TROY CAB INC V MICHIGAN DEPARTMENT OF TREASURY
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STATE OF MICHIGAN
COURT OF APPEALS
WESTLAKE TRANSPORTATION, INC.,
VANDERKOOI CARRIERS, INC., EL TORO
MOTOR FREIGHT, INC., MYRIAH, INC.,
PRISM, INC., GERRIGS TRUCKING &
LEASING, INC., and BEST WAY EXPRESS,
INC.,
FOR PUBLICATION
March 11, 2003
9:00 a.m.
Plaintiffs-Appellants,
and
AMERICAN TRUCKING ASSOCIATION, INC.
and TNT HOLLAND MOTOR EXPRESS, INC.,
Intervening Plaintiffs-Appellants,
v
MICHIGAN PUBLIC SERVICE COMMISSION,
DEPARTMENT OF TREASURY, and the STATE
OF MICHIGAN,
Defendants-Appellees.
TROY CAB, INC., DEECO SERVICES, INC.,
d/b/a DEECO TRANSPORTATION, TIBERIO
FRANK, d/b/a FAIRFIELD TOWING, ELEX,
INC., d/b/a LAFOND EXPRESS, DALE
CONSTINE & SONS, INC., CALCUT SALES &
SERVICES, INC., d/b/a CALCUT TRUCKING
COMPANY, AMBASSADOR
TRANSPORTATION, INC., HAWKINS STEEL
CARTAGE, INC., MIDCON FREIGHT
SYSTEMS, INC., JLH TRANSFER, INC., H & H
ENTERPRISES, INC., d/b/a S & M CARTAGE,
INC., CENTRAL TRANSPORT, INC.,
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No. 226052; 226122
Court of Claims
LC No. 95-015628-CM
BANCROFT TRUCKING COMPANY, US
TRUCK COMPANY, INC., WEST END
CARTAGE, INC., CENTRAL CARTAGE
COMPANY, CTX, INC., MOHAWK MOTOR
MICHIGAN, INC., ECONOMY TRANSPORT,
INC., MCKINLAY TRANSPORT LIMITED,
MASON & DIXON LINES, INC., UNIVERSAL
AMCAN LIMITED, ROMEO EXPEDITERS,
INC., TOM THUMB SERVICES, INC., d/b/a REI,
OJ TRANSPORT COMPANY, JLAW
ENTERPRISES INC., and OJ TRANSPORT,
INC.,
Plaintiffs-Appellants,
and
AMERICAN TRUCKING ASSOCIATION, INC.
and TNT HOLLAND MOTOR EXPRESS, INC.,
Intervening Plaintiffs-Appellants,
v
MICHIGAN PUBLIC SERVICE COMMISSION,
DEPARTMENT OF TREASURY,
DEPARTMENT OF COMMERCE, and the
STATE OF MICHIGAN,
Defendants-Appellees.
No. 226053; 226137
Court of Claims
LC No. 95-015631-CM
Updated Copy
May 9, 2003
Before: Markey, P.J., and Saad and Smolenski, JJ.
SMOLENSKI, J.
In these consolidated class actions, plaintiffs, individual class-representative trucking
companies, and intervening plaintiffs, two trucking companies, appeal by right from a December
30, 1998, judgment of the Court of Claims that granted summary disposition in favor of
defendants. The appeals were consolidated. We affirm.
I
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This case involves the effect of several federal laws, specifically 49 USC 11501, 49 USC
11506, and subsection 601(h) of the Federal Aviation Administration Authorization Act of 1994
(FAAAA), PL 103-105, subsection 601(h), on various provisions of Michigan's Motor Carrier
Act (MCA), MCL 475.1 et seq. This litigation began on January 3, 1995, when plaintiffs
Westlake Transportation, Inc., et al., filed their complaint, alleging that the state's $100 annual
fees for interstate and intrastate motor carriers were unconstitutional because federal laws, 49
USC 11506 and 49 USC 11501, respectively, preempted the state laws. On January 9, 1995,
Troy Cab, Inc., et al., filed their complaint, and made similar allegations.
In Michigan, since 1933, motor-carrier regulation has been pursuant to the Michigan
MCA. The act authorizes the Michigan Public Service Commission (PSC) to enforce the act.
MCL 475.1(c); MCL 475.2. Under the MCA, motor carriers must pay a fee of $100 for each
application filed with the commission for a certificate of authority or for a permit to operate
intrastate. MCL 478.1. Also, motor carriers are required to pay an annual fee of $100 a vehicle
for the administration of the act. MCL 478.2(1) and (2). Subsection 1 applies to motor-carrier
vehicles that operate intrastate pursuant to a certificate of authority, while subsection 2 applies to
motor-carrier vehicles licensed in Michigan that engage entirely in interstate commerce.1 The act
also provides that motor carriers that are registered outside Michigan are required to pay a
registration fee of $10 a vehicle. MCL 478.7.
In February 1995, intervening plaintiffs filed their complaint, alleging that the intrastatedecal fee violated the Commerce Clause, US Const, art I, § 8, cl 3, and were subsequently
granted the right to intervene. Plaintiffs Westlake Transportation, Inc., et al., and intervening
plaintiffs both amended their complaints, adopting the other's substantive claims. The plaintiffs'
cases were consolidated in April 1995 and the classes were certified in June 1995.
On June 22, 1995, plaintiffs filed two separate motions for partial summary disposition
pursuant to MCR 2.116(C)(10): one regarding their intrastate-preemption claim and the other
regarding their interstate-preemption claim. On June 30, 1995, intervening plaintiffs filed their
motion for partial summary disposition pursuant to MCR 2.116(C)(10), regarding their claim
alleging violation of the Commerce Clause. On October 27, 1995, defendants renewed their own
motion for summary disposition. The Court of Claims issued its opinion on October 13, 1998,
concluding that plaintiffs' and intervening plaintiffs' claims were meritless, and denied their
motions for partial summary disposition in an order entered on November 12, 1998.
Subsequently, the court granted defendants' motion for summary disposition "for the reasons
defendants stated in their November 10, 1998 supplemental brief," which relied on the court's
October 13, 1998, opinion.
The court concluded that § 601 of the FAAAA did not preempt MCL 478.2(1) because
the federal law did not preempt safety-related regulatory fees. The court also found that MCL
1
The fees in MCL 478.1 and 478.2(1) will be referred to as the "intrastate fees," and the fee in
MCL 478.2(2) will be referred to as the "interstate fee."
