[Federal Register Volume 63, Number 111 (Wednesday, June 10, 1998)]
[Notices]
[Pages 31827-31829]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-15391]


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DEPARTMENT OF TRANSPORTATION

Federal Highway Administration


Petition for Declaratory Order Regarding Application of Federal 
Motor Carrier Truth In-Leasing Regulations

AGENCY: Federal Highway Administration (FHWA), DOT.

ACTION: Notice of denial of petition for declaratory order.

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SUMMARY: The Owner-Operator Independent Drivers Association, Inc. 
(OOIDA), Howard Jenkins, Marshall Johnson, Susan Johnson and Jerry 
Vanboetzelaer filed with the FHWA a petition for declaratory order (the 
OOIDA petition) seeking a formal ruling by the FHWA that New Prime, 
Inc., dba Prime, Inc. (Prime) and Success Leasing, Inc. (Success) 
violated certain provisions of the federal motor carrier truth-in-
leasing regulations (49 CFR part 376). This petition was filed after 
the U.S. District Court for the Western District of Missouri dismissed 
petitioners' class action complaint against Prime and Success, seeking 
enforcement of these regulations, on the ground that FHWA has primary 
jurisdiction to determine whether the regulations have been violated.
    The FHWA is denying the OOIDA petition because it fails to raise 
any issues not adequately addressed by existing legal precedent which 
require the special expertise of this agency. Although denials of 
petitions for declaratory orders will not ordinarily be published in 
the Federal Register, the FHWA is publishing this decision to

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provide guidance to courts, carriers, owner-operators and other 
interested parties regarding the agency's general policy in handling 
such petitions, particularly those involving issues arising under the 
truth-in-leasing regulations. This policy applies to all petitions for 
declaratory orders, regardless of whether filed in connection with 
private litigation.

FOR FURTHER INFORMATION CONTACT: Mr. Michael J. Falk, Motor Carrier Law 
Division, Office of the Chief Counsel, (202) 366-1384, Federal Highway 
Administration, Department of Transportation, 400 Seventh Street, SW., 
Washington, D.C. 20590. Office hours are from 8 a.m. to 4:30 p.m., 
e.t., Monday through Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION:

The OOIDA Petition

    On March 5, 1998, OOIDA and four owner-operators filed a petition 
for declaratory order seeking a ruling from the FHWA that Prime and 
Success violated the truth-in-leasing regulations. Petitioners 
initially sought damages and enforcement of these regulations by filing 
a class action complaint, under 49 U.S.C. 14704, in the U.S. District 
Court for the Western District of Missouri. However, the court 
dismissed the complaint on the ground that the FHWA had primary 
jurisdiction to resolve the issues in controversy.
    According to the OOIDA petition, several owner-operators leased 
equipment to Prime which they obtained through lease-purchase 
agreements with Success, an equipment leasing company allegedly under 
common ownership with Prime. Under the terms of these lease-purchase 
agreements, Prime deducted rental/purchase payments for the equipment 
from the owner-operators' compensation and remitted the money to 
Success. Owner-operators were also required to remit money into several 
reserve funds maintained by Success to cover the cost of repairs and 
maintenance of the equipment. Owner-operators who terminated their 
leases with Prime were not refunded their reserve fund balances.
    Petitioners claim that Prime violated 49 CFR 376.12(i) because its 
leases failed to specify the terms of any lease-purchase agreement 
authorizing the carrier to deduct lease purchase payments from lessor 
compensation. They also allege that the reserve funds maintained by 
Success are escrow funds within the meaning of 49 CFR 376.2(f), and 
that any balances in these funds must be returned to them with 
interest, within 45 days of termination of their leases, under 49 CFR 
376.12(k).
    Petitioners contend that the district court's dismissal of their 
complaint, potentially with prejudice: (1) conflicts with their right 
to seek private enforcement by filing a civil action under Sec. 14704; 
(2) conflicts with congressional intent to eliminate DOT's role in 
resolving private disputes; and (3) improperly applied the doctrine of 
primary jurisdiction, which is limited to cases where the 
reasonableness of a federal regulation is in dispute and an agency's 
technical expertise is necessary to resolve the issues before the 
court. Petitioners have appealed the dismissal of their complaint to 
the Court of Appeals for the Eighth Circuit. Consequently, petitioners 
request, in the alternative, that the FHWA rulethat it lacks primary 
jurisdiction over regulatory issues where a private party has elected 
to litigate these issues in federal district court under 49 U.S.C. 
14704. Petitioners further contend that FHWA's technical expertise is 
not needed in this case because the Interstate Commerce Commission 
(ICC) previously ruled on the applicability of the part 376 escrow 
provisions to carrier-affiliated equipment leasing companies in Dart 
Transit Company--Petition for Declaratory Order, 9 I.C.C. 2d 700 
(1993).

