Board of Contract Appeals General Services Administration Washington, D.C. 20405 ______________________________ March 2, 1999 ______________________________ GSBCA 14510-RATE In the Matter of ALASKA CARGO TRANSPORT, INC. Andrew D. Shafer of Harris, Mericle, Wakayama & Mason, Seattle, WA, appearing for Claimant. James F. Fitzgerald, Director, Transportation Audits Division, General Services Administration, Washington, DC, appearing for General Services Administration. Col. James F. Quinn, Staff Judge Advocate, Headquarters, Military Traffic Management Command, Department of the Army, Falls Church, VA, appearing for Department of Defense. HYATT, Board Judge. Claimant, Alaska Cargo Transport, Inc. (ACT), a carrier by water, transported munitions from Concord, California (San Francisco Bay area) to Pearl Harbor, Hawaii for the Military Traffic Management Command (MTMC) in 1996. Under government bill of lading (GBL) number C-7,805,481, ACT was paid the amount of $1,332,291.05 for transporting the subject munitions to Hawaii. Following an audit, the General Services Administration's (GSA's) Office of Transportation Audits (OTA) issued a notice of overcharge, initially seeking recovery of the amount of $732,440.55, plus interest. Subsequently, GSA amended the overcharge claimed to the amount of $489,314.20, plus interest. ACT contests GSA's action and has requested the Board's review. Background ACT, which is based in Seattle, Washington, operates tug and barge services primarily between Seattle and Alaska, and Seattle and Hawaii. Although ACT maintains an office in San Francisco, California, it does not routinely transport cargo out of this area to other ports. In 1995, MTMC contacted ACT about transporting containers of ammunition from the Naval Weapons Station (NWS) in Concord, California to Pearl Harbor, Hawaii. Since ACT does not generally operate out of the San Francisco area or hold itself out to the public as offering water transportation services from this location, ACT negotiated with MTMC concerning the nature of services to be provided and a price for transportation and ancillary services. These negotiations took place over a three month period. The price negotiated was based in part on the fact that ACT would have to divert a barge originating in Seattle to provide the service desired by MTMC. In connection with this transaction, ACT provided MTMC with copies of its Surface Transportation Board (STB) Tariff Number 250, item 3007, which was developed for such a non-routine shipment. After agreeing to terms and requirements, MTMC contracted with ACT in late December 1995 for the transportation of approximately 140 containers of ammunition in February 1996 at the rates set out in STB Tariff Number 250, Item 3007. MTMC assigned GBL number C-7,805,481 to this shipment. In early February 1996, after learning that the loading crane at NWS Concord was inoperable, ACT offered to provide a floating crane at a rate outlined in STB tariff number 250, item 300, at an additional charge. Upon transport of the ammunition in late February 1996, ACT billed, and MTMC paid, the charges agreed upon under STB tariff number 250, items 3007 and 300, for GBL C-7,805,481. On June 5, 1997, GSA's OTA issued a notice of overcharge to ACT. The notice was based upon the application of the lower rates set forth in ACT's Federal Maritime Commission (FMC) tariff number 006, instead of those in STB tariff number 250, which ACT had used to calculate MTMC's bill. FMC tariff number 006, dated October 7, 1994, with an effective date of December 20, 1994, on its face applies generally to transport between United States Pacific origin ports and Hawaii. Within FMC tariff number 006 is item 9306-00-0000- 0001, issued December 21, 1994 and effective December 22, 1994. This item specifically covers the shipment of ammunition from United States Pacific origin ports, including Port Chicago (NWS Concord), to Hawaii. STB tariff number 250, issued December 14, 1995 and effective January 28, 1996, was based on the negotiation between MTMC and ACT for the services provided in February 1996; it applies generally to transport between points in Oregon and Washington and points in Hawaii. Within STB tariff number 250 is item 3007, most recently issued December 15, 1995, effective December 27, 1995, which applies exclusively to shipments of ammunition from NWS Concord to Hawaii. Neither of these tariffs, nor their respective items, have expiration dates. ACT has submitted the sworn declaration of its vice- president to explain the historical context of the FMC tariff, which ACT submits is both dormant and inapplicable to this transaction. ACT, which was formed in 1986, has only transported three other shipments for the United States military which have originated in Concord, California with a destination in the Pacific. ACT was able to offer unusually low rates to MTMC for the transportation of munitions to Hawaii on these three occasions, which occurred in 1988 and 1989, because another carrier, Hawaiian Tug and Barge, was seeking freight to defray the costs of returning its vessels from California to Hawaii. To handle this particular traffic, in 1988 ACT published FMC tariff number 001, which ACT states was subsequently abandoned because ACT was not in the business of transporting goods from Concord to Hawaii. ACT has supplied transportation services (not under an