[Federal Register Volume 65, Number 218 (Thursday, November 9, 2000)]
[Notices]
[Pages 67472-67474]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-28826]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

[Released Rates Decision No. MC-999]


Notice of Filing of an Application To Amend Released Rate 
Provisions (and Corresponding Limits of Liability) for Motor-Carrier 
Shipments of Household Goods, and Request for Public Comments

AGENCY: Surface Transportation Board.
SUMMARY: The Household Goods Carriers' Bureau Committee (Committee), on 
behalf of its member motor carriers, seeks authority to amend Released 
Rates Decision No. MC-999 by changing the terms under which the 
carriers would limit their liability for damage to, or loss of, 
household-goods shipments, and thus changing the resulting charges to 
shippers.

DATES: Comments are due December 11, 2000.

ADDRESSES: Send comments (an original and 10 copies) referring to 
Released Rates Decision No. MC-999, to: Surface Transportation Board, 
Office of the Secretary, Case Control Unit, 1925 K Street, NW., 
Washington, DC 20423-0001.

FOR FURTHER INFORMATION CONTACT: James W. Greene, (202) 565-1578, or 
Lawrence C. Herzig, (202) 565-1576. [TDD for the hearing impaired: 
(202) 565-1695.]

SUPPLEMENTARY INFORMATION:

1. Background

    Under 49 U.S.C. 14706(a)(1), motor carriers of household goods 
ordinarily are liable for the actual loss or injury that they cause to 
the property they transport.\1\ However, under 49 U.S.C. 14706(f), 
household-goods carriers may establish ``released rates,'' under which 
the carriers' liability is limited to a value established by written 
declaration of the shipper or by a written agreement between the 
carrier and shipper, if they obtain permission from the Board.\2\
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    \1\ Carriers are not liable for loss or injury that they do not 
cause, such as losses due to acts of God.
    \2\ Motor carriers of freight other than household goods may 
establish released rates without having to obtain the Board's 
permission. 40 U.S.C. 14706(c)(1)(A).
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2. Current Provisions

    The released rates currently offered by most household-goods 
carriers are based upon authority granted by the Board's predecessor, 
the Interstate Commerce Commission (ICC), in Released Rates of Motor 
Common Carriers of Household Goods, 9 I.C.C.2d 523 (1993). Under the 
plan approved in 1993, the freight charges paid by a household-goods 
shipper depend upon the level of liability assumed by the carrier. A 
shipper pays the carrier's lowest rate, the ``base rate'' when it 
agrees, by indicating in writing on the bill of lading, that the 
carrier's liability will be 60 cents per pound per article for goods 
lost or damaged, but not more than the actual, depreciated value of the 
item. According to the Committee, the percentage of household-goods 
shippers choosing to move their goods under the 60-cents-per-pound 
limitation on liability remained relatively constant from 1985 through 
1996, decreasing from 33.1 to 31.2 percent.\3\
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    \3\ The 60-cent limitation predates the 1993 plan. See Household 
Goods Carriers' Bureau v. ICC, 584 F.2d 437, 439 (D.C. Cir. 1978).
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    A second option available to shippers allows them to protect more 
of the value of the shipment for a higher transportation charge. The 
shipper declares a lump sum value for the entire shipment, and pays the 
base rate plus a charge of 70 cents for each $100, or fraction, of the 
``declared value'' of the shipment. Under this second option, there is 
a minimum valuation: if the shipper's declared value is less than $1.25 
times the weight (in pounds) of the shipment, the minimum declared 
value of $1.25 per pound will apply instead. The recovery under this 
option for lost goods is the actual (depreciated) value of the 
(typically used) goods up to the declared value of the shipment.\4\
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    \4\ Of course, if the carrier lost an item that was new and 
unused, it would be liable for the replacement value of the item. In 
that case, the ``actual value'' of the lost item would be its new, 
or replacement, value.

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[[Page 67473]]

    Many carriers today also offer a third option for an even higher 
charge: ``full value protection'' (FVP) within broad ranges of declared 
values in which the carrier is liable for the full replacement value of 
items, up to the declared value of the shipment.\5\ The breadth of the 
ranges of declared values to which a single charge applies under this 
third option is greater than the $100 increments provided under the 
second option. The Committee states that, from 1985 through 1996, 
shippers' election of FVP increased from 38.8 to 55.4 percent of 
shipments.
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    \5\ We note that the protection under the third option could 
amount to less than full value if a shipper chose a declared value 
that is less than the replacement cost for all of the items in its 
shipment and the entire shipment were lost.
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    Under any of these options, when goods are damaged rather than 
lost, the carrier has the option of paying the cost of repairs to 
restore the damaged goods to their prior condition.