Petitions for Declaratory Orders

    Although fairly new to the FHWA, petitions for declaratory orders 
were a common device for obtaining guidance from the ICC in resolving 
disputes within that agency's jurisdiction. An agency's authority to 
issue declaratory orders comes from Sec. 5(d) of the Administrative 
Procedure Act, 5 U.S.C. 554(e), which gives agencies ``sound 
discretion'' to issue declaratory orders to ``terminate a controversy 
or remove uncertainty''. The FHWA intends to exercise this authority 
much more selectively than the ICC because Congress, in transferring 
several ICC functions to the Department of Transportation (DOT) through 
the ICC Termination Act of 1995 (ICCTA), envisioned that DOT would 
generally not become involved in resolving disputes between private 
parties.
    The ICCTA expanded the rights and remedies of persons injured by 
carriers by providing for private enforcement of its provisions in 
court. Under 49 U.S.C. 14704, an injured party may seek both damages 
and injunctive relief against a motor carrier in federal district court 
to redress violations of part 376. In discussing this provision, the 
House Transportation and Infrastructure Committee stated that DOT 
should not allocate its scarce resources to resolving essentially 
private disputes, and that the right of private enforcement ``will 
permit these private, commercial disputes to be resolved the way that 
all other commercial disputes are resolved--by the parties''. H. Rep. 
No. 104-311, pp. 87-88.
    The FHWA believes that issuing declaratory orders, except in 
extraordinary circumstances, would undermine the Congressional intent 
to keep DOT out of private commercial disputes, particularly where one 
of the parties has filed suit in federal court under Sec. 14704. 
Accordingly, although the FHWA reserves the right to issue declaratory 
orders to resolve controversies between third parties in appropriate 
circumstances, it will generally do so only in cases having industry-
wide significance that raise issues not adequately addressed by 
existing legal precedent.

Primary Jurisdiction

    The doctrine of primary jurisdiction is ``a doctrine specifically 
applicable to claims properly cognizable in court that contain some 
issue within the special competence of an administrative agency.'' 
Reiter v. Cooper, 507 U.S. 258 (1993), at 268. In contrast to the 
doctrine of exhaustion of administrative remedies, it does not require 
parties to seek relief from the agency before invoking the jurisdiction 
of the court. The court, when faced with an issue it believes requires 
the special expertise of an agency, has equitable discretion to give 
that agency the first opportunity to pass on the issue by staying 
further proceedings and giving the parties a reasonable opportunity to 
seek an administrative ruling. However, an agency is not required to 
rule on issues directly referred to it by a court or, as in this case, 
indirectly referred to it following a court's order of dismissal. If an 
agency declines to issue a ruling, the court must then resolve the 
issues without the benefit of the agency's views. See Atchison, Topeka 
& S.F. Ry. Co. v. Aircoach Transp. Ass'n, 253 F.2d 877 (D.C. 
Cir.,1958).
    Although the FHWA does not agree with petitioners' contention that 
the doctrine of primary jurisdiction applies only to issues involving 
the reasonableness of a federal regulation, it does agree that special 
expertise is generally not needed to resolve disputes regarding the 
part 376 truth-in-leasing regulations. These regulations contain 
specific, straightforward, non-technical requirements which a court is 
ordinarily competent to construe. Consistent with the Congressional 
intent underlying 49 U.S.C. 14704, the FHWA will generally

[[Page 31829]]

decline to exercise its primary jurisdiction with regard to court 
referrals involving violations of part 376.

Conclusion

    The OOIDA petition does not raise issues which require special 
expertise by the FHWA. The questions of whether Prime's leases contain 
the necessary terms required by Sec. 376.12(i), or whether escrow funds 
were returned within 45 days of lease termination, are fairly 
straightforward matters clearly within the competence of a court to 
resolve. Although part 376 does not expressly apply to carrier-
affiliated equipment leasing companies, the ICC fully addressed the 
applicability of the regulations to such entities in the Dart decision. 
The FHWA sees no reason to revisit this issue. Accordingly, OOIDA's 
petition for declaratory order is denied.

    In Washington, District of Columbia, this 29th day of May, 1998.
Gloria J. Jeff,
Deputy Administrator, Federal Highway Administration.
[FR Doc. 98-15391 Filed 6-9-98; 8:45 am]
BILLING CODE 4910-22-P