Opinion ID: 184591
Heading Depth: 2
Heading Rank: 1

Heading: Munitions I

Text: 13 Although the Carriers do not argue that the MTMC's appeal of the decision in Munitions I (invalidating its first policy) was mooted when the MTMC adopted the policy at issue in Munitions II, we must consider the question in order to be confident of our jurisdiction. See, e.g., FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 231, 110 S.Ct. 596, 107 L.Ed.2d 603 (1990); Floyd v. District of Columbia, 129 F.3d 152, 155 (D.C.Cir.1997). Foreseeing this jurisdictional issue, the MTMC, after prevailing in Munitions II, republished its first policy in a Notice stating that, if upheld in its appeal of Munitions I, it would reimpose that policy. See Movement of Foreign Military Sales (FMS) Shipments--Proposed Policy Change, 62 Fed.Reg. 58,946 (Oct. 31, 1997). That Notice keeps the validity of the first policy in contention and therefore keeps this matter a live controversy. And so to the merits. 14 The MTMC argues that by replacing the comprehensive tariff regime of Chapter 107 with the household goods regime of Chapter 137 the Congress intended to allow the market in all other motor carriage to operate freely; therefore, the MTMC may seek combined bids for the transportation of FMS and DOD freight just as any other buyer in a free market may solicit bids for the service it requires. The Carriers counter that § 13712 creates (or preserves) a two-tiered rate scheme in which discounts are still prohibited for FMS goods. In their view, combined bids must be prohibited because such bids would require a carrier either to give a discount for FMS goods, contrary to § 13712, or to give up its right, pursuant to the same section, to offer a discount for DOD freight. 15 As the MTMC points out, there is a fundamental flaw in the Carriers' theory: it assumes that § 13712 applies to the transportation of all types of goods, as did § 10721 under the tariff regime. Chapter 107 made both tariffs and the requirements of nondiscrimination and nonpreferential treatment universal; § 10721 (the predecessor to § 13712) exempted all government transportation--and only government transportation--from the tariff requirement. Now that Chapter 137 imposes tariff and nonpreferential treatment requirements only upon the carriage of household goods, however, and eliminates any requirement of nondiscrimination, a carrier of non-household goods may offer any price to any shipper and negotiate different rates with different shippers. This is because § 13712 states only that a carrier may transport property ... for the United States Government ... at a rate reduced from the applicable commercial rate. That is, nothing in § 13712 (or elsewhere in Chapter 137) prohibits a carrier from offering such discounted rates to others: the nondiscrimination provision (§ 10741(a)) was repealed; and the nonpreferential treatment requirement (§ 10735(a)(1)) was succeeded by a provision (§ 13704(a)(2)) that applies only to household goods. 16 Indeed, the Carriers concede that a carrier may negotiate rates with the Government as it does with other shippers. Nonetheless the Carriers maintain that the Government may not negotiate rates when it is acting on behalf of a third party, such as a foreign government purchaser of FMS goods. The Carriers' argument is based upon the reference in § 13712 to the applicable commercial rate: for every good there is a commercial rate, they say, and though a foreign shipper may on its own negotiate a reduction from that rate, the Government may not use its market power (the threat of the loss of all freight moving under DOD tenders) to negotiate for such shippers because that would force a carrier to extend to a foreign government the benefit of the reduced rates that under Baggettwere previously given to DOD alone. 17 The Carriers' theory misconstrues both § 13712 and Baggett. In holding that the Government could negotiate rates only when the pecuniary benefit would go directly and wholly to the Government, Baggettwas ensuring the integrity of the tariff rate, no-discrimination scheme under which carriers were prohibited from negotiating reduced rates for shippers other than the Government. In other words, Baggettprohibited discounts under § 10721 for non-government goods because the exemption in § 10721 was limited to government goods and at that time non-government shippers were forbidden to seek discounts. Now that the tariff scheme has been repealed, however, any shipper is free to seek a discount, as the Carriers concede. Any discount now obtained by the Government on behalf of a private shipper, therefore, would not be a reduced rate under § 13712 but would be simply a rate negotiated in the marketplace--and there is no indication that such negotiated discounts are prohibited. 18 The Carriers' theory that the statutory reference to applicable commercial rates somehow limits the MTMC's negotiating options is also ill-founded. There are today no known commercial rates other than the tariff rates filed for household goods. The only plausible way to read applicable commercial rates, therefore, is as a reference to tariff rates for household goods. This reading is also consistent with the usage of the phrase elsewhere in the statute over time. Tariff rates were the only rates from 1887, when § 22 (the original version of § 13712) was enacted, until 1995; during that period the applicable commercial rate[s] were necessarily the tariff rates. In the current version of the statute, however, the Congress distinguishes between the applicable commercial rate[s] and unregulated rates set in the marketplace, which strongly suggests that the phrase applicable commercial rate[s] still refers to tariff rates (and perhaps to collectively determined rates, see 49 U.S.C. § 13703, a matter we need not decide in this case). For example, § 13710 states that a carrier must make available a copy of the rate applicable to its shipment or agreed to between the shipper and carrier; and § 13711 specifically addresses the difference--which could arise during the period of transition from regulation to the market--between the applicable rate and the negotiated rate. 19 In addition, as the Government argues, there is no other intelligible way to read the phrase applicable commercial rate[s] because the statute gives no guidance on how to determine such rates if they are not understood to be tariff rates. Although the Carriers argue that their own internal price lists should be considered the applicable commercial rates, they offer no conventional legal argument to anchor this implausible theory either in the text or the structure of the statute. Tariffs were filed in a highly regulated environment overseen by the ICC; the tariff requirement was integral to the statutory purpose of ensuring that all rates were just and reasonable and not unduly discriminatory. In today's unregulated marketplace, however, a carrier's internal price list has no legal significance whatsoever. The carrier may discriminate among different shippers; only the customer, not the Government, decides whether a price is reasonable; and just-ness has nothing to do with the matter. To read applicable commercial rate[s] as the Carriers' own price lists, therefore, would be to read the Carriers' wish list into the law. 20 As explained in our discussion of Baggett, a negotiated rate--even if it is lower than the rates that others are able to negotiate--is not a reduced rate. This conclusion is consistent with the purpose of § 13712 and its predecessors, namely, to allow carriers to offer and the Government to accept discounted rates notwithstanding the general prohibition of discrimination among shippers under the tariff regime. The Government, not the carriers, has been the intended beneficiary of this provision in all prior versions. The Carriers' interpretation of § 13712, on the other hand, would benefit them and harm the Government by prohibiting the MTMC from using its market power to negotiate lower rates for the shipment of FMS goods. That the Congress intended thus to deny the Government and its FMS customers the benefit of lower negotiated rates while deregulating the motor freight industry and creating a free market for the benefit of all other shippers is, to say the least, counter-intuitive. More important, the suggestion remains completely unsupported. 21 The most reasonable way to interpret § 13712, then, is as the MTMC suggests: the provision exempts a carrier from the nondiscrimination provisions imposed by the rump tariff regime retained for household goods; therefore, the exemption being no broader than the rule, it too applies only to household goods moving under tariff rates. Deregulation removed the prior limitation under which only the Government could bargain with carriers. Because any shipper may now bargain for a lower rate, the Government may also bargain on behalf of non-government shippers. Neither Baggettnor § 13712 provides any reason to treat FMS goods differently from DOD goods, so there is no reason the MTMC cannot solicit bids in the form of one combined offer for the transportation of FMS and DOD freight. In sum, the policy announced in the 1995 Notice does not violate anything in Chapter 137.