Opinion ID: 454658
Heading Depth: 2
Heading Rank: 3

Heading: The Reasonableness of the Rate Structure

Text: 65 At bottom, then, we find that MarAd and the Board acted within their discretion in concluding that a cost-based rate structure plus the bid augmentation rule would strike a reasonable balance between Congress' dual objectives to have subsidized ships carry preference cargos and have subsidized ships carry those cargos at world rates. Aeron, 695 F.2d at 579. Both Aeron's and the unsubsidized shippers' challenges to the rate decision seize on a single aspect of those competing objectives. Aeron emphasizes Congress' expectation that subsidized vessels would take over the preference trade, while Phoenix and the AMA focus on Congress' assumption that they would do so at world rates. Given the present realities of the bulk shipping market, however, neither goal can be attained without sacrificing the other. The Board and MarAd accordingly developed a compromise position: Aeron can carry preference cargoes at cost-based rates that allow for a reasonable profit, but it must bid substantially below the premium rates charged by unsubsidized shippers in order to secure preference cargo contracts. This result fairly meets our call in Aeron for rates that, so far as practicable, approach world rates ... [but are] high enough to provide reasonable incentives for subsidized operators to carry [preference] cargos. Id. In light of the Board's discretion, we cannot say that the compromise rate structure is unreasonable.