Opinion ID: 478554
Heading Depth: 2
Heading Rank: 1

Heading: The Statutory Definition of Motor Contract Carriage

Text: 3 At issue is the meaning of the statutory definition of motor contract carriage, now codified at 49 U.S.C. Sec. 10102(14)(B). That section defines a motor contract carrier as 4 (B) a person providing motor vehicle transportation of property for compensation under continuing agreements with one or more persons-- 5 (i) by assigning motor vehicles for a continuing period of time for the exclusive use of each such person; or 6 (ii) designed to meet the distinct needs of each such person. 7 In issuing the permits challenged here, the Commission relied on Sec. 10102(14)(B)(i), commonly referred to as the dedication of equipment prong of the definition. (Section 10102(14)(B)(ii) is referred to as the distinct needs prong.) An applicant for a permit to operate as a motor contract carrier must satisfy only one of the two tests. Aero Mayflower Transit Co. v. ICC, 711 F.2d 224, 227 (D.C.Cir.1983). 8 In contrast, a motor common carrier is defined as a person holding itself out to the general public to provide motor vehicle transportation for compensation. 49 U.S.C. Sec. 10102(13). There are significant differences in the kind and degree of regulation imposed upon common and contract carriers. For example, common carriers are required to file with the Commission tariffs specifying rates for the transportation they provide; contract carriers are not. 2 A common carrier may not charge or receive from a person a different compensation ... for a service rendered ... than it charges or receives from another person for performing a like and contemporaneous service, nor may it subject a person, place, port, or type of traffic to unreasonable discrimination. 49 U.S.C. Sec. 10741(a)-(b). Contract carriers, on the other hand, are not subject to these anti-discrimination provisions. See Central & Southern Motor Freight Tariff Ass'n v. United States, 757 F.2d 301, 325 (D.C.Cir.), cert. denied, --- U.S. ---, 106 S.Ct. 568, 88 L.Ed.2d 553 (1985). 9 Contract carriage and common carriage were distinguished originally in the Motor Carrier Act of 1935, Pub.L. No. 74-255, 49 Stat. 543, which was designed ... in large part, to prevent depression-squeezed contract carriers from encroaching on the domain of common carriers. Central & Southern Motor Freight, 757 F.2d at 309; see Contracts of Contract Carriers, 1 M.C.C. 628, 629 (1937) (The underlying purpose [of the 1935 Act] is plainly to promote and protect adequate and efficient common-carrier service.... The patent object of Congress is to protect the common carriers against cut-throat competition.), modified, 11 M.C.C. 693 (1938). 3 The 1935 Act defined a contract carrier by motor vehicle as a person who provided transportation of passengers or property by motor vehicle for compensation under special and individual contracts or agreements. Pub.L. No. 74-255, Sec. 203(a)(15), 49 Stat. 543, 544-45 (1935). 10 Worried in 1957 that [t]he present law has proved inadequate to maintain proper distinctions between common and contract carriage, Congress made several changes in the definition of contract carriage. S.Rep. No. 703, 85th Cong., 1st Sess. 7, reprinted in 1957 U.S.Code Cong. & Admin.News 1599, 1604. 4 The 1957 amendments required a contract carrier to enter into continuing contracts with one person or a limited number of persons 5 and to meet either the dedication of equipment or the distinct needs test. Pub.L. No. 85-163, Sec. 1, 71 Stat. 411, 411 (1957). The aim of the 1957 amendments was to provide greater protection for the interests of common carriers. See S.Rep. No. 703, 85th Cong., 1st Sess. 7 (bill required by public interest in a stable and adequate system of common carriage), reprinted in 1957 U.S.Code Cong. & Admin.News 1599, 1605; cf. Central & Southern Motor Freight, 757 F.2d at 310 (aim of 1957 amendments was unabashed protection of common carriers). 11 The statutory definition of contract carriage was again amended by the Motor Carrier Act of 1980, Pub.L. No. 96-296, 94 Stat. 793. The premise of the 1980 Act, however, was that the statutes governing Federal regulation of the motor carrier industry are outdated and must be revised to reflect the transportation needs and realities of the 1980's. Pub.L. No. 96-296, Sec. 3, 94 Stat. 793, 793 (codified at 49 U.S.C. Sec. 10101 note). 6 With respect to contract carriers, the Act was intended to remove[ ] many of the obstacles that have kept motor contract carriers from realizing their full potential. H.R.Rep. No. 1069, 96th Cong., 2d Sess. 22, reprinted in 1980 U.S.Code Cong. & Admin.News 2283, 2304. The Motor Carrier Act eliminated the requirement that a contract carrier enter into agreements with a limited number of persons. Pub.L. No. 96-296, Sec. 10(a)(1), 94 Stat. 793, 799 (1980). The congressional reports indicate that this change was intended to ratify the Commission's recent abolition of the Rule of Eight, under which the Commission had for many years limited the number of shippers a contract carrier could serve to eight, 7 but that [m]otor contract carriers will continue to be required to meet the standard of dedication of equipment or providing a service to meet a shipper's distinct need, but will be able to expand their service to serve more shippers. H.R.Rep. No. 1069, 96th Cong., 2d Sess. 22, reprinted in 1980 U.S.Code Cong. & Admin.News 2283, 2304; S.Rep. No. 641, 96th Cong., 2d Sess. 27 (1980). The 1980 Act eliminated several other restrictions on the operations of contract carriers: it permitted a carrier to operate as both a contract and a common carrier, prohibited the Commission from requiring a contract carrier to limit its operations to carriage for a particular industry or within a particular geographic area, and authorized contract carriers to provide services to freight forwarders. Pub.L. No. 96-296, Sec. 10, 94 Stat. 793, 799-801 (1980); see H.R.Rep. No. 1069, 96th Cong., 2d Sess. 22-23, reprinted in 1980 U.S.Code Cong. & Admin.News 2283, 2304-05.