[Federal Register Volume 65, Number 218 (Thursday, November 9, 2000)]
[Notices]
[Pages 67472-67474]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-28826]
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DEPARTMENT OF TRANSPORTATION
Surface Transportation Board
[Released Rates Decision No. MC-999]
Notice of Filing of an Application To Amend Released Rate
Provisions (and Corresponding Limits of Liability) for Motor-Carrier
Shipments of Household Goods, and Request for Public Comments
AGENCY: Surface Transportation Board.
SUMMARY: The Household Goods Carriers' Bureau Committee (Committee), on
behalf of its member motor carriers, seeks authority to amend Released
Rates Decision No. MC-999 by changing the terms under which the
carriers would limit their liability for damage to, or loss of,
household-goods shipments, and thus changing the resulting charges to
shippers.
DATES: Comments are due December 11, 2000.
ADDRESSES: Send comments (an original and 10 copies) referring to
Released Rates Decision No. MC-999, to: Surface Transportation Board,
Office of the Secretary, Case Control Unit, 1925 K Street, NW.,
Washington, DC 20423-0001.
FOR FURTHER INFORMATION CONTACT: James W. Greene, (202) 565-1578, or
Lawrence C. Herzig, (202) 565-1576. [TDD for the hearing impaired:
(202) 565-1695.]
SUPPLEMENTARY INFORMATION:
1. Background
Under 49 U.S.C. 14706(a)(1), motor carriers of household goods
ordinarily are liable for the actual loss or injury that they cause to
the property they transport.\1\ However, under 49 U.S.C. 14706(f),
household-goods carriers may establish ``released rates,'' under which
the carriers' liability is limited to a value established by written
declaration of the shipper or by a written agreement between the
carrier and shipper, if they obtain permission from the Board.\2\
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\1\ Carriers are not liable for loss or injury that they do not
cause, such as losses due to acts of God.
\2\ Motor carriers of freight other than household goods may
establish released rates without having to obtain the Board's
permission. 40 U.S.C. 14706(c)(1)(A).
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2. Current Provisions
The released rates currently offered by most household-goods
carriers are based upon authority granted by the Board's predecessor,
the Interstate Commerce Commission (ICC), in Released Rates of Motor
Common Carriers of Household Goods, 9 I.C.C.2d 523 (1993). Under the
plan approved in 1993, the freight charges paid by a household-goods
shipper depend upon the level of liability assumed by the carrier. A
shipper pays the carrier's lowest rate, the ``base rate'' when it
agrees, by indicating in writing on the bill of lading, that the
carrier's liability will be 60 cents per pound per article for goods
lost or damaged, but not more than the actual, depreciated value of the
item. According to the Committee, the percentage of household-goods
shippers choosing to move their goods under the 60-cents-per-pound
limitation on liability remained relatively constant from 1985 through
1996, decreasing from 33.1 to 31.2 percent.\3\
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\3\ The 60-cent limitation predates the 1993 plan. See Household
Goods Carriers' Bureau v. ICC, 584 F.2d 437, 439 (D.C. Cir. 1978).
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A second option available to shippers allows them to protect more
of the value of the shipment for a higher transportation charge. The
shipper declares a lump sum value for the entire shipment, and pays the
base rate plus a charge of 70 cents for each $100, or fraction, of the
``declared value'' of the shipment. Under this second option, there is
a minimum valuation: if the shipper's declared value is less than $1.25
times the weight (in pounds) of the shipment, the minimum declared
value of $1.25 per pound will apply instead. The recovery under this
option for lost goods is the actual (depreciated) value of the
(typically used) goods up to the declared value of the shipment.\4\
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\4\ Of course, if the carrier lost an item that was new and
unused, it would be liable for the replacement value of the item. In
that case, the ``actual value'' of the lost item would be its new,
or replacement, value.
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[[Page 67473]]
Many carriers today also offer a third option for an even higher
charge: ``full value protection'' (FVP) within broad ranges of declared
values in which the carrier is liable for the full replacement value of
items, up to the declared value of the shipment.\5\ The breadth of the
ranges of declared values to which a single charge applies under this
third option is greater than the $100 increments provided under the
second option. The Committee states that, from 1985 through 1996,
shippers' election of FVP increased from 38.8 to 55.4 percent of
shipments.
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\5\ We note that the protection under the third option could
amount to less than full value if a shipper chose a declared value
that is less than the replacement cost for all of the items in its
shipment and the entire shipment were lost.
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Under any of these options, when goods are damaged rather than
lost, the carrier has the option of paying the cost of repairs to
restore the damaged goods to their prior condition.
