Bye Bye Bureaus

June 18, 2007
On May 7, 2007, the Surface Transportation Board (STB) withdrew its approval of the agreements of the eleven existing motor carrier bureaus and terminated

On May 7, 2007, the Surface Transportation Board (STB) withdrew its approval of the agreements of the eleven existing motor carrier bureaus and terminated their exemption from the antitrust laws. The effective date for this action is September 4, 2007.

At one time the bureaus reigned supreme with respect to motor carrier rates, classifications and rules of service. Practically all trucking companies belonged to one or more of the bureaus. Some of the bureaus specialized in certain types of cargo such as bulk commodities, while others dealt with geographic regions such as the Rocky Mountain States.

The motor carriers would meet together in bureaus and collectively decide upon a uniform tariff rate schedule as well as the various rules pertaining to movements by trucks. Until 1994 trucking company tariffs had to be filed at the former Interstate Commerce Commission (ICC). The bureaus would file these uniformly set tariffs at the ICC on behalf of their members. These tariffs could be protested by shippers and, if they were, the ICC would hold hearings and investigate the terms and conditions of the rates and rules. While there was a right of independent action by individual motor carriers it was seldom exercised because the independent rates had to be filed at the ICC where they would often be protested by other carriers, necessitating lengthy and expensive proceedings. Accordingly, the bureaus became very powerful forces in the trucking industry. All this was at a time when the precisely set tariff rates had to be adhered to and rebates could be a crime.

The bureaus could engage in such action because, by statute, they were exempt from the antitrust laws if their operating agreements were approved by the ICC. Interestingly, the antitrust immunity statute, something called the Reed-Bullwinkle Act, was passed in 1948 over the veto of President Harry S. Truman which gives you some idea of the political power the bureaus had in those days.

As the transportation deregulation movement began to gain steam in the 1970s the concept of motor carrier bureaus and even the tariff system came into question.

Congress passed legislation in 1980 curtailing certain practices of the bureaus. A series of administrative actions by the ICC had loosened the tariff system so much that it was almost impossible to administer and finally, in 1994 the Trucking Industry Regulatory Reform Act (TIRRA) eliminated the requirement that general freight motor carriers file tariffs. With passage of the ICC Termination Act of 1995, Congress abolished all remaining regulation of motor carrier rates except for household goods movements and joint motor-water movements in noncontiguous domestic trade, which still require tariffs. For general freight the tariff system was gone. The 1995 Act transferred jurisdiction over the bureaus to the newly created STB.

The STB's recent decision raises many interesting questions. A number of trucking companies have continued to rely upon collectively set bureau rates by offering shippers discounts off of the bureau rates. Uniform terms and conditions set by the bureaus have enabled shippers to readily compare motor carrier prices. Now bureaus will not be able to collectively decide on periodic general rate increases, so future rate adjustments may not be automatic or uniform.

One bureau, the National Classification Committee (NCC), did not set rates. Instead it establishes the various categories of freight ("classes") under which freight is often rated by carriers. In general the lower the classification number the lower the charges for hauling that category of commodity, although it is something motor carriers and shippers may negotiate. As noted by the STB, while some shippers have complained that the NCC system was sometimes manipulated to effect a rate increase the STB found little evidence of this. The STB specifically noted that if classifications are set in a fair and objective manner, including continued shipper participation, no antitrust violation would occur and the NCC would not need an exemption from the antitrust laws.

The STB also noted that all of the bureaus may continue to do a number of things that, if not conducted in an anticompetitive manner or with an anticompetitive objective, would not violate the antitrust laws. This includes devising mileage guides, collecting industry data and establishing benchmark guidance rules.

The STB also noted that motor carriers are not precluded from making through route and joint rate decisions with one another if such arrangements are designed to facilitate traffic movements. The STB described them as nothing more than contractor/subcontractor arrangements that should not raise antitrust problems.

The STB decision has no impact on safety rules such as the hours of service limitations for drivers or commercial driver's license requirements.

The STB action eliminating bureau antitrust immunity will necessitate some adjustments in motor carrier transportation, but it is only the latest step in the evolving process to abolish all forms of rate and service regulation.

Mr. Calderwood is a partner with the law firm of Zuckert, Scoutt & Rasenberger, L.L.P., in Washington, D.C., where he concentrates in transportation matters. Mr. Calderwood can be reached at [email protected]. This column is designed to provide information of general interest. It cannot substitute for in-depth legal analysis of particular problems. Readers are urged to seek counsel concerning individual situations.