FMC tariff) originating in the San Francisco Bay area for only one other, commercial, customer on two occasions in 1990 and 1991. Other than the transaction in dispute here, the three earlier shipments for MTMC, and the two transactions with a commercial customer that also sought out ACT to perform a special service, ACT provided no service whatsoever between the San Francisco Bay area and Hawaii. ACT has never contemplated competing in this traffic lane on a regular basis and has never intended to try to penetrate this market. In 1994, the FMC required all non-vessel and vessel operating common carriers to create electronic tariffs. To preserve its FMC license, ACT hired a tariff publishing company to take its existing paper tariff and convert it to an electronic one. At that time, ACT was not using the tariff and did not review it to determine if rates still applied. The electronic tariff became FMC tariff number 006. According to its records, ACT has never provided service between San Francisco and Hawaii to any shipper under the electronic tariff and considers it to be dormant. Moreover, for the period at issue here, the only regularly scheduled and published water transportation services to Hawaii offered by ACT originated in Seattle. In support of its position that the services provided to MTMC were specially contracted for and not covered by the FMC tariff, ACT has also supplied the sworn statement of its Director of Marketing, who coordinated the subject shipment with MTMC. ACT's marketing director states that the rates proposed were based on factors unique to MTMC's shipping needs for this transaction. In particular, ACT was required to divert a barge from Seattle to San Francisco to load the cargo, thus extending the normal length of the barge's voyage to Hawaii. Although the initial quote was for the transportation of seventy-five twenty- foot containers of ammunition, by the time the cargo was ready for shipment, this requirement had ballooned to 140 containers, requiring ACT to add another barge to handle the traffic. Because MTMC was transporting incompatible high explosives, ACT was required to create a stowage plan to isolate incompatible munitions from each other. MTMC continued to modify its munitions mix virtually up until the time the cargo was loaded, forcing ACT to reconfigure its stowage plan upon arrival in Concord to load the freight, giving rise to an additional unanticipated delay of two days. The rates offered to MTMC, set forth in STB tariff number 250, item 3007, were based on the unique factors applicable to MTMC's shipment. MTMC and ACT both agreed to these rates. ACT's marketing director at no time contemplated using the FMC tariff. ACT protested the notice of overcharge, contending that the FMC tariff was not applicable to this transaction, but OTA rejected the protest on August 27, 1997. On October 24, 1997, ACT asked OTA to reconsider its decision of August 27, 1997, but on December 2, 1997, OTA declined to modify its position. In February 1998, however, GSA amended the notice of overcharge to seek recovery of the reduced amount of $489,314.20. ACT appealed the notice of overcharge to the Board. Discussion GSA and MTMC contend that the notice of overcharge is proper and enforceable because ACT's FMC tariff number 006 contains lower rates for the same water transportation services as were provided under STB tariff number 250. It is axiomatic, according to GSA and MTMC, that the Government is entitled to the lowest published rates applicable to its shipments and that Government agents are not authorized to contract for higher rates for similar services. See, e.g., Great Northern Railway Co. v. United States, 170 Ct. Cl. 188, 194 (1965); Puerto Rico Marine Management, Inc., 57 Comp. Gen. 584 (1978). In arguing that the facts support their position, GSA and MTMC point to the similarities in the two tariffs. Both provide rates for the transportation of ammunition, explosives, and dangerous cargo from Port Chicago to Hawaii. Additionally, both tariffs provide for ancillary services such as the crane service provided by ACT. Thus, GSA and MTMC conclude that both tariffs are applicable and, as such, only the lowest rates can be charged. ACT disagrees, asserting numerous alternative arguments to support its position that only the STB tariff governed the provision of services to MTMC with respect to this particular shipment. ACT's principal arguments are that 1) FMC tariff number 006, which is a general tariff between the Pacific origin group (all ports ranging from San Diego, California to Seattle, Washington) and Hawaii, pertains only to common carriage by water and ACT has not acted as a common carrier by water in providing these services; 2) the specific tariff negotiated under STB tariff number 250 governs over the general tariff; 3) even if this transaction constitutes common carriage, the STB tariff applies because under applicable law, where there is overlapping jurisdiction between the STB and the FMC, the STB's jurisdiction prevails; and 4) ACT and MTMC negotiated a special contract for these services and, as a matter of law and public policy, ACT is entitled to the benefit of its bargain. According to ACT, this dispute is governed by the answer to the question of which administrative body has jurisdiction over the shipping services provided by ACT to MTMC: the FMC or the STB[foot #] 1. ACT maintains that the matter is governed by the STB (formerly the ICC). Under the provisions of the Interstate Commerce Act (ICA), STB has jurisdiction over transportation "(1). . . by water carrier between a place in a State and a place in another State, even if part of the transportation is outside the United States." 