 49 U.S.C. § 11501(b)(1) (1982). For those states, like Illinois, that submit their proposed regulatory standards and procedures to the ICC for approval, the referenced provisions permit preexisting state regulation to continue unless and until the Commission determines (through the certification procedures) that the state’s standards and procedures are not in accordance with the standards and procedures applicable to interstate regulation. 49 U.S.C. § 11501(b)(2) & (3). This is no total preemption, but merely a limitation upon preexisting, traditional, unpreempted state powers — or, if you will, a partial preemption, the scope of which is precisely the question before us. This is the view we recently took in Utah Power & Light Co. v. ICC, 747 F.2d 721, 726 (D.C. Cir.1984) (“Congress expressly rejected a *210sweeping federal preemption of the state regulatory role”). It is also the view of the Third Circuit:
Contrary to the ICC’s contention, the legislative history of the Staggers Act indicates that the Act did not fundamentally reallocate federal and state ratemaking authority____ Rather, it appears that Congress, by rejecting federal preemption of intrastate rates, intended to preserve this traditional sphere of state competence.
Wheeling-Pittsburgh Steel Corp. v. ICC, 723 F.2d 346, 353 (3d Cir.1983). The majority’s only basis for its hypothesis of total preemption is a statement in the Conference Report that “the Act preempts state authority over rail rates, classifications, rules and practices,” H.R. Rep. No. 1430, 96th Cong., 2d Sess. 106 (1980), 1980 U.S. Code Cong. & Ad.News p. 4111-4112. I would agree it preempts: the question is how far — totally or only in part? Nothing suggests the former. In short, from both a technical and a practical point of view, what is at issue here is not the scope of a supposed federal cede-back, but the scope of a partial federal preemption.
There is no doubt concerning the manner in which we are to resolve this issue:
Where ... the field which Congress is said to have pre-empted has been traditionally occupied by the States, see, e.g., U.S. Const., Art. I, § 10; Patapsco Guano Co. v. North Carolina, 171 U.S. 345, 358 [18 S.Ct. 862, 867, 43 L.Ed. 191] (1898), “we start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.” Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 [67 S.Ct. 1146, 1152, 91 L.Ed. 1447] (1947). This assumption provides assurance that “the federal-state balance,” United States v. Bass, 404 U.S. 336, 349 [92 S.Ct. 515, 523, 30 L.Ed.2d 488] (1971), will not be disturbed unintentionally by Congress or unnecessarily by the courts. But when Congress has “unmistakably ... ordained,” Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142 [83 S.Ct. 1210, 1217, 10 L.Ed.2d 248] (1963), that its enactments alone are to regulate a part of commerce, state laws regulating that aspect of commerce must fall.
Jones v. Rath Packing Co., 430 U.S. 519, 525, 97 S.Ct. 1305, 1309, 51 L.Ed.2d 604 (1977). To depart from that long tradition of interpretation in the present case is particularly inappropriate, because the language at issue was specifically adopted as a compromise between pro- and anti-preemption legislators, who must be presumed to have evaluated the deal with that tradition in mind.
It is worth briefly describing the compromise, since the basic issue here is whether it will be enforced or disregarded. The original House version of the Staggers Act (H.R. 7235, 96th Cong., 2d Sess. (1980)) flatly ousted the states from all jurisdiction over intrastate rates. See 126 Cong.Rec. 17,793 (1980) (colloquy prepared by Rep. Madigan). Rep. Broyhill, however, introduced an amendment prompted by “great concern expressed by the public utility commission in my State and in others” about the elimination of state jurisdiction. Id. at 18,298. The amendment sought to “achieve a better balance between Federal regulation and State regulation,” id., by permitting states to continue to exercise jurisdiction over intrastate rates if they applied the rate regulation standards set forth in the Staggers Act and if their proposed regulatory procedures were approved by the ICC as consistent with its own procedures. Rep. Broyhill’s amendment was accepted by the majority of the House Committee on Interstate and Foreign Commerce which first reported H.R. 7235, id.; with minor alteration, its intent to preserve state jurisdiction was carried forward to the final House bill, see H.R. Rep. No. 1430, 96th Cong., 2d Sess. 105-06 (1980), 1980 U.S.Code Cong. & Ad.News p. 4111-4112, the Conference Committee Report, id. at 106, and, as a perusal of 49 U.S.C. § 11501(b)-(c) will confirm, the bill that was ultimately signed into law.
