US SUPREME COURT DECISIONS

Since the 1930's, railroads, motor carriers, and freight forwarders have offered both trailer-on-flatcar (TOFC) and container-on-flatcar (COFC) services, forms of mixed train and truck transportation whereby loaded truck trailers or containers to be placed on truck trailers are transported on railroad flatcars and then hauled by trucks on the highways. A provision of the Staggers Rail Act of 1980, 49 U.S.C. §10505(f), authorizes the Interstate Commerce Commission (ICC) to exempt from state regulation "transportation that is provided by a rail carrier as a part of a continuous intermodal movement." In 1981, the ICC adopted a regulation exempting from state regulation, and covering both the motor and rail portions of, "Plan II TOFC/COFC service," which involves door-to-door service by a railroad that moves its own trailers or containers on flatcars. In 1982, petitioner railroad companies petitioned the Texas Railroad Commission to apply the ICC's exemption to Texas intrastate TOFC/COFC traffic. The State Commission granted a partial exemption covering the rail portion, but not the truck portion, of intrastate Plan II service. The railroad companies then petitioned for review of that decision by the ICC, which held that the State Commission's assertion of regulatory jurisdiction over the truck portion of Plan II service was inconsistent with the ICC's 1981 regulation. On review of the ICC's order, the Court of Appeals reversed, holding that the truck portion of the intrastate movements at issue was not "transportation . . . provided by a rail carrier" within the meaning of § 10505(f), but rather was "transportation provided by a motor carrier" within the meaning of 49 U.S.C. § 10521(b)(1), which reserves such intrastate transportation for state regulation.

Held: The grant of authority to the ICC under §10505(f) encompasses the motor freight portion of a Plan II shipment entirely within the State. Since all of the elements of the Plan II service at issue are provided on equipment owned and operated by a rail carrier over which the ICC has jurisdiction, the plain language of § 10505(f) unambiguously supports chanrobles.com-red

Page 479 U. S. 451

the ICC's position. Although § 10521(b)(1) can be read to support a contrary result, the correct, and more natural, reading of the statute is that all of the Plan II service provided by interstate rail carriers on equipment that they own is "transportation provided by a rail carrier" subject to the ICC's § 10505(f) jurisdiction. A contrary result would be inconsistent with the ICC's historical treatment of Plan II service as "provided by a railroad," and would make § 10521(b)(1) authorize state regulation of TOFC/COFC services in areas where it has already been rejected. Moreover, the ICC's special statutory authority to determine the proper interrelationship of different modes of transportation supports its interpretation of the Staggers Rail Act. In its statement of rail transportation policy, Congress has unambiguously expressed its interest in allowing free competition, to the maximum extent possible, to govern the financial health of the railroad industry. Pp. 479 U. S. 455-461.

770 F.2d 452, reversed.

STEVENS, J., delivered the opinion for a unanimous Court.