National Classification Committee v. U.S.
| Decision Date | 17 May 1994 |
| Docket Number | No. 92-1212,92-1212 |
| Citation | 22 F.3d 1174 |
| Parties | NATIONAL CLASSIFICATION COMMITTEE and National Motor Freight Traffic Association, Inc., Petitioners, v. UNITED STATES of America and Interstate Commerce Commission, Respondents, Mallinckrodt Specialty Chemicals Company, et al., The National Industrial Transportation League, Intervenors. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Petition for Review of an Order of the Interstate Commerce Commission.
William W. Pugh, Alexandria, VA, argued the cause, for petitioners. On brief, was John R. Bagileo, Washington, DC. Rosalind C. Cohen, Washington, DC, entered an appearance.
Michael Martin, Atty., I.C.C., Washington, DC, argued the cause, for respondents. On brief, were Robert S. Burk, Gen. Counsel, I.C.C., Craig M. Keats, Associate Gen. Counsel, I.C.C., and Robert B. Nicholson and John P. Fonte, Attys., Dept. of Justice, Washington, DC.
Daniel J. Sweeney, Washington, DC, argued the cause, for intervenors. On the joint brief, were Richard D. Fortin and Nicholas J. DiMichael, Washington, DC.
Before MIKVA, Chief Judge; WILLIAMS and HENDERSON, Circuit Judges.
Opinion for the court filed by Circuit Judge KAREN LeCRAFT HENDERSON.
The National Classification Committee (NCC) seeks review of a decision by the Interstate Commerce Commission (ICC or Commission) ordering the NCC to cancel tariffs reclassifying certain acids that are designated as hazardous by the United States Department of Transportation and are transported by motor common carriers. Because the Commission reasonably concluded that the reclassification violates 49 U.S.C. Sec. 10706(b)(3)(C), we deny the NCC's petition for review.
The NCC is a standing committee of the National Motor Freight Traffic Association, a trade association whose members include roughly one thousand motor common carriers. The NCC is responsible for publishing the principal classification tariff, the National Motor Freight Classification (NMFC), used by motor common carriers to establish class rate tariffs. The NMFC groups commodities with similar transportation characteristics into divisions referred to as "classifications." Each classification is assigned a number called a "classification rating." The more difficult or costly it is to transport a commodity, the higher the classification rating of the commodity.
Although the NMFC itself does not establish trucking rates, it plays a significant role in the rate-setting process. Class rate tariffs incorporate the NMFC's classifications and establish rates on a classification by classification basis for transporting goods between specific locations. Generally, the higher the classification rating, the higher the rate the shipper pays for transportation. Class rate tariffs may be published either by a carrier individually or by a carrier rate bureau.
Historically Congress has excepted entities engaged in collective ratemaking from antitrust liability. See Reed-Bulwinkle Act, Pub.L. No. 90-662, 62 Stat. 472 (1948) (current version at 49 U.S.C. Sec. 10706). Motor common carriers can enter into agreements with each other regarding both classifications and rates and if the ICC approves the agreements the antitrust laws "do not apply ... with respect to making or carrying out the agreement." 49 U.S.C. Sec. 10706(b)(2). In the era of deregulation, however, Congress has narrowed the range of permissible collective ratemaking activities. See generally Household Goods Forwarders Tariff Bureau v. Interstate Commerce Comm'n, 968 F.2d 81, 82 (D.C.Cir.1992); National Classification Comm. v. United States, 765 F.2d 164, 166 (D.C.Cir.1985). Of relevance here, the Motor Carrier Act of 1980 (MCA 80 or the Act) prohibits collective action regarding "released rates." 49 U.S.C. Sec. 10706(b)(3)(C) (). A carrier offers a released value rate when it charges the shipper a discounted rate in exchange for a limitation on the carrier's liability in the event of loss or damage. In contrast, when a carrier charges a full value rate, it assumes liability for the full value of any loss or damage.
The petition for review arises from the NCC's proposal to change the classification rating of acids designated hazardous by the United States Department of Transportation (DOT). In the past, all acids were grouped into a single classification encompassing applicable subclassifications for released rates. The NCC's proposal would change hazardous acids from the generic acids classification to a new, more specific classification that would not include subclassifications for released rates. The proposed change would result in the cancellation of all collectively established released rates for the reclassified acids. The NCC argues that the reclassification is necessary so that carriers are adequately compensated for the increased costs they must incur in complying with the DOT's more rigorous requirements for the transportation of hazardous acids.
