B-164950, FEB. 6, 1969

B-164950: Feb 6, 1969

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YOU INQUIRE ABOUT THE STATUS OF THIS MATTER AND THE EXTENT TO WHICH IT IS ADMINISTRATIVELY FINAL. WE ENCOUNTERED THREE PRIMARY PROBLEM AREAS: (1) INSTANCES IN WHICH A FORWARDER HAD A TARIFF RATE ON FILE WITH THE BOARD APPLYING FROM A SPECIFIC ORIGIN TO A SPECIFIC DESTINATION BUT WHERE THE FORWARDER GENERALLY TRANSPORTED SHIPMENTS BETWEEN THE POINTS VIA AIRPORT CITIES (AS NAMED IN THE APPLICABLE TARIFF) OTHER THAN THOSE OVER WHICH THE RATE WAS CONSTRUCTED. (2) INSTANCES WHERE THE FORWARDER DID NOT HAVE A RATE ON FILE WITH THE BOARD FROM THE SPECIFIC ORIGIN TO THE SPECIFIC DESTINATION AND BILLED CHARGES VIA AIRPORT CITIES OTHER THAN THOSE ACTUALLY USED IN THE TRANSPORTATION OF SHIPMENTS. OUR CURRENT INSTRUCTIONS FOR THE AUDIT OF AIR FREIGHT FORWARDER ACCOUNTS IN THE FIRST TWO PROBLEM AREAS ARE SUBSTANTIALLY AS FOLLOWS: (A) WHERE A POINT-TO-POINT RATE IS IN EFFECT IN AN APPLICABLE TARIFF: (1) CONSTRUCT CHARGES OVER ACTUAL ROUTE OF MOVEMENT.

B-164950, FEB. 6, 1969

TO MR. JAMES J. MCNULTY:

WE REFER TO YOUR LETTER OF DECEMBER 16, 1968, CONCERNING NOTICES OF OVERCHARGE ISSUED BY THE TRANSPORTATION DIVISION OF THIS OFFICE AGAINST EMERY AIR FREIGHT ACCOUNTS. YOU INQUIRE ABOUT THE STATUS OF THIS MATTER AND THE EXTENT TO WHICH IT IS ADMINISTRATIVELY FINAL.

AS A RESULT OF A SURVEY CONDUCTED BY THE TRANSPORTATION AND TRAFFIC MANAGEMENT REVIEW BRANCH OF OUR TRANSPORTATION DIVISION AND OF A COMPLIANCE PROCEEDING INITIATED AGAINST AN AIR FREIGHT FORWARDER BY THE CIVIL AERONAUTICS BOARD, WE FOUND IT ADVISABLE LAST YEAR TO REVISE OUR AUDIT PROCEDURES FOR AIR FREIGHT FORWARDER ACCOUNTS. WE ENCOUNTERED THREE PRIMARY PROBLEM AREAS: (1) INSTANCES IN WHICH A FORWARDER HAD A TARIFF RATE ON FILE WITH THE BOARD APPLYING FROM A SPECIFIC ORIGIN TO A SPECIFIC DESTINATION BUT WHERE THE FORWARDER GENERALLY TRANSPORTED SHIPMENTS BETWEEN THE POINTS VIA AIRPORT CITIES (AS NAMED IN THE APPLICABLE TARIFF) OTHER THAN THOSE OVER WHICH THE RATE WAS CONSTRUCTED, (2) INSTANCES WHERE THE FORWARDER DID NOT HAVE A RATE ON FILE WITH THE BOARD FROM THE SPECIFIC ORIGIN TO THE SPECIFIC DESTINATION AND BILLED CHARGES VIA AIRPORT CITIES OTHER THAN THOSE ACTUALLY USED IN THE TRANSPORTATION OF SHIPMENTS, AND (3) INSTANCES WHERE THE FORWARDER BILLED FOR EXCESSIVE WEIGHTS ON A DIMENSIONAL BASIS NOT IN ACCORDANCE WITH ITS TARIFF.

OUR CURRENT INSTRUCTIONS FOR THE AUDIT OF AIR FREIGHT FORWARDER ACCOUNTS IN THE FIRST TWO PROBLEM AREAS ARE SUBSTANTIALLY AS FOLLOWS:

(A) WHERE A POINT-TO-POINT RATE IS IN EFFECT IN AN APPLICABLE TARIFF:

(1) CONSTRUCT CHARGES OVER ACTUAL ROUTE OF MOVEMENT, IF KNOWN, NOT TO EXCEED POINT-TO-POINT CHARGES.

(2) IF ACTUAL ROUTE OF MOVEMENT IS NOT KNOWN AND THERE IS NOTHING IN THE RECORD TO SUPPORT A CONCLUSION THAT THE SHIPMENT COULD NOT HAVE BEEN HANDLED THROUGH THE AIRPORTS IDENTIFIED IN THE POINT-TO-POINT BASIS, APPLY THE POINT-TO-POINT RATE.

(B) WHEN NO POINT-TO-POINT RATE IS IN EFFECT:

(1) CONSTRUCT CHARGES OVER ACTUAL ROUTE OF MOVEMENT, IF KNOWN.

