National Classification Committee v. U.S.

• Decision Date: 17 December 1985
• Docket Number: No. 84-1140,84-1140
• Citation: 779 F.2d 687
• Parties: NATIONAL CLASSIFICATION COMMITTEE and National Motor Freight Traffic Association, Inc., Petitioners, v. UNITED STATES of America and Interstate Commerce Commission.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 687

779 F.2d 687

250 U.S.App.D.C. 297

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

No. 84-1140.

United States Court of Appeals, District of Columbia Circuit.

Argued March 19, 1985.

Decided Dec. 17, 1985.

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

John R. Bagileo, with whom William W. Pugh and Brian L. Troiano, Washington, D.C., were on brief, for petitioners.

Sidney L. Strickland, Jr., Atty., I.C.C., with whom William F. Baxter, Asst. Atty. Gen., Dept. of Justice, Robert S. Burk, Acting Gen. Counsel, Henri F. Rush, Acting Deputy Gen. Counsel, I.C.C., Robert B. Nicholson and Robert J. Wiggers, Attys., Dept. of Justice, Washington, D.C., were on brief, for respondents.

Before WALD, EDWARDS and BORK, Circuit Judges.

Opinion for the Court filed by Circuit Judge BORK.

BORK, Circuit Judge.

This is the third in a series of petitions to this court relating to the question of whether petitioners, the National Classification Committee ("NCC") and the National Motor Freight Traffic Association, Inc. ("NMFTA") may include charges in their freight classification tariff, the National Motor Freight Classification ("NMFC"). This latest petition is from the Interstate Commerce Commission's summary denial of petitioners' application to amend the provisions of their rate bureau agreement to include authority to formulate and publish charges in the NMFC.

Petitioners challenge the Commission's decision on the grounds that they were not afforded their statutory right to a hearing on the application and that the record and findings supporting the decision are inadequate so that the decision is arbitrary, capricious and without a rational basis. We affirm the Commission's decision.

I.

The procedural history of this case was set out in our decision in National Classification Committee v. United States, 746 F.2d 886 (D.C.Cir.1984). ¹ Here we present only those facts that are directly relevant to this petition.

The agreement petitioners seek to amend was approved by the Commission in 1956 pursuant to former section 5a of the Interstate Commerce Act, recodified as amended at 49 U.S.C. Sec. 10706 (1982). See National Classification Committee--Agreement, 299 I.C.C. 519 (1956). The agreement governs freight classification matters for the approximately 3,000 motor common carriers who are parties to the agreement and "establishes a code of procedure which enables applicants to utilize an effective means for joint consideration, initiation, and establishment of classification matters." Id. at 522. The Commission's approval of the agreement confers antitrust immunity on any collective activities covered by the agreement. See 49 U.S.C. Sec. 10706(b)(2) (1982).

The purpose of the agreement is to assist various groups of motor common carriers or individual carriers in ratemaking, thus obviating the need for publication of millions of separate rates for articles transported through interstate commerce. This goal is achieved through the use of two complementary tariffs, the freight classification tariff and the class rate tariff. The freight classification tariff assigns commodities with comparable transportation characteristics to a class. See National Classification Committee v. United States, 765 F.2d 1146 (D.C.Cir.1985). Once a commodity has been assigned to a class, the class rate tariff is used to determine the rate for transporting an article between various origins and destinations. The freight classifications are published by petitioner NMFTA, and the class rate tariffs are published by regional rate bureaus and by individual carriers.

On May 5, 1978, the NMFTA proposed to publish in the NMFC an extra charge of $2.00 per shipment on "order notify" shipments weighing 10,000 pounds or less. ² The Commission suspended the operation of the proposed schedules and instituted an investigation into their lawfulness. By decision served on January 9, 1979, the Commission cancelled the proposed schedules, concluding that the NMFTA had not shown the proposed charge to be reasonable in amount and, further, that the collective establishment of an order-notify charge was beyond the scope of the approved section 5a agreement. Investigation and Suspension Docket No. M-29788--Charge for Shipments Moving on Order Notify Bills of Lading, N.M.F.T.A. (served Jan. 9, 1979), reprinted in No. 83-1474 J.A. at 246a ("Order-Notify I" ).

