697 F.2d 344 (D.C. Cir. 1982), 81-1600, National Classification Committee v. United States

Docket Nº:81-1600.
Citation:697 F.2d 344
Party Name:NATIONAL CLASSIFICATION COMMITTEE and National Motor Freight Traffic Association, Inc., Petitioners, v. UNITED STATES of America and Interstate Commerce Commission, Respondents.
Case Date:December 28, 1982
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit
 
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Page 344

697 F.2d 344 (D.C. Cir. 1982)

NATIONAL CLASSIFICATION COMMITTEE and National Motor Freight

Traffic Association, Inc., Petitioners,

v.

UNITED STATES of America and Interstate Commerce Commission,

Respondents.

No. 81-1600.

United States Court of Appeals, District of Columbia Circuit

December 28, 1982

Argued Jan. 26, 1982.

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William W. Pugh, Washington, D.C., with whom John R. Bagileo, Washington, D.C., was on the brief, for petitioners.

H. Glenn Scammel, Atty., I.C.C., Washington, D.C., with whom Richard A. Allen, Gen. Counsel, Kathleen M. Dollar, Associate Gen. Counsel, I.C.C., Robert B. Nicholson and Kenneth P. Kolson, Attys., Dept. of Justice, Washington, D.C., were on the brief, for respondents.

Before EDWARDS, Circuit Judge, DAVIS [*], Circuit Judge for the United States Court of Appeals for the Federal Circuit, and McGOWAN, Senior Circuit Judge.

Opinion for the court filed by Senior Circuit Judge McGOWAN.

McGOWAN, Senior Circuit Judge:

The National Motor Freight Traffic Association, Inc. (NMFTA) and an autonomous standing committee of that organization, the National Classification Committee (NCC), appeal from the Interstate Commerce Commission's (ICC's) rejection of a proposed change in the classification of furnaces for purposes of computing freight charges when furnaces move by truck. Finding merit in several of petitioners' contentions, we remand to the ICC for further proceedings.

I

The National Motor Freight Classification (NMFC) governs the nationwide tariffs applicable to the shipment of goods by motor common carriers ("truckers") operating under certificates of public convenience and necessity. An ICC-approved agreement among truckers directs the NCC, composed of 100 elected representatives of parties to the agreement, to maintain and make appropriate changes in the NMFC, thereby fulfilling their statutory duty to establish rates and classifications, 49 U.S.C. Sec. 10702(a) (Supp. IV 1981). National Classification Committee--Agreement, 299 I.C.C. 519 (1956). The NCC receives help in processing proposals for changes in classification matters from a group of experts it appoints, the National Classification Board (NCB).

To summarize how the NMFC works, rates for shipping a given item of freight are determined by the item's classification and its corresponding class rate or tariff. "The primary purpose of a freight classification is to assign each article, or a group of articles, to a class according to well-known

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classification principles or elements which recognize distinctions from a transportation standpoint, along fairly broad lines, in order to meet the needs of commerce." Class Rate Investigation, 1939, 262 I.C.C. 447, 508 (1945). The NCC must consider 15 characteristics of a commodity before assigning it a classification. 1 Once an item's classification is known, the freight charge is computed according to the corresponding class rate, the item's weight, and the distance to its destination.

The NMFTA, agent for publication of the NMFC, filed a proposal with the ICC to change the classifications for furnaces (item 26280 series), including mixed-truckload shipments of furnaces and certain related commodities (item 26300 series). The proposal, originally scheduled to become effective April 19, 1980, would have bumped these shipments into a higher classification for both truckload and less-than-truckload shipments. 2 In effect, the change would have increased freight charges on these goods. On April 2, 1980, members of the furnace industry petitioned the ICC to suspend implementation of the proposal and to investigate whether the rates were reasonable as required by 49 U.S.C. Sec. 10701(a) (Supp. IV 1981). Joint Appendix ("J.A.") 1; see 49 U.S.C. Sec. 10708 (Supp. IV 1981) (establishing procedures for investigation and suspension). The ICC granted the request on April 16, 1980. 3 J.A. 28. On April 21, 1980, the ICC set the matter for hearing on the basis of written pleadings under 49 C.F.R. Secs. 1100.43-.53 (1981). J.A. 30. By statute the truckers' representative in such a proceeding bears the burden of proving that the proposed change is reasonable. 49 U.S.C. Sec. 10708(c) (Supp. IV 1981).