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478.2(2) was not preempted because the federal law imposed the $10 maximum only on
"participating states," not "registration states." The court further determined that MCL 478.2(1)
did not implicate the Commerce Clause because it did not burden foreign motor carriers more
heavily as compared to Michigan motor carriers engaged in interstate commerce, since the state
statute only affects Michigan motor carriers who engage solely in intrastate commerce. Plaintiffs
filed a motion for reconsideration, which was denied. Plaintiffs and intervening plaintiffs now
appeal by right.
II
Summary disposition of all or part of a claim or defense may be granted when
[e]xcept as to the amount of damages, there is no genuine issue as to any material
fact, and the moving party is entitled to judgment or partial judgment as a matter
of law. [MCR 2.116(C)(10).]
A motion for summary disposition under MCR 2.116(C)(10) tests whether there is factual
support for a claim, and is reviewed de novo on appeal. Spiek v Dep't of Transportation, 456
Mich 331, 337; 572 NW2d 201 (1998). When deciding a motion for summary disposition, a
court must consider the pleadings, affidavits, depositions, admissions, and other documentary
evidence submitted in the light most favorable to the nonmoving party. Ritchie-Gamester v
Berkley, 461 Mich 73, 76; 597 NW2d 517 (1999). A motion for summary disposition based on
the lack of a material factual dispute must be supported by documentary evidence. MCR
2.116(G)(3)(b), Meyer v Center Line, 242 Mich App 560, 574; 619 NW2d 182 (2000). All
reasonable inferences are to be drawn in favor of the nonmovant. Bertrand v Alan Ford, Inc, 449
Mich 606, 618; 537 NW2d 185 (1995).
III
Plaintiffs argue that MCL 478.2(2) is preempted by federal law, specifically 49 USC
11506. Determining whether federal law preempts a state law presents an issue of statutory
construction and is a question of law. Konynenbelt v Flagstar Bank, FSB, 242 Mich App 21, 27;
617 NW2d 706 (2000). Congressional intent is the cornerstone of preemption analysis. Fort
Halifax Packing Co, Inc v Coyne, 482 US 1, 8; 107 S Ct 2211; 96 L Ed 2d 1 (1987).
2
The Supremacy Clause of the United States Constitution provides Congress with the
power to preempt state law. US Const, art VI, cl 2. A general presumption exists in the law
against federal preemption. Duprey v Huron & E R Co, Inc, 237 Mich App 662, 665; 604 NW2d
702 (1999). Federal preemption occurs only under certain conditions, such as when (1) Congress
enacts a federal statute that expresses a clear intent to preempt state law, (2) an outright or actual
conflict exists between federal and state law, (3) compliance with both federal and state law is
2
This statute is currently codified as 49 USC 14504; however, we will refer to the law as §
11506.
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effectively impossible, (4) an implicit barrier to state regulation exists in federal law, (5)
Congress has legislated comprehensively, thereby occupying an entire field and leaving no room
for supplemental state law, or (6) the state law stands as an obstacle to the accomplishment and
execution of the full objectives of Congress. Id.
49 USC 11506 provided, in part:
(b) General rule.—The requirement of a State that a motor carrier,
providing transportation subject to jurisdiction under subchapter I of chapter 135
and providing transportation in that State, must register with the State is not an
unreasonable burden on transportation referred to in section 13501 when the State
registration is completed under standards of the Secretary under subsection (c).
When a State registration requirement imposes obligations in excess of the
standards of the Secretary, the part in excess is an unreasonable burden.
(c) Single State registration system.—
(1) In general.—The Secretary shall maintain standards for implementing a
system under which—
(A) a motor carrier is required to register annually with only one State by
providing evidence of its Federal registration under chapter 139;
(B) the State of registration shall fully comply with standards prescribed
under this section; and
(C) such single State registration shall be deemed to satisfy the registration
requirements of all other States.
(2) Specific requirements.—
(A) Evidence of Federal registration; proof of insurance; payment of
fees.—Under the standards of the Secretary implementing the single State
registration system described in paragraph (1) of this subsection, only a State
acting in its capacity as registration State under such single State system may
require a motor carrier registered by the Secretary under this part—
(i) to file and maintain evidence of such Federal registration;
(ii) to file satisfactory proof of required insurance or qualification as a selfinsurer;
(iii) to pay directly to such State fee amounts in accordance with the fee
system established under subparagraph (B)(iv) of this paragraph, subject to
allocation of fee revenues among all States in which the carrier operates and
which participate in the single State registration system; and
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(iv) to file the name of a local agent for service of process.
(B) Receipts; fee system.—The standards of the Secretary—
(i) shall require that the registration State issue a receipt, in a form
prescribed under the standards, reflecting that the carrier has filed proof of
insurance as provided under subparagraph (A)(ii) of this paragraph and has paid
fee amounts in accordance with the fee system established under clause (iv) of this
subparagraph;
(ii) shall require that copies of the receipt issued under clause (i) of this
subparagraph be kept in each of the carrier's commercial motor vehicles;
(iii) shall not require decals, stamps, cab cards, or any other means of
registering or identifying specific vehicles operated by the carrier;
(iv) shall establish a fee system for the filing of proof of insurance as
provided under subparagraph (A)(ii) of this paragraph that—
(I) is based on the number of commercial motor vehicles the carrier
operates in a State and on the number of States in which the carrier operates;
(II) minimizes the costs of complying with the registration system; and
(III) results in a fee for each participating State that is equal to the fee, not
to exceed $10 per vehicle, that such State collected or charged as of November 15,
1991; and
(v) shall not authorize the charging or collection of any fee for filing and
maintaining evidence of Federal registration under subparagraph (A)(i) of this
paragraph.
(C) Prohibited fees.—The charging or collection of any fee under this
section that is not in accordance with the fee system established under
subparagraph (B)(iv) of this paragraph shall be deemed to be a burden on
interstate commerce.
The MCA applies to entities engaged in interstate commerce only to the extent it is
consistent with federal law. MCL 476.12. MCL 478.2(2) provides, in pertinent part, "A motor
carrier licensed in this state shall pay an annual fee of $100.00 for each vehicle operated by the
motor carrier which is registered in this state and operating entirely in interstate commerce."3
3
The subsection also provides that the fee is only $50 if the motor carrier begins operations after
June 30th of the year. The other provisions in the subsection are not at issue in this appeal.