3. The New Proposal
The Committee now proposes to offer only two options rather than
three. It would retain the same first option of paying a base rate, for
which the carrier's liability is limited to 60 cents per pound per
article. The only other option would be an FVP option based upon a
declared value for the shipment. It would differ from the currently
available options in two ways. First, there would be no choice under
which the carrier is liable for the actual, depreciated value of the
goods lost or damaged. Rather, the carriers would be liable for full
replacement value. Second, the minimum declared value for shipments
would increase from $1.25 to $4.00 times the weight of the shipment (in
pounds). The Committee established this figure after concluding that
$4.00 per pound, rather than $1.25 per pound, more closely approximates
the average value of recent household-goods shipments.
The proposed FVP option would use the broad ranges of declared
values from the current FVP option that many carriers offer. At the
lower end, the valuation charge would increase as the declared values
increased in $5,000 increments. As the declared values go up, the
increments to which a single valuation charge would apply also would
expand, up to $25,000 worth of declared values. The proposed ranges of
declared values and corresponding charges are:
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Declared value Charge
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$0 to $5,000................................................... $76
$5,001 to $10,000.............................................. 113
$10,001 to $15,000............................................. 149
$15,001 to $20,000............................................. 182
$20,001 to $25,000............................................. 216
$25,001 to $30,000............................................. 258
$30,001 to $35,000............................................. 298
$35,001 to $40,000............................................. 338
$40,001 to $50,000............................................. 380
$50,001 to $60,000............................................. 440
$60,001 to $75,000............................................. 508
$75,001 to $100,000............................................ 624
$100,001 to $125,000........................................... 754
$125,001 to $150,000........................................... 825
$150,001 to $175,000........................................... 933
$175,001 to $200,000........................................... 1,041
$200,001 to $225,000........................................... 1,155
$225,001 to $250,000........................................... 1,280
Over $250,000.................................................. 1,280\1
\
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\1\ Plus $.50 for each $100, or fraction thereof, in excess of $250,000
declared value.
Within any of the proposed valuation ranges, lower charges would apply
if the shipper elects a $250 or $500 deductible. If goods were lost,
the carrier would be fully liable for the loss of the property, at its
replacement value with no reduction for depreciation, up to the
declared value of the shipment.\6\
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\6\ Again, we note that a shipper that chooses a declared value
that is lower than the replacement value of its household goods
would not be able to replace all of its goods with new goods if the
entire shipment were destroyed or lost.
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If a shipper did not, in writing, either select the 60-cents-per-
pound-per-article limit or declare a value for the shipment, the
declared value would be deemed to be $4.00 times the weight of the
shipment in pounds. Also, when goods are damaged, the carrier would
retain the option of paying repairs to restore the damaged items to
their condition when the carrier received them, up to the declared
value of the shipment.
4. Comments Requested
We wish to ensure that any proposal we might approve represents an
appropriate liability regime for individual homeowners who would be
affected. Therefore, we seek comments, especially from individual
shippers of household goods and organizations or government entities
that represent their interests, concerning the Committee's new proposal
and particularly the issues we outline below.\7\ We also seek
additional information from the Committee, as discussed below.
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\7\ The Committee's proposal is the result of collective action
by its members pursuant to 49 U.S.C. 13703. The Committee's request
for renewed Board approval of (and resulting antitrust immunity for)
discussing and taking actions collectively is currently pending
before the Board. Our action in moving this proceeding forward is
not intended to prejudge our disposition of the Committee's renewal
request.
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A. 60-cents-per-pound Limitation
The limit of 60 cents per pound per article may no longer be
appropriate if the estimated current average value of $4.00 per pound
of household-goods shipments is accurate. There may be some appeal to
having low base rates with minimal carrier liability for shippers who
want to insure their household goods through other means. However, the
rates for separate insurance likely will be higher, with lower carrier
liability, because insurers typically seek to recover from the
carriers, to the extent of the carrier's liability. Thus, any savings
to the shipper from continuing an unrealistically low 60-cents-per-
pound-per-article limitation could be illusory. We request comments on
whether and why we should allow a 60 cents-per-pound-per-article limit.
In addition, we have received informal complaints from household-
goods shippers who, despite our clear rule on this matter, state that
they did not knowingly request the 60-cents-per-pound limitation but
were somehow deemed to have selected it. Therefore, we also request
comments on ways to better ensure that shippers make informed,
conscious decisions regarding the level of carrier liability and
understand any applicable limitations to liability.
B. Use of Deductibles
Under the proposal, if a shipper chooses a rate that includes a
deductible, a carrier might lack a liability-based incentive to
exercise reasonable care to avoid minor damages to shipments. We
request comment on this aspect of the proposal.
