Secretary of Defense
| Decision Date | 18 May 1959 |
| Docket Number | B-138736 |
| Citation | 38 Comp.Gen. 768 |
| Parties | THE SECRETARY OF DEFENSE |
| Court | Comptroller General of the United States |
Transportation - rates - released value quotations - acceptance released valuation quotations which are offered by common carriers to the United States for transportation services under section 22 of the interstate commerce act, 49 U.S.C. 22, and which require the agreed or released valuation to be declared on the bills of lading in a specified form as a condition for the reduced rate offer, May not be regarded as having been accepted by the government by the mere existence of a provision on the back of the bill of lading concerning released valuation shipments in the absence of the required statement in the specified form. 38 Comp.Gen. 257, overruled.
The legality of tenders by common carriers, pursuant to section 22 of the interstate commerce act, 49 U.S.C. 22, of reduced rates conditioned upon limited liability has been considered here at the request of the department of the air force and the military traffic management agency, made at a conference held here January 22, 1959.
The problem of the legality of these tenders, presented in connection with shipments of internal combustion engines radial cylinder or jet propulsion type, made by the military departments, arose from the apparent inconsistency of an assumption of legality of such a tender implied in our decision of October 1, 1958, B-135792, 38 Comp.Gen. 257, with the policy of your department. The latter is based upon the conclusion of illegality of such tenders reached by your office of the general counsel and expressed in a memorandum dated November 9, 1954, to the director of transportation and communications, department of defense. We understand that the assistant secretary of defense for supply and logistics, on January 31, 1955, directed the military departments to assure that released rate section 22 quotations be processed in conformity with the opinion of the office of the general counsel, that steps were taken to comply with this directive and that agreed valuations of internal combustion engines are not declared in writing on the covering bills of lading.
The conclusion of illegality reached by your office of the general counsel was predicated upon two premises: (1) that section 20 (11) of the interstate commerce act, 49 U.S.C. 20 (11), which prohibits carriers from maintaining rates or charges based upon limitations of liability unless authorized or required by the interstate commerce commission, operates to preclude granting and acceptance of the tender, under section 22 of the act, of reduced rates conditioned upon limited liability absent a prior authorization therefor from the commission and (2) that section 22 contemplates a pre-existing tariff rate or charge from which a reduction in whole or in part May be offered the United States, and that therefore in instances where carriers do not maintain released rates in published tariffs (and rail carriers do not maintain released rates or ratings on internal combustion engines), there is no rate from which a reduction May validly be offered and accepted under section 22.
Section 22 of the interstate commerce act codified the antecedent common law right of carriers to grant preferential treatment to certain classes in certain cases; it conferred no right on carrier, shipper, or traveler. Nashville, chattanooga and St. Louis v. Tennessee, 262 U.S. 318. Section 20 (11) was not in the original act of 1887, as was section 22; it was added by the carmack amendment of 1906 and the cummins amendments of 1915 and 1916. Cumulatively, those amendments made a radical departure from the common law which held common carriers to the strictest accountability as insurers of the goods carried and from the common law rule permitting carriers to limit their liability by contract with the shipper (chicago, burlington and quincy railway company v Miller, 226 U.S. 513; adams express company v. Croninger Id. 491). However, we believe the effect of such amendments should not be extended beyond the plain meaning of the language employed and the evident purpose. Reider v Thompson, 339 U.S. 113, rehearing denied, Id. 936. The interstate commerce commission made an exhaustive study of section 20 (11) in 1915 in the cummins amendment, 33 i.C.C. 682, holding that the legislative intent therein was to change only that part of the act known as the carmack amendment and that the amendment should be construed so as to give full force to its clear purpose "without impairing the effect of any other provision of the act., " page 692. This would seem to be equally true of the second cummins amendment, which modified the absolute prohibition of its predecessor against rates conditioned upon limited liability so as to permit them where authorized or required by the interstate commerce commission. The effect of section 22 is to exclude from the operation of the act the carriage, storage and handling of property free or at reduced rates for the United States. United States v. Wells fargo, 161 F. 606, 617, affirmed on other grounds, American express company v. United States, 212 U.S. 522. The interstate commerce commission can neither bind the United States to tariff rates, Illinois central railroad company v. United States, 58 c.1cls. 182, nor compel carriers to grant reduced rates under section 22, United States v. Union pacific railroad company, 28 i.C.C. 518; it has limited jurisdiction over rates promulgated under section 22 as in the case of an illegal preference or discrimination, nashville, chattanooga and St. Louis railway company v. Tennessee, above. Thus the interstate commerce commission apparently cannot require carriers to offer reduced rates, conditioned upon limited liability, pursuant to section 22, nor would its authorization of such rates have any practical legal effect upon their validity. Fundamentally, section 22 seems to operate to exempt from the rate regulation of the act transportation for the United States. See public utilities commission of California v. United States, (1958) 355 U.S. 534, footnote 10, page 543, where it was stated that "section 22 of interstate commerce act, 24 Stat. 379, as amended, 49 U.S.C. 22, exempts transportation for the United States from the rate provisions of that act.' in the absence of language clearly indicating that congress intended so to limit the government's freedom to contract for its transportation services, we believe this exemption ought not to be determined administratively to be affected by the proviso in section 20 (11) limiting released valuation rates and ratings to those authorized or required by the interstate commerce commission.
There does not seem to be anything in the language of section 22 by itself or when construed with the rest of the act, which circumscribes the exemption so that it runs only to the level of rates, at least to the extent of requiring that tariff rates or charges for the contemplated services preexist the proposed section 22 rates or charges. See, in this connection, louisville and nashville railroad company v. United States, 106 f.1supp. 999, 1007, 1008, affirmed 221 F.2d 698, 703, in which a somewhat similar argument, made by the government, was rejected, although the decision turned on another point. Frequently carriers have offered and the government has accepted and used section 22 quotations providing charges for services not available to the public in tariffs, (e.g., the various section 22 quotations authorizing on government traffic transit privileges which are not available to the public). Other quotations have been made, accepted and used which provided higher rates than those available to the public because they included services additional to those offered the public under the tariff rates. See chesapeake and Ohio railway company v. United States, 161 f.1supp. 403, wherein the court of claims held applicable to the shipments there involved a section 22 quotation providing a stop-off charge at the oyster point backup depot rather than the lower charge provided in the carrier's...
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