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Plaintiffs contend that the interstate fee was preempted both before and after the
implementation of the Single State Registration System (SSRS) on January 1, 1994. With the
implementation of the SSRS, § 11506 was amended and significant language changes were
made. We will first address plaintiffs' preemption argument regarding § 11506 after January 1,
1994. However, before we do so, an understanding of the evolution of this federal law is helpful.
The United States Supreme Court has summarized this evolution in Yellow Transportation, Inc v
Michigan, 537 US ___, ___; 123 S Ct 371, 374-375; 154 L Ed 2d 377, 383-384 (2002):
Beginning in 1965, Congress authorized States to require interstate motor
carriers operating within their borders to register with the State proof of their
Interstate Commerce Commission (ICC) interstate operating permits. Pub L 89170, 79 Stat 648, 49 USC § 302(b)(2) (1970 ed). Congress provided that state
registration requirements would not constitute an undue burden on interstate
commerce so long as they were consistent with regulations promulgated by the
ICC. Ibid.
Prior to 1994, the ICC allowed States to charge interstate motor carriers
annual registration fees of up to $10 per vehicle. See 49 CFR § 1023.33 (1992).
As proof of registration, participating States would issue a stamp for each of the
carrier's vehicles. § 1023.32. The stamp was affixed on a "uniform identification
cab car[d]" carried in each vehicle, within the square bearing the name of the
issuing State. § 1023.32(d)-(e). This system came to be known as the "bingo
card" system. Single-State Insurance Registration, 9 ICC2d 610, 610 (1993).
The "bingo card" regime proved unsatisfactory to many who felt that the
administrative burdens it placed on carriers and participating States outweighed
the benefits to those States and to the public. HR Rep No 102-171, pt I, p 49
(1991), HR Conf Rep No 102-404, pp 437-438 (1991), US Code Cong & Admin
News 1991, pp 1526, 1679. In the Intermodal Surface Transportation Efficiency
Act of 1991 (ISTEA), Congress therefore directed the ICC to implement a new
system to replace the "bingo card" regime.* See Pub L 102-240, § 4005, 105 Stat
1914, 49 USC § 11506(c) (1994 ed). Under the new system, called the Single
State Registration System, "a motor carrier [would be] required to register
annually with only one State," and "such single State registration [would] be
deemed to satisfy the registration requirements of all other States." §§
11506(c)(1)(A) and (C). Thus, one State would—on behalf of all other
participating States—register a carrier's vehicles, file and maintain paperwork, and
collect and distribute registration fees. § 11506(c)(2)(A). Participation in the
Single State Registration System was limited to those States that had elected to
participate in the "bingo card" system. § 11506(c)(2)(D).
ISTEA also capped the per-vehicle registration fee that participating States
could charge interstate motor carriers. Congress directed the ICC to "establish a
fee system . . . that (I) will be based on the number of commercial motor vehicles
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the carrier operates in a State and on the number of States in which the carrier
operates, (II) will minimize the costs of complying with the registration system,
and (III) will result in a fee for each participating State that is equal to the fee, not
to exceed $10 per vehicle, that such State collected or charged as of November 15,
1991." § 11506(c)(2)(B)(iv). Congress provided that the charging or collection of
any fee not in accordance with the ICC's fee system would "be deemed to be a
burden on interstate commerce." § 11506(c)(2)(C).
__________________________________________________________________
* Congress abolished the ICC in 1995 and assigned responsibility for
administering the new Single State Registration System to the Secretary of
Transportation. See ICC Termination Act of 1995, Pub L 104-88, § 101, 109 Stat
803. The provisions of ISTEA governing the system were amended and
recodified. See 49 USC § 14504(c). The Federal Highway Administration, under
the Secretary of Transportation, adopted the ICC regulations that implemented the
Single State Registration System, 61 Fed Reg 54706, 54707 (1996), and the
Federal Motor Carrier Safety Administration now has authority to administer the
system, 49 USC § 113(f)(1).
__________________________________________________________________
A
Plaintiffs argue that the federal statutory language is clear—a state may charge a
maximum registration fee of $10 a vehicle to motor carriers engaged in interstate commerce,
regardless of whether a motor carrier is registered in Michigan or another state. Plaintiffs
acknowledge that MCL 478.7 reflects the mandate of § 11506 with regard to motor carriers
registered out of state,4 and asserts that motor carriers registered in Michigan are required to be
charged similarly.
Defendants' counterargument is two-fold. First, § 11506 applies to registration fees only,
not regulatory fees, and the interstate fee at issue is a regulatory fee. Second, the fee limit in §
11506 applies to participating states only, not the registration state. The court agreed with
4
MCL 478.7 provides, in part:
(4) The annual fee levied on each interstate or foreign motor carrier
vehicle operated in this state and licensed in another state or province of Canada
shall be $10.00. The commission may enter into a reciprocal agreement with a
state or province of Canada that does not charge vehicles licensed in this state
economic regulatory fees or taxes and may waive the fee required under this
subsection.
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defendants' argument and granted summary disposition on this issue for the same reasons.
Therefore, the key questions are (1) to whom does the fee limit in § 11506 apply, and (2) to what
type of fees. The answers to these questions can be found in the language of the statute itself and
the federal regulations that interpret it.
It is not an unreasonable burden on interstate commerce to require vehicles to register
with a state; however, any registration requirements of a state that are in excess of the standards
in subsection 11506(c) are considered an unreasonable burden. Subsection 11506(b). Under the
SSRS, a motor carrier is required to register annually with only one state, and that registration
satisfies the registration requirements of all the states. Subsection 11506(c)(1)(A). A motor
carrier may only register with a participating state, a state which participated in the old "bingo
card" system. Subsection 11506(c)(2)(D). The motor carrier must register with the state where
its principal place of business is located, if it is a participating state, or else register with the
participating state in which it operates the most vehicles. 49 CFR 367.3.5 Therefore, a
registration state, the state in which a motor carrier registers, is by definition a participating state.
Michigan is a participating state, Yellow Transportation, supra, 123 S Ct 376; 154 L Ed 2d 385,
and therefore, can be a registration state.
