B-145929, AUG. 10, 1962

B-145929: Aug 10, 1962

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

INC.: FURTHER REFERENCE IS MADE TO YOUR LETTER OF MAY 18. THE SHIPMENTS IN QUESTION WERE SUBJECT TO CHARGES COMPUTED ON THE BASIS OF THE RATES AND RULES PUBLISHED IN PACIFIC COAST TARIFF BUREAU U.S. BECAUSE THE SHIPMENTS WERE SUBJECT TO CLASS RATES NAMED IN SECTION 2 OR 2-A OF THE QUOTATION AND THE BASIS OF MINIMUM CHARGES PROVIDED FOR IN ITEM 135. THE POSITION TAKEN BY OUR TRANSPORTATION DIVISION WAS THAT THE SURCHARGE WHICH YOU ADDED TO THE MINIMUM CHARGES DID NOT APPLY WHEN THE SHIPMENTS WERE SUBJECT TO RATES NAMED IN SECTION 2 OR 2 -A. THAT THE SURCHARGE WAS TO BE ADDED TO THE MINIMUM CHARGE ONLY WHEN THE SHIPMENT WAS SUBJECT TO THE COMMODITY RATES NAMED IN SECTION 3 OF THE QUOTATION.

B-145929, AUG. 10, 1962

TO DELTA LINES, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MAY 18, 1961, IN WHICH YOU REQUESTED REVIEW OF THE SETTLEMENT AND AUDIT ACTION OF OUR TRANSPORTATION DIVISION RESULTING IN DISALLOWANCES OF CERTAIN SURCHARGES ORIGINALLY PAID ON 15 OF YOUR FREIGHT BILLS WHICH COVERED SHIPMENTS MOVING BETWEEN POINTS IN CALIFORNIA DURING 1958, 1959 AND 1960. IN OUR LETTER OF SEPTEMBER 5, 1961, WE ADVISED YOU THAT SINCE ONE OF THE 15 BILLS, NO. 6572, HAD BEEN MADE THE SUBJECT OF A SETTLEMENT CERTIFICATE, THE MATTER WOULD BE REVIEWED HERE.

THE SHIPMENTS IN QUESTION WERE SUBJECT TO CHARGES COMPUTED ON THE BASIS OF THE RATES AND RULES PUBLISHED IN PACIFIC COAST TARIFF BUREAU U.S. GOVERNMENT RATE QUOTATION NO. 2, AGENT C. R. NICKERSON'S I.C.C. NO. 1. EACH INSTANCE YOU COLLECTED CHARGES ON THE BASIS OF THE MINIMUM CHARGE AS PROVIDED IN ITEM 135 OF THE QUOTATION, PLUS A SURCHARGE OF 8 PERCENT NAMED IN SUPPLEMENT NO. 63 AND SUPERSEDING SUPPLEMENTS.

THE QUESTIONED AUDIT AND SETTLEMENT ACTION ELIMINATED THE 8 PERCENT SURCHARGE, BECAUSE THE SHIPMENTS WERE SUBJECT TO CLASS RATES NAMED IN SECTION 2 OR 2-A OF THE QUOTATION AND THE BASIS OF MINIMUM CHARGES PROVIDED FOR IN ITEM 135. THE POSITION TAKEN BY OUR TRANSPORTATION DIVISION WAS THAT THE SURCHARGE WHICH YOU ADDED TO THE MINIMUM CHARGES DID NOT APPLY WHEN THE SHIPMENTS WERE SUBJECT TO RATES NAMED IN SECTION 2 OR 2 -A, AND THAT THE SURCHARGE WAS TO BE ADDED TO THE MINIMUM CHARGE ONLY WHEN THE SHIPMENT WAS SUBJECT TO THE COMMODITY RATES NAMED IN SECTION 3 OF THE QUOTATION.

THE CONTROVERSY HERE ARISES OVER THE INTERPRETATION TO BE PLACED UPON PARAGRAPH B (2) OF SUPPLEMENT NO. 63 AND SUPERSEDING SUPPLEMENTS TO THE QUOTATION PROVIDING FOR THE APPLICATION OF SURCHARGES TO BE ADDED TO THE CHARGES COMPUTED ON RATES NAMED IN THE QUOTATION. THE ITEM IN QUESTION READS AS FOLLOWS:

"/2) BY 8 PERCENT ON CHARGES COMPUTED UPON RATES NAMED IN SECTION 3 WHICH ARE SUBJECT TO MINIMUM WEIGHTS OF 10,000 POUNDS AND GREATER BUT LESS THAN 20,000 POUNDS, AND TO THE MINIMUM CHARGES SPECIFICALLY PROVIDED IN ITEM 135.'