A. The Review Board's Decision

On November 26, 1980, a three-person review board 4 (Member Fisher dissenting) held that the NCC had not shown the classification change to be reasonable. J.A. 184 (I. & S. Docket No. M-30240 F). The decision began by summarizing the opposing sides' contentions with respect to each of the fifteen transportation characteristics that are to be considered in assigning classification ratings. See supra note 1. It then discussed those characteristics about which

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"[s]ubstantial issues" were raised, J.A. 186: (1) trade conditions; (2) excessive weight, and ease or difficulty in loading and unloading; (3) care and attention needed in loading, and liability to damage; (4) susceptibility to theft; (5) density and value; and (6) stowability.

The Review Board considered and rejected the NCC's arguments designed to show that factors in each of the first three categories made furnaces less favorable than other freight from a transportation standpoint. (Although it declined the invitation to deem these features unfavorable, the Board did not say that they were favorable either.) As for the fourth category, the Review Board credited furnaces with a slight transportation advantage: the NCC had failed to refute an assertion by the furnace industry that, owing to "their size and weight," furnaces were less susceptible to theft than were most commodities. Id. at 187.

The fifth and sixth categories--density and value, and stowability--received the most attention and ultimately formed the battleground for the present appeal. Before we discuss the Review Board's findings in these areas, it may be helpful to explain why, other things being equal, freight with lower densities generally bear higher classification ratings. Consider the relative shipping burdens of a truckload of feathers versus a truckload of bricks. Although some of the bricks' other transportation characteristics might be unfavorable (for instance, they might be relatively more difficult to load), strictly from the standpoint of density one would generally want to charge a higher rate for the feathers than for the bricks. Truckers would feel slighted otherwise, because application of the same rate-per-hundred-pounds would lead to gross revenue disparities between two separate shipments that might have filled the same truck and travelled the same distance. In the parlance of the ICC, feathers would not then have borne their fair share of the transportation burden. 5

The NCC cited several ICC cases for the proposition that density was "a critical transportation characteristic," J.A. 50. Motor Freight Classification Ratings on Medical Kits, I. & S. Docket No. M-29116 (Apr. 7, 1977) (not printed); Classification Ratings Based on Density, 337 I.C.C. 784 (1970); Incandescent Electric Lamps or Bulbs, 44 M.C.C. 501 (1945), modified, 47 M.C.C. 601 (1947), 48 M.C.C. 195 (1948). Both sides agreed that the average density of the relevant furnaces was 11.5 pounds per cubic foot, and the average value $1.65 per pound. The NCC offered exhibit G of its opening statement to show that an average density of 11.5 was low even for selected commodities bearing the higher less-than-truckload rating proposed for furnaces (LTL 85); furnaces' average value was said to fall within the middle of those for the selected commodities, J.A. 188; see J.A. 65. Exhibit H, a listing of selected commodities bearing furnaces' current LTL class rating, showed that furnaces had a lower average density than any compared item; the average value of furnaces was on the high side of this list. J.A. 66. Finally, the NCC showed that competing products generally bore a rating of LTL 85 or higher, the only exceptions being items notably more dense and less valuable than furnaces. See J.A. 188.

The NCC offered additional evidence on rebuttal. The furnace industry had objected to the relevance of exhibits G and H on the ground that they listed only the densities and values of the selected items, ignoring the thirteen other transportation characteristics. Consequently, the NCC offered rebuttal exhibits A and B which supplied information about each previously-omitted characteristic for the commodities listed in opening exhibits G and H. J.A. 133-35. With few exceptions, each characteristic was said to be normal, or the commodity was said not to be subject to the identified condition.

In response the Review Board said first that, "[w]hile evidence presented by NCC might appear at first glance to justify the proposed LTL classification, we note that

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no comparisons were offered with respect to the proposed truckload and mixed truckload ratings." J.A. 188 (emphasis added). Beyond this lack of proof, the opinion later noted evidence suggesting that the proposed truckload and mixed-truckload ratings might actually be inappropriate. As for truckload ratings, the Review Board pointed out that only one of the items from LTL 85 selected for comparison in exhibit G bore a truckload rating or minimum weight requirement similar to the ones proposed for furnaces. 6 As for mixed-truckload shipments, the Review Board noted that furnaces were grouped with items such as fire brick, furnace cement, and sheet steel. "[T]he inclusion of these relatively dense items," the Board found, "could raise the average density of mixed truckloads considerably above the average density of the furnaces alone." J.A. 189. All told, the Board thought it lacked evidence to conclude "that the proposed increased truckload and mixed truckload ratings could be justified on the basis...

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