49 U.S.C. 13521 (1994). The Shipping Act of 1916 states: rates and charges for the barging and affreighting of containers or containerized cargo by barge between points in the United States, shall be filed solely with the [FMC] in accordance with rules and regulations promulgated by the [FMC] where (a) the cargo is moving between a point in a foreign country or a noncontiguous State, territory, or possession and a point in the United States, (b) the transportation by barge between points in the United States is furnished by a terminal operator as a service substitute in lieu of a direct vessel call by the common carrier by water transporting the containers or containerized cargo under a through bill of lading, (c) such terminal operator is a Pacific Slope State, municipality, or other public body or agency subject to the jurisdiction of the [FMC], and the only one furnishing the particular circumscribed barge service in question as of January 2, 1975, and (d) such terminal operator is in compliance with the rules and regulations of the [FMC] for the operation of such barge service. 46 U.S.C. 804 (emphasis added). In general, the STB (formerly the ICC) has jurisdiction over interstate water transportation by water carrier, while the FMC has regulatory control of ocean transportation of property between the United States and foreign countries. Japan Line, LTD. v. United States, 393 F. Supp. 131, 135 n.6 (N.D. Cal. 1975). ACT thus argues that the STB, not the FMC, exercises jurisdiction over the shipping services provided to MTMC. GSA and MTMC maintain that the FMC, under 46 U.S.C. 804, in fact has jurisdiction over the services in dispute. They interpret 46 ----------- FOOTNOTE BEGINS --------- [foot #] 1 Effective January 1, 1996, the Interstate Commerce Commission (ICC) was abolished by Congress and replaced by the Surface Transportation Board (STB). Pub. L. No. 104-88, 101, 201-205, 109 Stat. 804, 932-43 (1995). With certain exceptions, not relevant here, all of the former functions of the ICC were transferred to the STB. ----------- FOOTNOTE ENDS ----------- U.S.C. 832, which states that the Shipping Act shall not be construed to "confer upon the [FMC] concurrent power or jurisdiction over any matter within the power or jurisdiction of the [STB]," as serving only to prevent the STB and the FMC from having concurrent jurisdiction, not as conferring jurisdiction on the STB over the FMC in cases of conflict. ACT disagrees with GSA's and MTMC's analysis, contending that, under 46 U.S.C. 832, in the event of an apparent overlap of jurisdiction between the STB and the FMC, the STB controls. ACT has the better argument. While 46 U.S.C. 804 may be read to confer jurisdiction upon the FMC in certain narrow circumstances, ACT is not subject to the terms of 46 U.S.C. 804 because it does not meet all the criteria set out in this section. In particular, ACT is not "a Pacific Slope State, municipality, or other public body or agency," nor does subsection (b) appear to be applicable. All the section criteria, as evidenced by the "and" before subsection (d) of the section, must be fulfilled. Since ACT does not meet all of the criteria, ACT is not subject to regulation by the FMC under 46 U.S.C. 804. Furthermore, even if ACT did meet all the criteria of 46 U.S.C. 804, 46 U.S.C. 832 explicitly states that the Shipping Act of 1916 does not affect the power or jurisdiction of the STB and expressly deprives the FMC of concurrent jurisdiction over any matter within the purview of the STB. The purpose of 46 U.S.C. 832 is to avoid a conflict of jurisdiction should any regulatory power of the FMC overlap with a power also vested in the STB. See Hawaiian Express Service, Inc. v. Pacific Hawaiian Terminals, Inc., 492 F.2d 865, 867 (9th Cir. 1974). Where there is an overlap, the STB prevails over the FMC. Moreover, under the applicable statutory scheme and given the facts before us, it is not clear that ACT was obligated to file and observe a tariff with either the FMC or the STB for shipments originating from the San Francisco Bay area. To be obligated to establish and observe a tariff under the ICA and the Shipping Act of 1916, 46 U.S.C. 817, a carrier must be a "common carrier." The Shipping Act of 1916 defines a "common carrier by water in interstate commerce" as: a common carrier engaged in the transportation by water of passengers or property on the high seas or the Great Lakes on regular routes from port to port between one State, Territory, District, or possession of the United States and any other State, Territory, District, or possession of the United States, or between places in the same Territory, District, or possession. 46 U.S.C. app. 801 (emphasis added). The ICA's definition of a common carrier is substantially different from that of the Shipping Act of 1916 because it no longer distinguishes between common and contract carriers. Instead, the ICA divides its carriers by modes of transportation, and a water carrier is merely "a person providing water transportation for compensation." 