AS INDICATED ABOVE THE SETTLEMENT AND AUDIT ACTION WAS BASED UPON THE INTERPRETATION OF THAT ITEM AS MEANING THAT THE SURCHARGES NAMED APPLIED TO THE MINIMUM CHARGE BASIS NAMED IN ITEM 135 ONLY WHEN THE SHIPMENTS WERE COVERED BY RATES NAMED IN SECTION 3 OF THE QUOTATION. IT IS YOUR CONTENTION THAT THE SURCHARGE APPLIES TO THE MINIMUM CHARGE BASIS NAMED IN ITEM 135 ON SHIPMENTS SUBJECT TO THE CLASS RATES NAMED IN SECTIONS 2 AND 2 -A, OR TO THE COMMODITY RATES NAMED IN SECTION 3. IN SUBSTANCE YOU STATE THAT THE QUOTATION DOES, AND IT WAS INTENDED TO, REQUIRE THE APPLICATION OF THE SURCHARGE DURING THE PERIOD IN QUESTION TO ANY SHIPMENT WHICH MAY BE SUBJECT TO THE MINIMUM CHARGE BASIS PROVIDED IN ITEM 135 OF THE QUOTATION.

WE HAVE CONSIDERED THE MATTER CAREFULLY AND CONCLUDE THAT THE SETTLEMENT AND AUDIT ACTION TAKEN ON YOUR BILLS WAS CORRECT FOR THE REASON THAT THE SURCHARGE APPLIES ONLY WHEN THE ACTUAL DOLLARS AND CENTS MINIMUM CHARGE IS NAMED IN ITEM 135.

ITEM 135 IN EFFECT DURING THE PERIOD WHEN THE SHIPMENTS MOVED IS SHOWN IN THE 18TH THROUGH THE 22ND REVISED PAGE 12 OF THE QUOTATION. PART 1 OF THE ITEM IN 18 REVISED PAGE 12, ENTITLED "VEHICLE UTILIZATION MINIMUM CHARGE," PROVIDES IN SUBSTANCE THAT WHEN A SHIPMENT REQUIRES THE FULL UTILIZATION OF ONE OR MORE UNITS OF CARRIER'S EQUIPMENT, THE APPLICABLE RATES AND CHARGES SHALL APPLY ON THE ENTIRE SHIPMENT, SUBJECT TO MINIMUM CHARGES FOR 20,000 POUNDS AT THE CLASS 4 RATE APPLICABLE TO THAT WEIGHT FOR EACH UNIT USED, AS WELL AS CERTAIN NOTES AND EXCEPTIONS. THUS, IT WILL BE NOTED THAT THIS ITEM DOES NOT "SPECIFICALLY PROVIDE" THE MINIMUM CHARGE TO BE APPLIED, BUT PROVIDES THE BASIS FOR ARRIVING AT SUCH MINIMUM CHARGE, WHICH MUST BE DETERMINED BY REFERRING TO THE CLASS 4 RATE NAMED IN SECTION 2 OR 2 A OF THE QUOTATION. TO UNDERSTAND THE REASON FOR THE LANGUAGE USED IN PARAGRAPH B (2) AND ITS REISSUES IT IS NECESSARY TO TRACE ITEM 135 TO FEBRUARY 25, 1957, AS IT READ IN 13TH REVISED PAGE 12 (AND EARLIER REVISIONS OF PAGE 12) OF THE QUOTATION. AT THAT TIME PARAGRAPH (A) OF THE ITEM PROVIDED A MINIMUM CHARGE BASIS OF 10,000 POUNDS AT THE FIRST CLASS RATE, BUT EXCEPTION 3 TO THE ITEM NAMED A MINIMUM CHARGE OF DOLLARS AND CENTS PER UNIT OF EQUIPMENT ON MOVEMENTS BETWEEN POINTS NAMED THEREIN. CONCURRENTLY PARAGRAPH B (3) OF SUPPLEMENT NO. 59 (AND EARLIER SUPPLEMENTS) PROVIDED SURCHARGES OF 8 PERCENT ON CHARGES COMPUTED UPON RATES NAMED IN SECTIONS 1, 2, 2-A AND 3, AND TO THE MINIMUM CHARGES SPECIFICALLY PROVIDED IN ITEM 135. THUS, AT THAT TIME THE FIRST CLASS RATE AT THE 10,000 POUND BASIS IN ITEM 135 (A) WOULD BE FOUND IN SECTION 2 OR 2-A AND WOULD BE INCREASED 8 PERCENT, AND THE DOLLARS AND CENTS PER UNIT OF EQUIPMENT NAMED IN EXCEPTION 3 OF ITEM 135, WHERE APPLICABLE, WOULD ALSO BE INCREASED 8 PERCENT. IN OTHER WORDS, AT THAT TIME THE SURCHARGE INCREASE WAS UNIFORM, WHETHER THE MINIMUM CHARGE BASIS IN PARAGRAPH (A) OF ITEM 135 APPLIED, OR THE DOLLARS AND CENTS PER UNIT OF EQUIPMENT APPLIED. IT IS OBVIOUS THAT AT THAT TIME IT WAS NECESSARY (AND IT WAS DONE) TO INCLUDE THE WORDS: "AND TO THE MINIMUM CHARGES SPECIFICALLY PROVIDED IN ITEM 135" IN PARAGRAPH B (3) OF SUPPLEMENT NO. 59 AND EARLIER SUPPLEMENTS TO AUTHORIZE THE ADDITION OF THE 8 PERCENT SURCHARGE TO THE DOLLARS AND CENTS PERUNIT CHARGE IN ITEM 135, SINCE THAT CHARGE WAS NOT DERIVED FROM SECTION 1, 2, 2-A OR 3 OF THE QUOTATION.