The registration state may require a motor carrier to (1) file proof of its federal
registration (ICC permit), (2) file proof of insurance, (3) file the name of its agent for service of
process, and (4) pay a fee. Subsection 11506(c)(2)(A). The registration state is then to issue the
motor carrier a receipt, reflecting that proof of insurance was filed and that the fee was paid, a
copy of which is to be kept in the carrier's vehicles. Subsection 11506(c)(2)(B). The fee is for
the filing of the proof of insurance, and may not be charged for the filing of the motor carrier's
ICC permit. Subsections 11506(c)(2)(B)(iv) and (v).
In support of the registration fee, the motor carrier must file with the registration state a
form that delineates (1) the number of vehicles it intends to operate in each participating state, (2)
the fee each participating state charges each vehicle, (3) the total fee due each participating state,
and (4) the total of all the fees due. 49 CFR 367.4(c)(4). The fee each participating state is
allowed to charge each vehicle is equal to the amount the state charged or collected as of
November 15, 1991, not to exceed $10. Subsection 11506(c)(2)(B)(iv)(III); 49 CFR
367.4(c)(4)(ii). Congress wanted to "minimize[] the costs of complying with the registration
system" for the motor carriers, subsection 11506(c)(2)(B)(iv)(II), while at the same time
preserving "revenues for the states which had participated in the bingo program," HR Conf Rep
No 102-404 reprinted in 1991 USCCAN 1817. The fees a registration state collects on behalf of
other participating states are remitted to those states monthly. 49 CFR 367.6. Thus, if a motor
carrier registered in Michigan, it would first list the number of vehicles it operated in each
participating state. Because Michigan is a participating state, it would need to list the number of
vehicles it operated in Michigan. The fee Michigan could charge cannot exceed $10.
5
49 CFR 1023.1 et seq., was recodified as 49 CFR 367.1 et seq.
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We find that the statutory language and its accompanying federal regulations are clear. A
registration state is simply a participating state in which a motor carrier is registering. Therefore,
when the statute states that a participating state may not charge a fee in excess of $10, this
includes the registration state. To conclude otherwise, that a registration state could set its own
fee, would contravene the express language and purpose of the statute.
The next question is whether the $100 fee in MCL 478.2(2) is a registration fee, so that it
is subject to the limitation in § 11506, or whether it is a regulatory fee. Plaintiffs assert that the
fee is for all practical purposes a registration fee. Because the fee must be paid at the time a
motor carrier registers with a state, and in return for the fee receives an identification decal,
plaintiffs contend that one can only conclude that the fee is, in actuality, a registration fee. We
disagree. Faced with a similar situation in Franks & Son, Inc v Washington, 136 Wash 2d 737,
759-760; 966 P2d 1232 (1998), the Washington Supreme Court rejected the plaintiffs' argument
that because the regulatory fee and federal identification fee were collected at the same time, an
unlawful registration requirement resulted. The court adeptly stated, "We believe a more realistic
rationale for concurrent collection of the two fees was administrative convenience and
efficiency." Id. at 760.
We find that the $100 interstate fee could reasonably be classified as a regulatory fee
because it is a fee imposed for the administration of the MCA, particularly covering costs of
enforcing safety regulations.6 If the purpose of a fee is to regulate an industry or service, it can
be properly classified as a regulatory fee. Bolt v Lansing, 459 Mich 152, 161-162; 587 NW2d
264 (1998). Because the fee in MCL 478.2(2) is not a registration fee, it is not subject to
preemption by 49 USC 11506.
Plaintiffs argue that the federal law prohibits construing the fee as a regulatory fee, citing
Roadway Express, Inc v Treasurer of State of Illinois, 120 Ill App 3d 133; 458 NE2d 66 (1983).
That case involved a $31 registration fee Illinois charged Ohio motor carriers. Id. at 133-134. At
the time, the federal regulation allowed a maximum registration fee of $5 plus an additional
reasonable fee imposed to defray the cost of the regulation of carriers within the state's borders.
Id. at 135. Plaintiffs contend that Roadway Express "issued a warning" that "no such additional
'regulatory fee' was permissible after 1981" because the federal regulation interpreting § 11506
was amended in 1981 and set an absolute limit of $10 for identification fees. However, Roadway
Express issued no such warning. The court merely noted, "again parenthetically," that the federal
regulation, 49 CFR 1023.33 (redesignated), was amended and set the limit at $10. Roadway
Express, supra at 135.
6
Because vehicles licensed in Michigan that operate solely interstate are required to pay the $100
regulatory fee, the PSC waives the registration fee. Schneider Nat'l Carriers, Inc v Michigan (On
Remand), 247 Mich App 716, 721; 637 NW2d 838 (2001). Hence, the registration fee Michigan
charges for vehicles licensed in Michigan is $0, less than the $10 limit imposed by § 11506.
Therefore, the registration fee is within the federal mandate.
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Plaintiffs appear to argue that because the amended federal regulation did not explicitly
provide for an additional fee, one was hence prohibited. However, plaintiffs provide no support
for their argument. Further, plaintiffs fail to recognize the import of two other regulations in
existence at the time. 49 CFR 1023.105 (1991) (superseded) provided that the rules and
regulations were not to be construed to affect the collection of taxes or fees by a state from motor
carriers for the operation of vehicles within the borders of a state. 49 CFR 1023.104 (1991)
(superseded) provided that states were "urged" to use fees collected for the purpose of defraying
the cost of regulation of motor carriers within their borders. Therefore, the ability of a state to
collect fees in addition to the registration fees was not affected by the removal from § 1023.33 of
the language providing for additional fees.7
B
Plaintiffs also argue that the interstate fee was prohibited before the creation of the SSRS
in 1994, under the previous version of § 11506. Plaintiffs assert this argument because their
complaint was filed in the beginning of 1995, and with a three-year period of limitation, plaintiffs
contend that they are entitled to a refund for the excess fees they have paid since 1992.
Before the 1994 enactment of the SSRS, § 11506 read, in pertinent part:
(b) The requirement of a State that a motor carrier . . . register the
certificate or permit issued to the carrier under section 10922 or 10923 of this title
is not an unreasonable burden on transportation referred to in section 10521(a)(1)
and (2) of this title when the registration is completed under standards of the
Commission under subsection (c) of this section. When a State registration
requirement imposes obligations in excess of the standards, the part in excess is
an unreasonable burden.