C. Elimination of Actual (Depreciated) Value Option
We are concerned that the FVP proposal eliminates the current
option under which motor carriers are liable for the actual
(depreciated) value of the household goods in a shipment--the level of
liability contemplated by the statute. We ask for comment on whether
carriers should be allowed to eliminate this intermediate option.
D. Rate Levels
According to the Committee, today some 22.9 percent of FVP
shipments result in paid claims. The Committee projects that 25 percent
of FVP shipments under the proposed $4.00-per-pound minimum would
result in
[[Page 67474]]
paid claims.\8\ We do not know if this projection is based on a trend
of an increasing number of paid claims. If the expected increase in
paid claims did not occur, the additional revenues generated would have
the same effect as a rate increase. We ask the Committee to submit all
supporting data, including work papers, associated with the proposed
fees and the prediction that a higher percentage of FVP shipments will
result in paid claims.\9\
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\8\ The Committee asserts that fewer claims were filed in the
past because the $1.25-per-pound minimum had the effect of
discouraging claims for small losses. But current FVP shipments have
not been subject to the $1.25-per-pound minimum. Therefore, we
question the Committee's assumption that there would be an increase
in the amount of paid claims under the proposed new FVP option.
\9\ Concerning the supporting data, we seek an explanation of
the basis for arriving at the proposed charges for each of the 19
levels shown in Table 5 of the application. It would be helpful to
have information similar to that submitted by the Committee in
Attachment No. 3 to its October 1992 application to amend earlier
released rate orders (Nos. MC-505 and MC-672).
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E. Different Carrier Liability on Identical Shipments
We do not know if the Committee intends a difference in carrier
liability for two otherwise identical shipments, one of which has a
declared lump sum value and one of which does not. As worded, the
proposal would seem to provide a different result. Under the
Committee's proposed terms:
All shipments (other than those released to a value not
exceeding 60 cents per pound per article) will be deemed released to
a minimum lump sum value of $5,000 or $4.00 times the actual total
weight (in pounds) of the shipment. If the shipper declares or
releases the shipment to a valuation that falls between the
valuation amounts shown, the next higher valuation amount and the
applicable charge associated therewith will apply.
An example will illustrate our concern. There would be a different
maximum amount of carrier liability on two identical shipments each
weighing 4,000 pounds, with the same charge, depending on whether the
shipper wrote in a declared value or left the line for a declared value
blank. If the shipper wrote in the figure $16,000 on the blank for a
declared value and the entire shipment were lost, the carrier could be
liable for up to $20,000 (if the shipper demonstrated that the
replacement value of his lost goods were that high) because the chosen
figure, $16,000, ``falls between the valuation amounts shown'' on the
carriers' proposed table of charges. But if the shipper does not write
anything in the blank for declared value, the declared value of this
shipment would be deemed to be $16,000 ($4.00 x 4,000) and the
shipper would pay the same valuation charge; however, the carrier's
maximum liability would be $16,000 if the entire shipment were lost. We
ask whether the Committee intended this disparate result and if so,
whether that is appropriate.
F. Annual Adjustments
The Committee requests authority to affect annual adjustments in
both the proposed minimum valuation per pound and the proposed
valuation charges for shipments, based on changes in the ``household
furnishings and operations'' item within the Consumer Price Index, U.S.
City Average, published by the Bureau of Labor Statistics (BLS) of the
United States Department of Labor. We understand that BLS has
restructured the household furnishings and operations index, and that
certain items frequently included in household goods shipments
(televisions and sound equipment, for example) were moved to other
indexes. We request additional justification from the Committee
regarding the relevance of the proposed index, comparing the items
included in the index with all the items commonly included in shipments
of household goods.
We invite comments regarding the merits of this or any other index
that may be appropriate to establish adjustments in the minimum
valuation of shipments and the corresponding charges. Additionally, we
invite comments as to whether any methodology for adjusting minimum
valuations of household-goods shipments should apply also to the
carriers' charges, as the relationship between the costs of providing a
specific dollar amount of carrier liability and changes in the value of
household goods has not been explained.
5. Summary
We encourage interested persons to participate in this proceeding
by submitting written data, views, or arguments for or against the
proposed changes in the released rates authority for motor carriers of
household goods. While we are interested particularly in receiving
comments on certain issues, as discussed above, we invite comments on
all aspects of the proposal. All comments and other materials referred
to in this notice will be available for inspection and copying at the
Board's address given above. Normal office hours are between 8:30 a.m.
and 5:00 p.m., Monday through Friday, except holidays.
By the Board, Chairman Morgan, Vice Chairman Burkes, and
Commissioner Clyburn.
Vernon A. Williams,
Secretary.
[FR Doc. 00-28826 Filed 11-8-00; 8:45 am]
BILLING CODE 4915-00-P