National Classification Committee v. U.S., 83-1474

• Citation: 746 F.2d 886
• Decision Date: 26 October 1984
• Docket Number: No. 83-1474,83-1474
• Parties: NATIONAL CLASSIFICATION COMMITTEE and National Motor Freight Traffic Association, Inc., Petitioners, v. UNITED STATES of America and Interstate Commerce Commission, Respondents.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 886

746 F.2d 886

241 U.S.App.D.C. 153

NATIONAL CLASSIFICATION COMMITTEE and National Motor Freight Traffic Association, Inc., Petitioners, v. UNITED STATES of America and Interstate Commerce Commission Respondents.

No. 83-1474.

United States Court of Appeals District of Columbia Circuit.

Argued Feb. 3, 1984.

Decided Oct. 26, 1984.

Petition for Review of an Order of the Interstate Commerce commission.

John R. Bagileo, Washington, D.C., with whom William W. Pugh, Bryce Rea, Jr. and Leo C. Franey, Washington, D.C., were on the brief, for petitioners.

Henri F. Rush, Associate Gen. Counsel, Interstate Commerce Com'n, Washington, D.C., with whom John Broadley, Gen. Counsel, Sidney L. Strickland, Jr., Atty., Interstate Commerce Com'n, John J. Powers and Robert J. Wiggers, Attys., Dept. of Justice, Washington, D.C., were on the brief, for respondents.

Before WALD, BORK, and STARR, Circuit Judges.

Opinion for the Court filed by Circuit Judge BORK.

BORK, Circuit Judge:

Petitioners National Classification Committee ("NCC") and National Motor Freight Traffic Association, Inc. ("NMFTA") appeal from an order of the Interstate Commerce Commission interpreting an agreement made pursuant to former section 5a of the Interstate Commerce Act, recodified as amended at 49 U.S.C. Sec. 10706 (1982). That section, enacted by Congress in 1948, ch. 491, 62 Stat. 472, provided that any carrier party to an agreement among carriers about "rates, fares, classifications, divisions, allowances, or charges ... or rules and regulations" relating to those subjects could apply to the Commission for approval of the agreement. Commission approval gave the parties antitrust immunity for the making of the agreement. ¹

The agreement in question here was made between motor carrier members of NMFTA and approved by the ICC. It provides for collective action with respect to freight classification matters. The Commission held that the agreement did not authorize various charges and rules promulgated by petitioners and ordered them stricken from the agreement. We affirm the Commission's order but hold that it does not operate retroactively to expose the parties to the agreement to antitrust liability for rules made in the past.

I.

Pursuant to the statute, in 1954 petitioner NMFTA presented the ICC with a proposed agreement which would govern classification matters among NMFTA members. The purpose of a freight classification is to assign each article or group of articles with comparable transportation characteristics to a class. These assignments are made according to well-known classification principles which are based upon distinctions relative to transportability, such as shipping weight, perishability, ease or difficulty of loading, and stowability. See Class Rate Investigation, 262 I.C.C. 447, 508 (1945). Once a classification rating is assigned, the price of class rated transportation can be established by examining a separate, class rate tariff which provides the rate for transporting an article of a given class between origins and destinations. Class rate tariffs are published by regional rate bureaus or individual carriers.

NMFTA's 1954 proposed agreement was rejected by the ICC as "not ... in furtherance of the national transportation policy ...." National Motor Freight Traffic--Agreement, 292 I.C.C. 45, 52 (1954). The Commission viewed the proposal as too broad because it attempted to set not only the particulars of classification practices, but also announced a system for joint consideration of traffic problems of general concern to the industry. Id. at 49.

NMFTA returned to the Commission with a redrafted agreement in 1956, and this time the Commission granted approval. National Classification Committee--Agreement, 299 I.C.C. 519 (1956). While not as ambitious as the earlier proposal, the 1956 agreement was still sweeping:

The agreement establishes a code of procedure which enables applicants to utilize an effective means for joint consideration, initiation, and establishment of classification matters. It furnishes a means to avoid destructive competition, promote sound economic conditions, protect shipping interests, and allow carriers an independence of action, free and unrestrained. The collective procedure in conformity with the terms of the agreement is not prohibited by any provisions of section 5a and it will aid motor carriers to maintain reasonable and nondiscriminatory classifications of property in furtherance of the national transportation policy.

Id. at 522.