*211It is, as I have suggested, a betrayal of that compromise to interpret its language on a basis different from that traditionally employed — which presumes the absence of preemption unless it clearly appears. In my view, however, the majority opinion not only fails to apply such a presumption but reaches a result that is wrong even without it. The crucial language, the nub of the accommodation between the federal and state proponents, is the following:
[E]ach State authority exercising jurisdiction over intrastate rates, classifications, rules, and practices for intrastate transportation ... shall submit to the Commission the standards and procedures (including timing requirements) used by such State authority in exercising such jurisdiction____ [T]he Commission shall certify such State authority for purposes of this subsection if the Commission determines that such standards and procedures are in accordance with the standards and procedures applicable to regulation of rail carriers by the Commission under this title____ Any rail carrier ... may petition the Commission to review the decision of any State authority, in any administrative proceeding in which the lawfulness of an intrastate rate, classification, rule, or practice is determined, on the grounds that the standards and procedures applied by the State were not in accordance with the provisions of this subtitle____ If the Commission determines that the standards and procedures were not in accordance with the provisions of this subtitle, its order shall determine and authorize the carrier to establish the appropriate rate, classification, rule, or practice.
49 U.S.C. § 11501(b)(2), (b)(3)(A), (c) (emphasis added). This text establishes a dichotomy between the state authority’s “standards and procedures,” on the one hand — which must conform to those of the Commission — and the carrier “rates, classifications, rules, and practices” approved by the state authority, on the other hand— which need not accord with those approved for interstate carriers by the Commission. The question before us is whether a Commission class-of-traffic exemption — that is, a Commission determination under 49 U.S.C. § 10505 that a particular category of interstate traffic (such as boxcar or export coal traffic) shall be exempt from one or more provisions of the Act (e.g., rate regulation) — constitutes a “standard or procedure” of the Commission. It seems to me obvious that it does not. The whole nature of the dichotomy is that the one element (standards and procedures) is used in order to determine the other element (the validity of carrier rates, classifications, rules and practices). A Commission exemption — an exemption from rate regulation, for example — is in no sense a standard by which the validity of a rate is determined, but is rather the determination itself, in effect approving all rates for the subject commodity. There will have to be an adjudication, of course, to determine whether a particular shipment comes within the exemption — but the mere existence of some generality in a determination is not alone enough to make it a standard, since the same is obviously true of the carrier “rules” and “classifications” that the Commission approves, which fall on the other side of the dichotomy.
What is meant by a standard is a principle of general application regarding degree of competition, revenue adequacy, service needs or other elements of the national transportation policy which will, when applied to particular facts, determine the legitimacy of railroad behavior. Prototypical examples are the “formulas or procedures” for determining variable costs and the “standards and procedures for establishing [adequate] revenue levels” that the Commission is required to adopt. See 49 U.S.C. §§ 10701a(c)(4)(A), 10704(a)(2). To confuse such a standard with an exemption is to call a criterion a conclusion or a test an outcome. Rather than constituting standards, exemptions — in effect automatic approvals of particular carrier activities — are the consequence of the application of standards to the activities in question. The broadest of those standards are set forth in *212§ 10505 itself, which requires the Commission to grant an exemption when the provision in question
(1) is not necessary to carry out the transportation policy of section 10101a of this title; and
(2) either (A) the 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.
49 U.S.C. § 10505(a). Subordinate standards further specifying these broad statutory generalities can of course be developed by the Commission. And both the statutory and Commission-developed standards must be applied by the states in their determinations of whether, at the intrastate level, the traffic should be exempt. But the exemption itself is, under no conceivable meaning of the term, a standard.