On review, this court affirmed the Commission's decision that the order-notify charge was not shown to be just and reasonable, but found the record inadequate for review of the issue "whether the Interstate Commerce Commission's determination that this type of charge cannot properly be included within the scope of a Section 5A agreement is reasonable under all the circumstances." National Classification Committee v. ICC, No. 79-2561, mem. op. at 1 (D.C.Cir.Dec. 16, 1980). The court found the record inadequate because the Commission did 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 already are 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. The Commission's decision on the scope of the agreement clouds the legitimacy of these and similar charges and the Commission must 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 1-2.

Upon remand, the Commission reopened the proceeding and issued a notice in which it solicited comments and stated in broad terms its understanding of the court's mandate:

By this decision, we are reopening this proceeding for consideration of the lawfulness of the promulgation of order-notify charges and any other charges as part of the National Motor Freight Classification Tariff.... The lawfulness of order-notify charges cannot be considered in a vacuum; the entire subject of charges per se must be addressed.

Investigation and Suspension Docket No. M-29788--Charge for Shipments Moving on Order-Notify Bill of Lading, N.M.F.T.A. at 3 (served Mar. 12, 1982), reprinted in No. 83-1474 J.A. at 351a, 353a.

After reviewing the comments received, and the entire section 5a agreement, on March 22, 1983, the Commission issued its decision on remand. Investigation and Suspension Docket No. M-29788--Charge for Shipments Moving on Order-Notify Bill of Lading, N.M.F.T.A. (served Mar. 22, 1983), reprinted in No. 83-1474 J.A. at 589a ("Order-Notify II" ). The Commission concluded first that the order-notify charge exceeded the scope of the section 5a agreement, and second, that the NCC published other rules and charges in the classification tariff which exceeded the scope of the agreement. The Commission concluded:

We do not question the NCC's authority to promulgate rules and regulations.... 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. Respondent's agreement is specific as to classification and silent as to rates and charges. This silence cannot be circumvented by placing rates and charges in rules governing the classification.

No. 83-1474 J.A. at 591a. Finally, the Commission did not limit its findings to the particular issue presented but, in what the Commission described as its response to the court's remand order, concluded its decision with a section entitled "Commission Policy." Id. at 596a. This section was intended by the Commission to "clarify definitively what is appropriate matter for inclusion within the NMFC," and was intended to establish a standard for ongoing proceedings with respect to proposed amendments to the section 5a agreement. Id. The statement provides in relevant part:

Accordingly, we conclude that for now and in the future, NCC's substantive antitrust immunity is limited to the promulgation of classifications and rules and regulations relating to the classification. Rules and charges, other than those prescribed by us, that do not contribute to the actual establishment, implementation and/or understanding of the classification exceed the scope of respondent's antitrust immunity and must be expunged from the NMFC.

Id. at 596a-597a.

This court affirmed the Commission's Order-Notify II decision in National Classification Committee v. United States, 746 F.2d 886 (D.C.Cir.1984). The court first determined that the critical issue presented in the case was "the scope and purpose of the NMFC agreement," id. at 891, and then affirmed the Commission's interpretation of the agreement: "We will not interfere with the Commission's determination of what constitutes a true classification matter when that determination is, standing alone and unaided by judicial deference, reasonable, and in fact, compelling. The decision that accessorial charges and minimum charges may be stricken from the agreement is thus affirmed." Id. at 892.

On July 5, 1983, while the Order-Notify II decision was pending on appeal, the NCC filed an application that proposed to add language to the NMFC authorizing the NCC to consider and establish charges. The proposed amendment essentially would have added the word "charges" where the powers and functions of the NCC, the National Classification Review Subcommittee, and the National Classification Board are enumerated. The NCC's application stated that "[t]he purpose of the proposed amendment is to insure that...