(c)(1) The Commission shall maintain standards and amendments to
standards (A) prepared and certified to it by the national organization of the State
Commissions, and (B) prescribed by the Commission. . . .
The Commission prescribed the following interpretive regulation:
7
We note that the substance of 49 CFR 1023.104 and 1023.105 was not included in the 1994
amendments, 49 CFR 1023.1-1023.6. However, neither was there any express prohibition on
state-imposed regulatory fees. The statute and its regulations address registration requirements
only. Because there is a presumption against federal preemption, we believe that Congress's
silence cannot be interpreted as prohibiting state regulatory fees, see Wisconsin Pub Intervenor v
Mortier, 501 US 597, 607; 111 S Ct 2476; 115 L Ed 2d 532 (1991), particularly given that
regulatory and registration fees can coexist in the same field without conflicting, Duprey, supra
at 665.
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The application for the issuance of such identification stamps or number
shall . . . be duly completed and executed by an official of the motor carrier, and
shall be accompanied by the fee, if any, prescribed by the law of such State;
provided, however, that such fee shall not exceed $10 for the issuance of each
such identification stamp; and provided further (when the State Commission
assigns an identification number in lieu of issuing an identification stamp or
stamps), that such fee shall not exceed $10 for each vehicle operated under the
authority of the motor carrier identified in the cab card bearing such identification
number. [49 CFR 1023.33 (superseded).]
The pre-1994 federal regulation substantively mirrored subsection 11506(c) as amended
in 1994. Because we concluded that the interstate fee is a regulatory fee, it is outside the scope
of the federal law and was not preempted.8 Accordingly, the court did not err in granting
defendants summary disposition.
IV
In their complaints, plaintiffs and intervening plaintiffs allege that the intrastate fees in
MCL 478.1 and MCL 478.2(1) were preempted by § 601 of the FAAAA. Subsection 601(h),
which became effective on January 1, 1995, prohibited state regulation of prices, routes, or
services of motor carriers, save for a few delineated exceptions. (Currently codified as 49 USC
14501[c].)
Plaintiffs argue that the court erred in granting defendants summary disposition on this
issue before discovery was complete.9 Plaintiffs assert that they should have been allowed an
opportunity to conduct additional discovery in order to show that, as utilized, the intrastate fees
are prohibited by federal law.
In re Fed Preemption of Provisions of the Motor Carrier Act, 223 Mich App 288, 302;
566 NW2d 299 (1997), held that § 601 did not preempt the entire MCA and did not indicate an
intent to preempt fee provisions such as MCL 478.1 and MCL 478.2. The Court noted that in
response to the enactment of the FAAAA, the PSC "issued considered decisions that indicated
how its regulation of the trucking industry in Michigan was affected by federal legislation
preempting at least some aspects of state regulation." In re Motor Carrier Act, supra at 300. In
regard to the fee provisions at issue, the Court stated:
8
We note that the cases from other jurisdictions that plaintiffs cite are inapplicable in this case.
The conclusion in this case turns on whether the interstate fee is classified as a regulatory fee or a
registration fee. In the cases plaintiffs cite, there was no disagreement that the fee at issue was a
registration fee.
9
We note that plaintiffs do not contest the court's summary-disposition ruling, that § 601 did not
preempt the intrastate fees.
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The PSC still has significant regulatory obligations. For example, the PSC
must supervise and regulate the safety of motor carrier operations. MCL 479.41;
MSA 22.587(1). There is still a certification process. It follows that the fees for
obtaining a certificate of authority, MCL 478.1; MSA 22.560, for protesting an
application for a certificate, MCL 478.1a; MSA 22.560(1), and for administering
the act, MCL 478.2(1); MSA 22.561(1), are unaffected by the preemptive effect of
§ 601. In fact, because the PSC is not using its resources to enforce preempted
portions of the Motor Carrier Act, the fees collected by the PSC are not related to
the preempted provisions and rules. Indeed, appellants Central Transport and
Universal Am-Can have not shown that the cost of the PSC's operations has ever
been totally funded by the fees it collects, and they have not provided any reason
to believe that the fees collected were or can be used only for what is now
preempted economic regulation. [Id. at 302-303; emphasis added.]
Plaintiffs contend that the PSC intrastate fees were being used to fund preempted portions
of the MCA, and, thus, the fees were related to a preempted provision. Therefore, the fees were
also preempted. Plaintiffs did not submit any documentary evidence below in support of this
contention. Plaintiffs argue that they had intended to do so, but their opportunity was foreclosed
when the court denied their motion for partial stay and bifurcation of issues. Plaintiffs requested
a 90- to 120-day stay in the proceedings to conduct discovery in order to present a factual record
to the court in a supplemental brief in response to the decision in In re Motor Carrier Act, supra;
however, the court denied the motion without prejudice because it believed its summarydisposition ruling would cover the issue.
A court's decision regarding matters of discovery is reviewed on appeal for an abuse of
discretion. In re Pott, 234 Mich App 369, 373; 593 NW2d 685 (1999). Plaintiffs could not
address this Court's decision in In re Motor Carrier Act, supra, in their original motions for
partial summary disposition because they were filed and argued in 1995, and the case was not
decided until April 25, 1997. However, plaintiffs did not file their motion for partial stay and
bifurcation of issues until March 1998, nearly one year later. The record indicates that plaintiffs
were conducting discovery during this entire time, yet never sought evidence relating to this
issue.
We find that plaintiffs had ample opportunity to conduct discovery following the decision
in In re Motor Carrier Act, supra, and file a supplemental brief containing their findings. Given
that one year had passed, we also find that there is no reason to believe that had plaintiffs been
given another three or four months in which to conduct discovery, plaintiffs would have
uncovered a factual basis for their claim. Furthermore, we note that by stipulation, discovery was
to be completed 180 days after the court issued its ruling on the parties' motions for summary
disposition.
Plaintiffs assert in their reply brief that they are not arguing that they were prevented from
conducting discovery, but that they were denied an opportunity to supplement their motion
papers. However, the court did not foreclose plaintiffs' opportunity to present their argument.