Though the answer seems to me clear in the present case, I do not pretend that it will always be easy to identify a standard within the meaning of the statutory provisions here at issue. But assuredly that judgment must be made by conducting an inquiry along the lines I have just described, rather than by simply asking, as the Commission and the majority did here: “Will it hamper federal deregulation for the states to fall out of lock-step with regard to this federal determination?” — or actually, even less than that: “Will it hamper federal deregulation to have to assure the necessary degree of lock-step by reviewing state adjudications instead of flatly prescribing a uniform intrastate rule?” An affirmative response to that question proves nothing except that the proponents of deregulation were wise in seeking total federal preemption. But they were also unsuccessful. •
The majority appeals to the deference we owe to the Commission’s judgment. I agree with the proposition, Maj. op. at 881, that we always owe the agency’s judgment some deference — even an agency judgment such as this one, reached by a 4-to-2 margin (with the Chairman in dissent) and reversing the agency’s initial view of the matter. The only question is whether the deference owed in this case is sufficiently “heightened” to permit such mayhem upon the mother tongue as to call an exemption a standard. The only “heightening” factor discussed in the majority opinion that I think substantial is the fact that “the ICC based its ruling on commercial policy considerations that implicated the agency’s expertise,” Maj. op. at 881-882 (footnote omitted). It is true that the agency based its interpretation upon the judgment (which it is much more informed than we are to make) that the failure of a state to apply a federal exemption in lock-step would create “practical problems and inconsistencies,” would cause “operational and/or marketing difficulties,” and would interfere “with the railroads’ and shippers’ freedom to take advantage of permitted flexibility in doing business under the Staggers Act.” State Intrastate Rail Rate Authority, Ex Parte No. 388, 367 I.C.C. 149, 153 (1983). If these horribles were envisioned - by the Commission with regard to a statutory scheme presumably designed to avoid them, its selection of an interpretation that would, in its expert judgment, achieve that desired result would be persuasive. The problem here is that the presumption is not justified. It is entirely clear that the continuation of state regulation provided in the Staggers Act will complicate rail operations and impede deregulation; that is why the proponents of the original version of the legislation sought to eliminate it. The whole purpose of the provisions at issue here was to establish in what manner, and thus to what degree, it would complicate and impede. The majority has it precisely backwards, it seems to me, when — in reliance upon the Commission’s expertise — it in effect applies a standard of “no major complication or impedence” to reach a conclusion regarding the meaning of the statutory text. It is the text that is the standard, and the degree of complication or impedence that is the conclusion.
That is why, for certain areas in which the statutory text would produce a conclusion of more complication or impedence than Congress was willing to accept, the *213text was suspended and total federal preemption imposed. 49 U.S.C. § 11501(b)(6) provides that “[n]otwithstanding 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.” It would have been simple to add to this catalogue “exemptions of classes of traffic under section 10505 of this title.” That was not done. If it was unnecessary, then one must wonder why it was necessary to list “inflation-based rate increases under section 10712.” Surely those increases, justified solely by reference to objectively determinable “inflationary cost increases,” 49 U.S.C. § 10712(a) (1982), would meet the same test of ipso facto exclusion from state jurisdiction that the Commission applied here: “it is difficult to conceive of a situation where a State should continue regulation ... where the Commission, based on its own record, and under the same statutory criteria to be used by the States, has already determined that an exemption is warranted.” 367 I.C.C. at 153.
The railroads argued before the Commission that all ICC decisions on all subjects are “standards and procedures” under § 11501(b). The majority claims that “two circuits have adopted [this] broad reading ... and ... their reasoning would a fortiori support our narrower holding with respect to exemptions.” Maj. op. at 883, citing Wheeling-Pittsburgh Steel Corp. v. ICC, supra, and Illinois Central Gulf R.R. v. ICC, 702 F.2d 111, 115 (7th Cir.1983). I disagree with the characterization of both these cases. To begin with, they both dealt only with the scope of the ICC’s power to review state adjudicatory determinations under § 11501(c). I agree that that is plenary — so that if the ICC is indeed correct that the standards it applied in reaching the conclusion of a class-of-traffic exemption for interstate purposes will inevitably produce the same class-of-traffic exemption for intrastate purposes, it will inevitably reverse every state determination to the contrary. But we will be able to review that asserted inevitability on the basis of the evidence presented in the particular cases, instead of accepting as a statutory prescription that any exemption valid for interstate traffic applies to intrastate traffic as well. Neither Wheeling-Pittsburgh Steel nor Illinois Central holds that, outside the context of a specific adjudication, the ICC can dictate the application as well as the interpretation of the federal standards used by the state commissions in their intrastate proceedings.
Moreover, even the language of Wheeling-Pittsburgh Steel does not support the interpretation suggested by the majority. It does not intimate, much less state, that all Commission conclusions with regard to interstate traffic must be followed with regard to intrastate traffic. To the contrary, it displays a clear awareness that only pronouncements establishing “standards and procedures” have that effect (a condition that was easily met in the case before it, which involved Commission guidelines concerning the manner of computing revenue adequacy and maximum allowable rates). This is clear from the court’s statement of its principal holding:
We hold that the phrase “standards and procedures” in section 11501(c) refers to standards and procedures promulgated and interpreted in decisions and orders of the ICC as well as those standards or procedures expressly incorporated in the Interstate Commerce Act.