Several individual shippers and shipper groups challenged the NCC's proposed reclassification before the ICC. In response the ICC suspended the effectiveness of the proposed classification change pending a determination of its legality. The ICC ultimately concluded that the NCC's proposed reclassification resulted from proscribed collective action on released rates in violation of 49 U.S.C. Sec. 10706(b)(3)(C). Classification Rating on Acids, NMFC, March 1992, No. M-30424 at 4, reprinted at Joint Appendix (J.A.) 375. As an alternative ground for its holding, the ICC found that the NCC's proposed reclassification was not reasonable, as required by49 U.S.C. Sec. 10701(a), because the NCC had not shown any substantial change in the transportation characteristics of hazardous acids necessitating a change in classification. Id. 1
The petition for review requires us to decide whether, as the NCC argues, section 10706(b)(3)(C) prohibits only collective ratemaking with respect to released value rates or whether, as the ICC concluded, that section also prohibits collective classification changes that have the effect of cancelling existing released rates.
Congress has not made clear whether section 10706(b)(3)(C) prohibits only collective action on released rates or whether its reach extends to classifications that have the effect of cancelling existing released rates. Because it has implicitly left this gap for the ICC to fill, we will uphold the Commission's interpretation of the Act, that is, that section 10706(b)(3)(C) prohibits collective action on classification changes that affect released rates, so long as it is reasonable. See Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 844, 104 S.Ct. 2778, 2782-83, 81 L.Ed.2d 694 (1984).
We conclude that the ICC's interpretation of MCA 80 is reasonable. It is beyond dispute that the NCC's proposed reclassification is the result of collective action. 2 Furthermore, the reclassification cancels existing released rates just as effectively as a direct vote would. The NCC proposes to move the designated hazardous acids from a general category which includes subclassifications for acids shipped at released rates to a distinct category which does not include a subclassification for released rates. Because class rate tariffs assign rates only to classifications contained in the NMFC, the absence of a released rate classification for the designated hazardous acids in the NMFC means that class rate tariffs will not include released rates for the acids. In other words, the proposed reclassification will result in the assignment of full value rates to acids previously assigned both full value and released rates. Because the proposed reclassification results from collective action and has the effect of cancelling existing released rates, we hold that the ICC reasonably concluded that section 10706(b)(3)(C) bars it.
We are not persuaded by the NCC's arguments to the contrary. The NCC first argues that the ICC's interpretation of section 10706(b)(3)(C) is unreasonable because it is inconsistent with the ICC's interpretation when it originally approved the NCC's classification-making agreement. After the enactment of MCA 80, the NCC revised its classification-making agreement to conform it to the Act. The NCC submitted its agreement to the ICC for approval as required by the Act. See 49 U.S.C. Sec. 10706(a)(2)(A). The NCC also requested the ICC to interpret the precise scope of section 10706(b)(3)(C)'s prohibition on collective action regarding released rates. Specifically, the NCC asked whether it would run afoul of section 10706(b)(3)(C) if it entertained
a proposal recently made by a shipper to establish a full value rating of class 60 for a product described as 'acid spill cleanup products' notwithstanding that that commodity is presently embraced in NMFC item 60000, which provides class 70 for Drugs and Chemicals, NOI, when released to a value of $1.70 per pound.
J.A. at 374 n. 8. The proposed reclassification would have made shippers uninterested in shipping the product under a released value agreement since the full rates would actually be lower than the released rates. In one sense, then, the proposal would have "cancelled" the classification applicable to the product when shipped under a released value agreement. But the Commission responded that the NCC could make the proposed reclassification without violating section 10706(b)(3)(C). Decision of the ICC, Section 5a Application No. 61 at 2 (May 2, 1988).
Despite the NCC's claim, the ICC's current position does not necessarily contradict its 1988 response to the NCC. Under the default rule contemplated by the 1988 proposal, shippers would have retained the option...
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National Motor Freight Traffic Ass'n v. I.C.C., 94-1032
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