3. The New Proposal

    The Committee now proposes to offer only two options rather than 
three. It would retain the same first option of paying a base rate, for 
which the carrier's liability is limited to 60 cents per pound per 
article. The only other option would be an FVP option based upon a 
declared value for the shipment. It would differ from the currently 
available options in two ways. First, there would be no choice under 
which the carrier is liable for the actual, depreciated value of the 
goods lost or damaged. Rather, the carriers would be liable for full 
replacement value. Second, the minimum declared value for shipments 
would increase from $1.25 to $4.00 times the weight of the shipment (in 
pounds). The Committee established this figure after concluding that 
$4.00 per pound, rather than $1.25 per pound, more closely approximates 
the average value of recent household-goods shipments.
    The proposed FVP option would use the broad ranges of declared 
values from the current FVP option that many carriers offer. At the 
lower end, the valuation charge would increase as the declared values 
increased in $5,000 increments. As the declared values go up, the 
increments to which a single valuation charge would apply also would 
expand, up to $25,000 worth of declared values. The proposed ranges of 
declared values and corresponding charges are:

------------------------------------------------------------------------
                         Declared value                           Charge
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$0 to $5,000...................................................      $76
$5,001 to $10,000..............................................      113
$10,001 to $15,000.............................................      149
$15,001 to $20,000.............................................      182
$20,001 to $25,000.............................................      216
$25,001 to $30,000.............................................      258
$30,001 to $35,000.............................................      298
$35,001 to $40,000.............................................      338
$40,001 to $50,000.............................................      380
$50,001 to $60,000.............................................      440
$60,001 to $75,000.............................................      508
$75,001 to $100,000............................................      624
$100,001 to $125,000...........................................      754
$125,001 to $150,000...........................................      825
$150,001 to $175,000...........................................      933
$175,001 to $200,000...........................................    1,041
$200,001 to $225,000...........................................    1,155
$225,001 to $250,000...........................................    1,280
Over $250,000..................................................  1,280\1
                                                                       \
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\1\ Plus $.50 for each $100, or fraction thereof, in excess of $250,000
  declared value.

Within any of the proposed valuation ranges, lower charges would apply 
if the shipper elects a $250 or $500 deductible. If goods were lost, 
the carrier would be fully liable for the loss of the property, at its 
replacement value with no reduction for depreciation, up to the 
declared value of the shipment.\6\
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    \6\ Again, we note that a shipper that chooses a declared value 
that is lower than the replacement value of its household goods 
would not be able to replace all of its goods with new goods if the 
entire shipment were destroyed or lost.
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    If a shipper did not, in writing, either select the 60-cents-per-
pound-per-article limit or declare a value for the shipment, the 
declared value would be deemed to be $4.00 times the weight of the 
shipment in pounds. Also, when goods are damaged, the carrier would 
retain the option of paying repairs to restore the damaged items to 
their condition when the carrier received them, up to the declared 
value of the shipment.

4. Comments Requested

    We wish to ensure that any proposal we might approve represents an 
appropriate liability regime for individual homeowners who would be 
affected. Therefore, we seek comments, especially from individual 
shippers of household goods and organizations or government entities 
that represent their interests, concerning the Committee's new proposal 
and particularly the issues we outline below.\7\ We also seek 
additional information from the Committee, as discussed below.
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    \7\ The Committee's proposal is the result of collective action 
by its members pursuant to 49 U.S.C. 13703. The Committee's request 
for renewed Board approval of (and resulting antitrust immunity for) 
discussing and taking actions collectively is currently pending 
before the Board. Our action in moving this proceeding forward is 
not intended to prejudge our disposition of the Committee's renewal 
request.
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A. 60-cents-per-pound Limitation

    The limit of 60 cents per pound per article may no longer be 
appropriate if the estimated current average value of $4.00 per pound 
of household-goods shipments is accurate. There may be some appeal to 
having low base rates with minimal carrier liability for shippers who 
want to insure their household goods through other means. However, the 
rates for separate insurance likely will be higher, with lower carrier 
liability, because insurers typically seek to recover from the 
carriers, to the extent of the carrier's liability. Thus, any savings 
to the shipper from continuing an unrealistically low 60-cents-per-
pound-per-article limitation could be illusory. We request comments on 
whether and why we should allow a 60 cents-per-pound-per-article limit.
    In addition, we have received informal complaints from household-
goods shippers who, despite our clear rule on this matter, state that 
they did not knowingly request the 60-cents-per-pound limitation but 
were somehow deemed to have selected it. Therefore, we also request 
comments on ways to better ensure that shippers make informed, 
conscious decisions regarding the level of carrier liability and 
understand any applicable limitations to liability.

B. Use of Deductibles

    Under the proposal, if a shipper chooses a rate that includes a 
deductible, a carrier might lack a liability-based incentive to 
exercise reasonable care to avoid minor damages to shipments. We 
request comment on this aspect of the proposal.