-13-
They could have filed additional briefs at any time before the court issued its ruling. In fact, on
January 28, 1998, plaintiffs filed a supplemental brief in support of their motions for summary
disposition and in opposition to defendants' motion, in which they specifically mentioned In re
Motor Carrier Act, supra. This indicates plaintiffs were well aware of the import of the case,
and could have conducted discovery and presented their argument accordingly. Plaintiffs
mention that defendants did not submit the opinion as authority until January 1998. However, In
re Motor Carrier Act was decided in April 1997, and nothing prevented plaintiffs from
proactively distinguishing their case from it.
Moreover, the court specifically invited plaintiffs to present their argument again if they
thought its ruling did not adequately cover the issue. Plaintiffs did file a motion for
reconsideration after the court issued its orders on the parties' motions for summary disposition,
yet did not reraise this issue. We recognize that plaintiffs renewed their motion to stay on
October 8, 1998; however, this was before the court issued its ruling. Because the court had not
yet issued its ruling, plaintiffs could have attempted to conduct discovery after its first motion
was denied.
Therefore, we conclude that the court did not abuse its discretion in denying plaintiffs'
request to stay the proceedings in order to conduct additional discovery. A decision of a court
that obtained the correct result, albeit for a different reason, will be affirmed on appeal. Lavey v
Mills, 248 Mich App 244, 250; 639 NW2d 261 (2001).
V
Plaintiffs Troy Cab, Inc., et al., allege that the intrastate fees in MCL 478.1 and MCL
478.2(1) are unconstitutional taxes in violation of various sections of the Michigan Constitution.
The fees at issue are credited to the PSC. MCL 478.6. Whether a charge is a permissible fee or
an illegal tax is a question of law. Bolt, supra at 158. A court's factual findings are reviewed for
clear error. A finding is clearly erroneous when, although there is evidence to support it, upon
reviewing the entire record, the appellate court is left with a definite and firm conviction that a
mistake was made. Christiansen v Gerrish Twp, 239 Mich App 380, 387; 608 NW2d 83 (2000).
In determining whether a charge imposed by a unit of government is a fee or a tax, a court
must consider: (1) whether the charge serves a regulatory purpose rather than operates as a means
of raising revenue; (2) whether the charge is proportionate to the necessary costs of the service to
which it is related; and (3) whether the payor has the ability to refuse or limit its use of the
service to which the charge is related. Bolt, supra at 161-162. These factors should be
considered in their totality, and a weakness in one area does not mandate a particular finding. Id.
at 167; Graham v Kochville Twp, 236 Mich App 141, 151; 599 NW2d 793 (1999).
Taxes have a primary purpose of raising revenue, while fees are usually in exchange for a
service rendered or a benefit conferred. Bolt, supra at 162. The stated purpose of the intrastate
fees is for "the administration of [the MCA]." MCL 478.1; MCL 478.2(1). The express
purposes of the act are
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to confer upon the [PSC] the power and authority and to make it its duty to
supervise and regulate the transportation of property by motor vehicle for hire
upon and over the public highways of this state in all matters whether specifically
mentioned herein or not, so as to: (a) Relieve all future undue burdens and
congestion on the highways arising by reason of the use of the highways by motor
vehicles operated by motor carriers; (b) protect and conserve the highways and
protect the safety and welfare of the traveling and shipping public in their use of
the highways; (c) promote competitive and efficient transportation services; (d)
meet the needs of motor carriers, shippers, receivers, and consumers; (e) allow a
variety of quality, price, and service options to meet changing market demands
and the diverse requirements of the shipping public; (f) allow the most productive
use of equipment and energy resources; (g) provide the opportunity for efficient
and well-managed motor carriers to earn adequate profits and attract capital; (h)
promote intermodal transportation; (i) prevent unjust discrimination; (j) promote
greater participation by minorities in the motor carrier system; (k) provide and
maintain service to small communities and small shippers; (l) prevent evasion of
this act through any device or arrangement; (m) promote entrepreneurship in the
motor carrier industry by allowing greater contract carrier economic and entry
flexibility; and (n) promote the use of jointly considered and initiated rates,
classifications, divisions, allowances, charges, or rules of motor carriers under
commission approved agreements. [MCL 475.2.10]
This language indicates the exactions are regulatory.
Taxes are designed to raise revenue for the general public, while a fee "confers benefits
only upon the particular people who pay the fee, not the general public or even a portion of the
public who do not pay the fee." Graham, supra at 151. In this case, in exchange for the fees, a
motor carrier receives the right to operate its trucks in Michigan, and the fees are used to enforce
the provisions of the act that carry out the above-listed purposes. Thus, there is a direct benefit to
the one who pays the fees. We recognize that promoting and regulating safe use of the highways
benefits the general public as well. However, a regulatory fee can have dual purposes and still
maintain its regulatory characterization. As long as the primary purpose of a fee is regulatory in
nature, the fee can also raise money provided that it is in support of the underlying regulatory
purpose, id. at 151, and thus benefit the general public.
Plaintiffs' argument focuses on the second prong of the test, whether the fees are
proportional to the cost of the services to which they relate. Plaintiffs assert that in 1982, when
10
Any purposes that related to economic regulation were preempted by § 601 of the FAAAA as
of January 1, 1995, and the PSC ceased to enforce those regulations. In re Motor Carrier Act,
supra at 300. However, the Legislature has yet to amend the MCA to reflect the federal
preemption.
-15-
the fees were increased,11 they became taxes because the amounts collected were in excess of the
expenses related to the services. A fee must be proportionate to the cost of the regulation, but its
amount is presumed reasonable unless its unreasonableness is established. Id. at 151. "[W]here
revenue generated by a regulatory 'fee' exceeds the cost of regulation, the 'fee' is actually a tax in
disguise." Gorney v Madison Hgts, 211 Mich App 265, 268; 535 NW2d 263 (1995).
In support of their contention, plaintiffs presented two affidavits and a senate fiscal
report. We find the affidavits of minimal value in determining whether the fees are
unreasonable. Neither of the affiants worked for the PSC and they could only offer their opinion
regarding how the fees were spent. The senate fiscal report, created by a senate fiscal analyst,
showed how the funds received by the PSC were utilized for fiscal years 1982-83 to 1994-95,12
and one of the charts showed that there was a surplus nearly every year.13
However, defendants dispute the accuracy of the figures in the report. Defendants note
that charts reflect the total fees collected, not just the fees collected pursuant to MCL 478.1 and
MCL 478.2(1), and defendants got confirmation from the author of the report that appropriations
to the Michigan Truck Safety Fund were not considered. Therefore, defendants contend that the
excess amounts were distorted.