ON MAY 10, 1957, IN 14TH REVISED PAGE 12 OF THE QUOTATION, THE DOLLARS AND CENTS PER UNIT PROVISIONS OF ITEM 135 WERE WITHDRAWN, LEAVING ONLY THE BASIS OR THE FORMULA FOR THE DETERMINATION OF THE SPECIFIC MINIMUM CHARGES REQUIRED TO BE OBSERVED. HOWEVER, THE SURCHARGE PROVISIONS OF SUPPLEMENT NO. 59 WERE BROUGHT FORWARD WITHOUT CHANGE UNTIL THE ISSUANCE OF SUPPLEMENT NO. 63, EFFECTIVE JANUARY 27, 1958. THE RESULT WAS THAT FROM MAY 10, 1957, TO JANUARY 27, 1958, THERE WERE NO MINIMUM CHARGES "SPECIFICALLY PROVIDED" IN ITEM 135, BUT ONLY THE MINIMUM CHARGE BASES DERIVED FROM NAMED SOURCES INCLUDING SECTION 2 OR 2-A OF THE QUOTATION. DURING THIS PERIOD, GIVING EFFECT TO THE INTERPRETATION URGED BY YOUR AS TO PARAGRAPH B (3) WOULD POSSIBLY HAVE THE RESULT OF IMPOSING TWO SURCHARGES WHERE PART 1 OF ITEM 135 APPLIED--- THE CLASS 4 RATE FOUND IN SECTION 2 OR 2-A SUBJECT TO THE SURCHARGE, AND THAT CHARGE (CLASS 4 AT 20,000 POUNDS PLUS 8 PERCENT) SUBJECT TO A FURTHER 8 PERCENT SURCHARGE. THERE IS NOTHING IN THE QUOTATION OR ELSEWHERE IN THE PRESENT RECORD SUPPORTING SUCH A RESULT. WE THINK THE REFERENCE TO ITEM 135 IN THE LATER SUPPLEMENTS WAS INCLUDED IN THE PARAGRAPH B (2) (OR FORMERLY B (3) UNTIL DECEMBER 8, 1958), DUE TO AN INADVERTENT REISSUE OF THE CLAUSE AS IT READ WHEN ITEM 135 NAMED THE DOLLARS AND CENTS PER UNIT MINIMUM CHARGE, ALTHOUGH ANOTHER REASON FOR SUCH REFERENCE MIGHT HAVE BEEN DUE TO THE FACT THAT SOME OF THE RATE PROVISIONS OF SECTION 3 OF THE QUOTATION ARE MADE SPECIFICALLY SUBJECT TO ITEM 135. IT MAY BE NOTED THAT EFFECTIVE DECEMBER 18, 1959, IN 20TH REVISED PAGE 12, ITEM 135 AGAIN CARRIED A SPECIFIC MINIMUM CHARGE OF 18 CENTS PER ROUND TRIP MILE IN EXCEPTION 3, BUT SUCH CHARGE WAS EXEMPTED FROM THE PROVISIONS OF THE SURCHARGE SUPPLEMENTS. THE SAME RESULT WOULD OBTAIN AFTER JANUARY 27, 1958, WHEN SUPPLEMENT NO. 63 ELIMINATED THE SURCHARGES IN CONNECTION WITH THE RATES NAMED IN SECTIONS 2 AND 2-A. EFFECTIVE THE SAME DATE THE REVISED PAGES NAMING THE CLASS RATES IN THOSE SECTIONS WERE REISSUED AND THE RATES FORMERLY PUBLISHED WERE INCREASED IN VARYING AMOUNTS.