The agreement was, of course, subject to amendment to take account of new developments and concerns. In schedules filed to become effective on May 5, 1978, NMFTA proposed to publish in the Classification Tariff on behalf of its member carriers an extra charge of $2.00 per shipment on what are called "order-notify" shipments when such shipments weighed 10,000 pounds or less. An order-notify shipment is one in which a carrier, upon its issuance of a negotiable, order-notify bill of lading, becomes obliged to retain possession of the goods shipped until the original bill is surrendered to it prior to delivery. According to petitioners, the order-notify bill is "another form of the more familiar c.o.d. shipment, with the difference being that the carrier collects the price of the goods before delivery in the case of c.o.d. shipments, whereas the consignor collects the price of the goods before the carrier can deliver in the case of order-notify shipments. In either case, the carrier is liable for loss of the goods if delivery is accomplished without prior collection of the price of the goods." Brief for NCC and NMFTA at 11-12 (citation omitted).

Some parties objected to NMFTA's proposal, and by order of May 2, 1978, the ICC suspended the operation of the proposed schedules and instituted an investigation into their lawfulness. The Commission requested that parties to the investigation address such issues as (1) whether the proposed charge was just and reasonable; (2) whether the charge was within the jurisdictional scope of the 1956 agreement, and (3) whether the NMFTA agreement procedures give participating carriers adequate time to publish provisions elsewhere to continue order-notify service without assessing the new $2.00 charge. The Commission stated that the 1956 agreement "is limited to the joint consideration of classification ratings, rules and regulations." Joint Appendix at 2a (hereinafter "J.A."). As a result of the investigation, the ICC "ordered the proposed schedules cancelled. It found that NMFTA had not shown the proposed charge to be cost-justified, i.e., just and reasonable in amount. In addition, the Commission concluded that it would be contrary to the purpose for which the Commission had originally approved the NMFC [National Motor Freight Classification] Agreement to interpret it to permit the collective establishment of an order-notify charge." Brief for ICC at 11; see J.A. at 248a, 320a. ² The Commission noted that "the purpose of classification is to assign articles to classes which reflect characteristics of commodities in relation to each other, and not to set the rate level for the shipment of such commodities." Brief for ICC at 11; see J.A. at 320 For that reason, the ICC found that "inserting the proposed charge in the classification tariff imputes the characteristics of a rate tariff to the classification tariff...." Brief for ICC at 11; see J.A. at 321a.

The NMFTA appealed the decision to this court. In National Classification Committee & National Motor Freight Traffic Association, Inc. v. ICC, No. 79-2561 (D.C.Cir. Dec. 16, 1980), we affirmed the Commission's order cancelling the order-notify charge as not just and reasonable but remanded the case for reconsideration of the question whether such a charge could properly be included within the scope of a section 5a agreement. The court found the record inadequate because the Commission had not adequately set forth the factual and policy basis for its decision. "There is, for example, no discussion by the Commission indicating the extent to which its decision affects similar charges ... which are already included within the agreement as approved; nor is there any explanation of the apparent inconsistency between the inclusion of such charges and the exclusion of a charge for order-notify shipments." Mem. op. at 1-2. The court asked that the Commission "clarify with adequate factual and legal analysis its position indicating what types of order-notify or other special charges are deemed appropriate or inappropriate under the Section 5a agreement." Id. at 2.

On March 22, 1983, the Commission issued the decision now under review. J.A. at 589a-603a. The ICC reviewed all facets of the 1956 agreement for the purpose of weeding out portions of that agreement which did not involve classification matters and which had thus not been contemplated by the 1956 agreement. The Commission decided that "[u]pon reopening, we conclude that the promulgation of the proposed order-notify rule and charge is not within the scope of the NMFTA's section 5a agreement. In addition, we find that the NCC currently publishes a number of other rules and charges in the NMFC which are unrelated to classification and, as a consequence, exceed the scope of the NMFTA's agreement." J.A. at 590a-591a. The ICC was careful to note that the agreement and the NCC had legitimate functions:

We do not question the NCC's authority to promulgate rules and regulations, regardless of whether the power is inferred from the title and preamble or inherent in respondent's authority to maintain a classification. We question respondent's authority to promulgate charges in the context of rules that are intended to govern the classification. Under Section 5a, motor carriers could enter into agreements to consider both rates and charges, provided these powers were specified in an agreement approved by the Commission. Responde...