(2) IF ACTUAL ROUTE OF MOVEMENT IS NOT KNOWN, CONSTRUCT CHARGES OVER MOST PROBABLE ROUTE BETWEEN POINTS. THE TERM "POINT-TO-POINT RATE," AS USED ABOVE, MEANS THE AIR FREIGHT FORWARDER PUBLISHED TARIFF CHARGE FROM ORIGIN TO DESTINATION AND MAY BE IN THE FORM OF A SINGLE FACTOR RATE OR A COMBINATION OF THE FREIGHT FORWARDER'S PUBLISHED AIR RATE, PLUS ITS TERMINAL TARIFF PICK-UP AND/OR DELIVERY CHARGE.

IT WILL BEE SEEN THAT SETTLEMENTS BASED ON (A) (1) ABOVE WILL BE CONTROVERSIAL INSOFAR AS THE GENERAL AIR FREIGHT FORWARDER'S POSITION REGARDING THE APPLICATION OF SUBSTITUTION OF SERVICE RULES IS CONCERNED. WE UNDERSTAND THAT A RULE-MAKING PROCEEDING NOW IS PENDING BEFORE THE CIVIL AERONAUTICS BOARD (DOCKET NO. 19797) WHICH HOPEFULLY WILL CLARIFY THE APPLICATION OF THESE RULES. HOWEVER, IN THE ABSENCE OF AN AUTHORITATIVE STATEMENT BY THE BOARD CONSTRUING THE RULES, WE BELIEVE THE APPLICATION OF THE RULES SHOULD BE LIMITED TO SUBSTITUTION OF SERVICE NECESSITATED BY SOME UNUSUAL OR EMERGENCY CONDITION WHICH THE FORWARDER MUST SHOW EXISTED IN ORDER TO JUSTIFY THE SUBSTITUTION.

THE RULES ARE DESIGNED FOR THE DESIRABLE PURPOSE OF AFFORDING THE AIR FREIGHT FORWARDER FLEXIBILITY IN ITS OPERATIONS BUT IT SEEMS TO US THAT THE RULES SHOULD NOT BE APPLIED GENERALLY TO PERMIT SUBSTITUTIONS SOLELY FOR THE FORWARDERS' CONVENIENCE TO PERMIT MORE ECONOMICAL OPERATIONS VIA POINTS NOT SPECIFIED IN THE FORWARDER TARIFFS. IN THE CASE OF AUDIT ACTION TAKEN UNDER (B) (1) OR (B) (2) ABOVE, WHEN THE FORWARDER HAS NO TARIFF RATE LAWFULLY ON FILE, IT IS THE VIEW HERE THAT THE FORWARDER IS ENTITLED TO CHARGES ON A QUANTUM MERUIT BASIS REPRESENTED BY RATES APPLIED OVER THE ACTUAL OR MOST PROBABLE ROUTE OF MOVEMENT.

IF AN AUDIT ACTION TAKEN HERE ON THE BASIS OF (A) (1) ABOVE PERTAINS TO A SITUATION WHERE THE ACTUAL ROUTE WAS NECESSITATED BY AN UNUSUAL OR EMERGENCY CONDITION WITHIN THE MEANING OF THE SUBSTITUTION OF SERVICE RULE, CONSIDERATION WILL BE GIVEN TO WITHDRAWAL OR MODIFICATION OF THE OVERCHARGE NOTICE UPON PRESENTATION OF SATISFACTORY PROOF BY THE FORWARDER OF THE EXISTENCE OF THE SPECIAL CONDITIONS. SIMILARLY, IN THE CASE OF AUDIT ACTION TAKEN ON THE BASIS OF (B) (2) ABOVE, CONSIDERATION WILL BE GIVEN TO WITHDRAWAL OR MODIFICATION OF THE OVERCHARGE NOTICE UPON PRESENTATION OF SATISFACTORY PROOF OF THE ACTUAL ROUTE OF MOVEMENT, IF DIFFERENT FROM THAT OBSERVED IN THE AUDIT.

CONCERNING YOUR INQUIRY ABOUT THE EXTENT TO WHICH AUDIT ACTION BY THE TRANSPORTATION DIVISION IS ADMINISTRATIVELY FINAL, IT MAY BE SAID GENERALLY THAT ANY COMMON CARRIER MAY OBTAIN REVIEW BY THE COMPTROLLER GENERAL OF THE UNITED STATES OF ANY FINAL SETTLEMENT ACTION TAKEN BY THE TRANSPORTATION DIVISION. FINAL ACTION BY THE TRANSPORTATION DIVISION GENERALLY IS CONSIDERED TO BE ONE EVIDENCED BY ISSUANCE OF A CERTIFICATE OF SETTLEMENT. THE REGULATIONS PERTAINING TO REVIEW, BY BOTH THE TRANSPORTATION DIVISION AND THE COMPTROLLER GENERAL, ARE SET FORTH IN DETAIL IN THE CODE OF FEDERAL REGULATIONS, 4 CFR 55.1, 55.2.

THE FOREGOING INFORMATION SHOULD SERVE TO CLARIFY SOME OF THE PROBLEMS MENTIONED IN YOUR LETTER.