49 U.S.C. 13102(22). ACT contends, and the record shows, that while it does maintain regularly scheduled routes between Seattle and Hawaii, it does not regularly schedule transport between San Francisco Bay (NWS Concord) and Hawaii. Contrary to the assertions of GSA and MTMC, the mere filing of an FMC tariff does not establish that the route in question is regularly served by the carrier. From 1988 to 1996, ACT contracted to transport goods from San Francisco Bay to Hawaii a total of four times for MTMC and twice for a single private corporation. At no time did ACT advertise service between San Francisco Bay and Hawaii. The Government argues that because ACT has transported goods from San Francisco Bay to Hawaii in the past, ACT is an interstate common carrier with respect to that route. Furthermore, the Government claims that ACT's filing of FMC tariff number 006 in 1994 further demonstrates that ACT must be an interstate common carrier on the San Francisco Bay-Hawaii route. Under the Shipping Act of 1916, ACT is clearly an interstate common carrier by water on its Seattle-Hawaii route, which it schedules regularly. Additionally, under the ICA definition, ACT is a water carrier on both its Seattle-Hawaii route and the San Francisco Bay Route at issue here. ACT is not, however, an interstate common carrier by water for the San Francisco Bay- Hawaii route in dispute. First, there is no language in the Shipping Act of 1916's definition of a "common carrier by water in interstate commerce" to suggest that, if a carrier has a tariff on file with the FMC which mentions a certain shipping route, then the carrier is automatically an interstate common carrier on that route. Furthermore, while ACT has transported goods from San Francisco Bay to Hawaii on a few, limited previous occasions, an essential element of being an interstate common carrier by water is regularly scheduled routes. See United States v. Stephen Brothers Line, 384 F.2d 118, 123 n.15 (5th Cir. 1967). For each of the four prior shipments, as well as for the trip presently in dispute, ACT contracted on a special basis to transport goods from San Francisco Bay to Hawaii. These sporadic trips do not constitute a regularly scheduled route. They are merely indicative of ACT's ability to perform special shipping duties in addition to its regular routes. Consequently, under the Shipping Act of 1916, ACT is not an interstate common carrier by water between San Francisco Bay and Hawaii. In addition, ACT asserts that regardless of any tariff requirement, in this case it contracted with MTMC to perform a special service and is entitled to collect the agreed upon contract price. GSA and MTMC counter that the Government is entitled to the lowest rate available for similar services offered to the public and that MTMC did not have the authority to contract for a higher rate than that available to the public. Since ACT did not regularly transport goods from San Francisco Bay to Hawaii, nor did it offer such a service to the regular public, the services performed for MTMC can be subject to a contracted rate. In essence, item 3007 of Tariff 250 was a specially negotiated rate that was memorialized by republication of the tariff in late December 1995. The current tariff represents the contracted rate. See Greyhound Corp. v. United States, 124 Ct. Cl. 758, 766 (1953) (Court held that the Government was obligated to pay the rate it agreed to when it contracted for special transportation services, even though the transporter had a lower tariff rate on file). The general rule, as set out in Missouri Pacific Railroad Co. v. United States, 56 Ct. Cl. 341 (1921), states that: [w]here the Government contracts for transportation at a special rate and the [carrier] had on file a special tariff at a less [sic] rate than that agreed upon, and which was known to the Government but which was not applied for, and with the conditions of which the Government had not complied, the Government is bound by its contract, as an individual would be. Id. at 355. In this matter, MTMC contracted with ACT for a special service and had constructive knowledge of the FMC tariff but failed to request the FMC tariff. Because under the facts of record the transport of ammunition from NWS Concord to Pearl Harbor was not a service regularly provided by ACT, the Government's argument that MTMC did not have the authority to contract with ACT for a higher rate than that available under the FMC tariff must fail. MTMC had the authority to contract with ACT for special transport services and should therefore be bound to its contract. Regardless of the bare language of the tariffs, which are similar in nature, an examination of the facts applicable to the services demonstrate that the services were not fully covered by the FMC tariff. In order to transport this cargo, ACT had to divert two barges from its Seattle route and make an unscheduled stop in Concord. In addition, it could not simply load the cargo -- it had to follow a carefully constructed stowage plan to avoid juxtaposition of incompatible explosives. This was not the type of routine transaction that would be covered by a general tariff. Decision GSA's audit action and notice of overcharge cannot be sustained. ACT is entitled to have refunded all of the monies collected from it based on the notice of overcharge. _________________________________ CATHERINE B. HYATT Board Judge