723 F.2d at 354-55.
The language of Illinois Central (as opposed to its holding) is another matter. It does indeed say that “a discrete reading of the statute requires that consistent rulings of the ICC must necessarily be incorporated and adhered to by state commissions exercising jurisdiction pursuant to the Staggers Act.” 702 F.2d at 115. Though the interpretation is not inevitable, I find it difficult to contest the majority opinion’s assertion that this was meant to cover all rulings of the ICC — inasmuch as the author of Illinois Central and the author of the majority opinion are one and the same. It *214seems to me, however, that the dictum rests upon a misapprehension of the statute’s basic dichotomy between “standards and procedures” on the one hand and “rates, classifications, rules and practices” on the other. That is apparent from the Illinois Central court’s description of the question it thought it had before it:
The crux of the dispute we must resolve is whether the policy of the ICC to enforce average agreements can be considered a “rule” or “practice” under the Act, thereby requiring conformity by a state railroad commission exercising its authority under the Act.
702 F.2d at 115. Of course the real question was whether the state authority was departing from ICC standards in declining to enforce an average agreement — which would automatically be the case if the ICC’s approval of such agreements was itself a standard, but could also be the case if it was not but the standards that produced it would yield the same result in the state case. In no event, however, could the ICC policy be a “rule” or “practice” under the Act, since those terms refer not to the decisions, rules or practices of the ICC, but to the rules or practices of the carriers. And even if they did refer to the former, one would think they would represent the opposite of the ICC “standards and procedures” the states are bound to apply. In other words, the formulation of the issue before the court would be mildly mistaken if it had used the terms “standard and procedure” instead of “rule or practice,” but is incomprehensible as written. The penultimate sentence of the opinion reinforces the impression that the language of the statute had not much to do with the outcome:
Thus, whether the ICC’s insistence in honoring average agreements is considered a “standard,” “procedure,” or “practice,” it should have been applied by the Kentucky Commission.
702 F.2d at 116 (footnote omitted). I therefore do not consider the Illinois Central dictum a reliable guide.
As a supplemental argument, the majority asserts that the same exemption provision of the Act that would be used to establish the class-of-traffic exemptions at issue here could also be used to exempt railroads from the provision of the Act that establishes continuing state jurisdiction over them. Maj. op. at 885. The problem with this analysis (apart from the fact that it makes a shambles of the legislative compromise) is that the exemption provision only applies “[i]n a matter related to a rail carrier providing transportation subject to the jurisdiction of the Interstate Commerce Commission under this subchapter,” 49 U.S.C. § 10505(a). I interpret this to mean that the matter must relate not merely to the carrier, but also to the transportation in question. Cf. 49 U.S.C. § 10501(a) (“Subject to this chapter and other law, the Interstate Commerce Commission has jurisdiction over transportation — (1) by rail carrier ____”) (emphasis added). But intrastate transportation is excluded from the jurisdiction of the Commission, see 49 U.S.C. § 10501(b)(1), unless the Commission acquires jurisdiction by proper refusal to certify a state regulatory authority under § 11501. See 49 U.S.C. § 11501(b)(4)(B). Thus, this imaginative make-weight in the majority’s analysis ultimately comes up against the same obstacle that impedes its principal argument: the necessity of establishing that certification was properly denied, the only asserted basis for which is the proposition that a class-of-traffic exemption is a standard.
****•}: *
It is my impression that, in the long era of expanding economic regulation that preceded the current trend towards disengagement, zealous regulators more than once turned a legislative compromise into an unqualified victory by successfully urging that the limiting text of a statute be interpreted in light of its “broad remedial purposes” — as though there had been only one side in the Congress, or as though prescribed limitations were less important than the prescribed powers which they circumscribed. It may seem to many that turnabout is fair play.
*215Ultimately, however, the integrity of the process is of supreme importance. Legislative compromise (which is to say most intelligent legislation) becomes impossible when there is no assurance that the statutory words in which it is contained will be honored. Those members of Congress who unsuccessfully oppose a legislative initiative favored by the Executive have every reason to fear that any ambiguity they leave in the statute will be interpreted against their interests by the implementing agency. But they also have every reason to trust that the clear limitations they succeed in imposing will be faithfully observed. Those are the rules of the game, and I think they have been violated here. I respectfully dissent.