C. Elimination of Actual (Depreciated) Value Option

    We are concerned that the FVP proposal eliminates the current 
option under which motor carriers are liable for the actual 
(depreciated) value of the household goods in a shipment--the level of 
liability contemplated by the statute. We ask for comment on whether 
carriers should be allowed to eliminate this intermediate option.

D. Rate Levels

    According to the Committee, today some 22.9 percent of FVP 
shipments result in paid claims. The Committee projects that 25 percent 
of FVP shipments under the proposed $4.00-per-pound minimum would 
result in

[[Page 67474]]

paid claims.\8\ We do not know if this projection is based on a trend 
of an increasing number of paid claims. If the expected increase in 
paid claims did not occur, the additional revenues generated would have 
the same effect as a rate increase. We ask the Committee to submit all 
supporting data, including work papers, associated with the proposed 
fees and the prediction that a higher percentage of FVP shipments will 
result in paid claims.\9\
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    \8\ The Committee asserts that fewer claims were filed in the 
past because the $1.25-per-pound minimum had the effect of 
discouraging claims for small losses. But current FVP shipments have 
not been subject to the $1.25-per-pound minimum. Therefore, we 
question the Committee's assumption that there would be an increase 
in the amount of paid claims under the proposed new FVP option.
    \9\ Concerning the supporting data, we seek an explanation of 
the basis for arriving at the proposed charges for each of the 19 
levels shown in Table 5 of the application. It would be helpful to 
have information similar to that submitted by the Committee in 
Attachment No. 3 to its October 1992 application to amend earlier 
released rate orders (Nos. MC-505 and MC-672).
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E. Different Carrier Liability on Identical Shipments

    We do not know if the Committee intends a difference in carrier 
liability for two otherwise identical shipments, one of which has a 
declared lump sum value and one of which does not. As worded, the 
proposal would seem to provide a different result. Under the 
Committee's proposed terms:

    All shipments (other than those released to a value not 
exceeding 60 cents per pound per article) will be deemed released to 
a minimum lump sum value of $5,000 or $4.00 times the actual total 
weight (in pounds) of the shipment. If the shipper declares or 
releases the shipment to a valuation that falls between the 
valuation amounts shown, the next higher valuation amount and the 
applicable charge associated therewith will apply.

    An example will illustrate our concern. There would be a different 
maximum amount of carrier liability on two identical shipments each 
weighing 4,000 pounds, with the same charge, depending on whether the 
shipper wrote in a declared value or left the line for a declared value 
blank. If the shipper wrote in the figure $16,000 on the blank for a 
declared value and the entire shipment were lost, the carrier could be 
liable for up to $20,000 (if the shipper demonstrated that the 
replacement value of his lost goods were that high) because the chosen 
figure, $16,000, ``falls between the valuation amounts shown'' on the 
carriers' proposed table of charges. But if the shipper does not write 
anything in the blank for declared value, the declared value of this 
shipment would be deemed to be $16,000 ($4.00  x  4,000) and the 
shipper would pay the same valuation charge; however, the carrier's 
maximum liability would be $16,000 if the entire shipment were lost. We 
ask whether the Committee intended this disparate result and if so, 
whether that is appropriate.

F. Annual Adjustments

    The Committee requests authority to affect annual adjustments in 
both the proposed minimum valuation per pound and the proposed 
valuation charges for shipments, based on changes in the ``household 
furnishings and operations'' item within the Consumer Price Index, U.S. 
City Average, published by the Bureau of Labor Statistics (BLS) of the 
United States Department of Labor. We understand that BLS has 
restructured the household furnishings and operations index, and that 
certain items frequently included in household goods shipments 
(televisions and sound equipment, for example) were moved to other 
indexes. We request additional justification from the Committee 
regarding the relevance of the proposed index, comparing the items 
included in the index with all the items commonly included in shipments 
of household goods.
    We invite comments regarding the merits of this or any other index 
that may be appropriate to establish adjustments in the minimum 
valuation of shipments and the corresponding charges. Additionally, we 
invite comments as to whether any methodology for adjusting minimum 
valuations of household-goods shipments should apply also to the 
carriers' charges, as the relationship between the costs of providing a 
specific dollar amount of carrier liability and changes in the value of 
household goods has not been explained.

5. Summary

    We encourage interested persons to participate in this proceeding 
by submitting written data, views, or arguments for or against the 
proposed changes in the released rates authority for motor carriers of 
household goods. While we are interested particularly in receiving 
comments on certain issues, as discussed above, we invite comments on 
all aspects of the proposal. All comments and other materials referred 
to in this notice will be available for inspection and copying at the 
Board's address given above. Normal office hours are between 8:30 a.m. 
and 5:00 p.m., Monday through Friday, except holidays.

    By the Board, Chairman Morgan, Vice Chairman Burkes, and 
Commissioner Clyburn.
Vernon A. Williams,
Secretary.
[FR Doc. 00-28826 Filed 11-8-00; 8:45 am]
BILLING CODE 4915-00-P