It is clear that the report on which plaintiffs rely included all fee revenues without
excluding nonchallenged interstate fees collected pursuant to the SSRS and its predecessor
system. Therefore, the surplus figures were distorted to some degree. Even without reducing the
surplus figures, the aggregate excess during the thirteen years was only 11.7 percent, a relatively
small percentage. The test is whether the fee is proportional, not whether it is equal, to the
amount required to support the services it regulates. Graham, supra at 151. We conclude that
the Court of Claims did not clearly err in finding that the fees were not "wholly
disproportionate."
11
1982 PA 399 raised the fees in MCL 478.1 and MCL 478.2(1) to their current levels.
12
Plaintiffs also assert that the report shows that the fees supported activities not related to the
regulation of motor carriers because a portion was allocated to the State Police, Department of
Commerce, and Department of Civil Service. However, it is the duty of the police to assist the
PSC in enforcement of the MCA, MCL 479.13, and the Department of Commerce provides
administrative support to the PSC that enables it to carry out its duties. It follows that the PSC
would allocate a portion of the fees to them. In addition, the allocation of a very small portion of
the PSC's revenues to the Department of Civil Service is mandated by the Legislature in
accordance with the constitution to fund the civil service. Const 1963, art 11, § 5. The
allocations to this department averaged only $23,000 each year when revenues ranged from $3.2
to $6.3 million.
13
Plaintiffs present no evidence regarding the proportionality of the fees after 1995, when the
PSC ceased any economic regulatory functions as mandated by § 601 of the FAAAA. Therefore,
we have no basis on which to determine the proportionality of the fees after 1995.
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Lastly, plaintiffs argue that the exaction is not voluntary because a motor carrier cannot
operate its trucks in Michigan without paying it. Defendants argue that a motor carrier has a
choice with regard to what extent its trucks will have a presence in Michigan, and, therefore, the
exaction is voluntary. While this is true in regard to the application fee, MCL 478.1, defendants'
logic is erroneous in regard to the administration fee, MCL 478.2(1), because every vehicle
licensed in Michigan must pay this fee irrespective of where it operates. Even if we were to view
the exaction as more compulsory than voluntary, when the totality of factors are considered, we
believe the exactions are most properly classified as regulatory fees. Bolt, supra at 167; Graham,
supra at 151. Therefore, the court did not err in granting defendants summary disposition on this
issue.
VI
Plaintiffs next argue that the intrastate and interstate fees violate the Equal Protection
Clause of the United States and Michigan Constitutions because they apply to "for-hire" motor
carriers only and not to private motor carriers.14 Both the federal and state constitutions
guarantee equal protection, and afford similar protection. Const 1963, art 1, § 2; US Const, Am
XIV, § 1; Vargo v Sauer, 457 Mich 49, 60; 576 NW2d 656 (1998). A court's ruling whether a
statute violates equal protection is a question of law. McDougall v Schanz, 461 Mich 15, 24; 597
NW2d 148 (1999).
Legislative classifications that do not implicate a fundamental right or target a suspect
class are presumed to be constitutional if they have a rational basis, and one who challenges such
a statute has the burden of showing that it bears no rational relation to some independent and
legitimate legislative end. TIG Ins Co, Inc v Dep't of Treasury, 464 Mich 548, 557; 629 NW2d
402 (2001); Vargo, supra at 60. Under the rational-basis test, a statute will ordinarily be
sustained if it can be said to advance a legitimate governmental interest, even if the law seems to
be unwise or works to the disadvantage of a particular group, or if the rationale seems to be
tenuous. People v Copper (After Remand), 220 Mich App 368, 372-373; 559 NW2d 90 (1996).
A legislative classification may not be set aside if any set of facts may reasonably be conceived to
justify it. Id. at 373.
Before 1994, the fees were used to fund the economic- and safety-regulation of motor
carriers. Motor carriers do not include private carriers. MCL 475.1(i). A private carrier is "any
person engaged in the transportation of property by motor vehicle upon public highways where
the transportation is incidental to, or in furtherance of, any commercial enterprise of the person,
other than transportation." MCL 475.1(q). A "for hire" motor carrier is one that receives
"remuneration or reward of any kind, paid or promised, either directly or indirectly." MCL
475.1(e). Thus, "for hire" motor carriers are engaged in the business of transportation.
14
Because we concluded that the fees are regulatory, plaintiffs additional argument, that the fees
violate Michigan's Uniform Taxation Clause, is without merit.
-17-
The rationale behind the classification distinction may be supported by facts either known
or reasonably assumed, even if those facts may be debatable. TIG Ins, supra at 557, citing Crego
v Coleman, 463 Mich 248, 259-260; 615 NW2d 218 (2000). We believe it is reasonable to
assume that motor carriers have larger fleets than private carriers, operate under competitive
pressures, and operate more frequently than private carriers. We can surmise that these carriers
are in need of being more closely scrutinized in order to protect the general public, which also
uses the public highways; thus, the need for regulations and fees to cover their enforcement.
Even after economic regulation of the motor carriers ceased, as In re Motor Carrier Act,
supra at 302, recognized, the PSC "still has significant regulatory obligations," including
supervising and regulating the safety of motor-carrier operations, as well as the certification
process. Therefore, the need for fees to support such regulations were not eliminated after the
FAAAA was enacted. The same concerns that existed before still existed. Accordingly, we
conclude that the Legislature's classification bore a rational relation to a legitimate state purpose,
and the court did not err in granting defendants summary disposition.
VII
Finally, intervening plaintiffs argue that the intrastate fee imposed by MCL 478.2(1)
violates the Commerce Clause because it burdens interstate commerce. Again, we disagree, but
for a different reason than stated by the Court of Claims.
The Commerce Clause provides that Congress "shall have power . . . [t]o regulate
commerce . . . among the several states . . . ." US Const, art I, § 8, cl 3. The "dormant Commerce
Clause" "denies the States the power unjustifiably to discriminate against or burden the interstate
flow of articles of commerce." Oregon Waste Systems, Inc v Dep't of Environmental Quality of
the State of Oregon, 511 US 93, 98; 114 S Ct 1345; 128 L Ed 2d 13 (1994).