THEREFORE, SINCE THE CLASS 4 RATE WAS INCREASED ON JANUARY 27, 1958, TO SUPERIMPOSE THE 8 PERCENT SURCHARGE ON THE ALREADY INCREASED RATE WOULD RESULT IN THE ASSESSMENT OF TWO INCREASES WHEN ITEM 135 APPLIED. IT SEEMS CLEAR THAT THE PUBLISHING AGENT RECOGNIZED THE SITUATION WHEN ON DECEMBER 8, 1958 (IN SUPPLEMENT NO. 64), AT WHICH TIME THE CLASS RATES IN SECTIONS 2 AND 2-A WERE AGAIN INCREASED REFERENCE TO THE "MINIMUM CHARGES SPECIFICALLY PROVIDED IN ITEM 135" WAS ELIMINATED. NO REASON IS APPARENT WHY THE CLAUSE IN QUESTION WAS ADDED TO THE PARAGRAPH B (2) AGAIN IN SUPPLEMENT 65, EFFECTIVE DECEMBER 29, 1958, SINCE AT THAT TIME NO MINIMUM CHARGES WERE SPECIFICALLY NAMED IN ITEM 135, BUT ONLY A BASIS FOR DETERMINING THE CHARGES, USING RATES THAT WERE ALREADY SUBJECTED TO INCREASES. THIS CLAUSE, REINSTATED IN SUPPLEMENT NO. 65, IS NOT PREFIXED BY A REFERENCE MARK INDICATING THAT IT REFLECTS AN INCREASE IN CHARGES OVER THOSE RESULTING UNDER SUPPLEMENT NO. 64, WHICH WAS CANCELLED BY SUPPLEMENT NO. 65. IT MAY BE NOTED THAT THE COMMODITY RATES NAMED IN SECTION 3 OF THE QUOTATION WERE NOT SUBJECTED TO THE SAME GENERAL INCREASES AS THE CLASS RATES, AND IT IS APPARENT THAT THE SURCHARGES IN THE SEVERAL SUPPLEMENTS IN QUESTION WERE APPLIED TO THAT SECTION FOR THE PURPOSE OF EFFECTING INCREASES WHICH WERE TO SOME EXTENT CONSISTENT WITH THOSE APPLIED IN SECTIONS 2 AND 2-A OF THE QUOTATION.

IN SUMMARY, OUR VIEW IS THAT THE CLAUSE "AND TO MINIMUM CHARGES SPECIFICALLY PROVIDED IN ITEM 135" HAS REFERENCE ONLY TO THE DOLLARS AND CENTS CHARGES FORMERLY CARRIED IN THAT ITEM, SINCE THE CLASS 4 RATE BASIS FOR THE DETERMINATION OF THE MINIMUM CHARGES MUST EMPLOY RATES THAT PREVIOUSLY WERE INCREASED AND MADE AN INTEGRAL PART OF THE TOTAL CLASS 4 RATE, SO AS TO REMOVE THE NEED FOR SEPARATE APPLICATION OF SURCHARGE PERCENTAGES, AS IN THE CASE OF SECTION 3 COMMODITY RATES. WE ACCORDINGLY SUSTAIN THE PERTINENT SETTLEMENT AND THE AUDIT ACTION TAKEN CONSISTENT WITH THE PRINCIPLE OF THE SETTLEMENT.