The Court of Claims held that the Commerce Clause was not implicated because the fee
applied to intrastate carriers only. However, any tax or regulation that affects interstate travel,
even if imposed solely on intrastate commerce, is subject to Commerce Clause analysis. Citizens
for Logical Alternatives & Responsible Environment v Clare Co Bd of Comm'rs, 211 Mich App
494, 499; 536 NW2d 286 (1995). Because the fee is imposed on any vehicle that operates
intrastate pursuant to a certificate of authority, even if it also travels interstate, the fee affects
interstate commerce, and thus, implicates the dormant Commerce Clause. Although the Court of
Claims did not address this issue, our review is nevertheless proper because whether a statute
violates the Commerce Clause is a question of law. Gillette Co v Dep't of Treasury, 198 Mich
App 303, 311; 497 NW2d 595 (1993).
"A statute is presumed constitutional absent a clear showing to the contrary." Caterpillar,
Inc v Dep't of Treasury, 440 Mich 400, 413; 488 NW2d 182 (1992). The test for determining
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whether a regulatory fee violates the Commerce Clause involves a two-tiered approach.15 The
first step is to determine whether the statute discriminates against interstate interests or merely
regulates evenhandedly with only incidental effects upon interstate commerce. Oregon Waste,
supra at 99. "'[D]iscrimination' simply means differential treatment of in-state and out-of-state
economic interests that benefits the former and burdens the latter." Id. The United States
Supreme Court has recognized that there is no clear line separating the two categories. The
critical consideration is the overall effect of the statute on both local and interstate activity.
Brown-Forman Distillers Corp v New York State Liquor Auth, 476 US 573, 579; 106 S Ct 2080;
90 L Ed 2d 552 (1986). A state law will be invalidated if it "discriminate[s] against an article of
commerce by reason of its origin or destination out of State." C & A Carbone, Inc v Town of
Clarkstown, New York, 511 US 383, 390; 114 S Ct 1677; 128 L Ed 2d 399 (1994).
In making this determination, we must consider all the provisions of the challenged
statute. MCL 478.2(1) requires that motor carriers that are licensed in Michigan and travel solely
intrastate or travel both intrastate and interstate, a "mixed" carrier, must pay a fee of $100 for
each vehicle. MCL 478.2(2) requires that motor carriers that are licensed in Michigan and travel
solely interstate must also pay the $100 fee. Therefore, the regulatory fee is the same for all
motor carriers licensed in Michigan, regardless of their final destination. It does not directly
regulate interstate commerce, Pike v Bruce Church, Inc, 397 US 137, 142; 90 S Ct 844; 25 L Ed
2d 174 (1970), nor is economic protectionism at issue, Arkansas Electric Coop Corp v Arkansas
Pub Service Comm, 461 US 375, 394; 103 S Ct 1905; 76 L Ed 2d 1 (1983).
Defendants assert that the majority of vehicles that pay the fee operate solely intrastate,
which presumably leads to their conclusion that the effect on interstate commerce is minimal.
However, the number of interstate vehicles burdened is inconsequential to a finding of
discrimination. New Energy Co of Indiana v Limbach, 486 US 269, 276-277; 108 S Ct 1803;
100 L Ed 2d 302 (1988).
Intervening plaintiffs argue that the mixed carrier invariably will pay a higher per-mile
fee than the carrier who operates solely intrastate. They assert that because the fee is a flat
annual fee, in order to receive the greatest benefit for the fee, a carrier would need to maximize
its intrastate operations and this could potentially affect a carrier's economic decisions by
discouraging an intrastate carrier from engaging in interstate commerce.
While this may be so, it is a matter of pure speculation. Intervening plaintiffs present no
evidence that any trucking firm's route choices are affected by the imposition of the fee, only
surmising that this could occur in the hypothetical. Only one affidavit was submitted by
15
Intervening plaintiffs contend that the four-pronged test enunciated in Complete Auto Transit,
Inc v Brady, 430 US 274, 279; 97 S Ct 1076; 51 L Ed 2d 326 (1977), and utilized in American
Trucking Ass'ns, Inc v Scheiner, 483 US 266, 283; 107 S Ct 2829; 97 L Ed 2d 226 (1987), is
applicable. However, this test is used to analyze the constitutionality of state-taxation statutes
that tax interstate commerce itself, i.e., taxes for the privilege of doing business in the state,
Complete Auto, supra at 279, not regulatory statutes.
-19-
intervening plaintiffs, in which James Crozier, manager of licensing and fuel for intervening
plaintiff TNT Holland Motor Express, Inc., stated that mixed carriers often top off their interstate
loads with intrastate hauls or transport intrastate loads in between interstate hauls. However, he
never averred that this was done only because of the fee imposed by MCL 478.2(1). Regardless
of the $100 fee, topping off loads or adding intrastate hauls in between interstate ones is an
economically efficient decision for the motor carriers. We do not find that the fee raises a
significant barrier to participation in interstate trade. Any effect the fee has on interstate
commerce is incidental and does not rise to the level of discrimination.
Having concluded that the statute regulates evenhandedly, it will be upheld unless the
burden it imposes on interstate commerce is "clearly excessive in relation to the putative local
benefits." Pike, supra at 142. Intervening plaintiffs do not contest that the statute serves a
legitimate nondiscriminatory purpose, i.e., funding safety and related regulations. This is an
exercise of the state's police power and serves a critical function in protecting the people who use
Michigan's highways. Great deference is given to state legislation in the field of highway safety
regulation and a strong presumption in favor of its validity exists. Raymond Motor
Transportation, Inc v Rice, 434 US 429, 443; 98 S Ct 787; 54 L Ed 2d 664 (1978). On the basis
of the record before us, we cannot say that the burden imposed on interstate commerce by the
$100 annual fee is clearly excessive in relation to Michigan's substantial interest in regulating
safety on its highways. Therefore, we hold that MCL 478.2(1) does not violate the Commerce
Clause. Accordingly, we affirm the Court of Claims' summary-disposition ruling in favor of
defendants even though it reached its decision for the wrong reason. Lavey, supra at 250.
Affirmed.
/s/ Michael R. Smolenski
/s/ Jane E. Markey
/s/ Henry William Saad
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