Nepera Chemical, Inc., Petitioner, v. Federal Maritime Commission and United States of America, Respondents, 662 F.2d 18 (D.C. Cir. 1981)

This case concerns the application by a carrier, Sea-Land Service, Inc., for waiver of a total of $42,569.90 in freight charges for the benefit of a shipper, Nepera Chemical, Inc.¹  The Federal Maritime Commission denied the application. FMC Special Docket No. 606 (1979). We reverse.

During 1977 Nepera contracted to have Sea-Land transport five containers of picoline (a liquid chemical) from the United States to Barcelona, Spain. At the time of the agreement, Sea-Land's Freight Tariff 166²  contained a specific rate for picoline transport which made total charges of $13,700 appropriate for the Nepera shipment.³  Effective December 31, 1977 Sea-Land cancelled Tariff 166 and instituted Tariff 232, but neglected to specify a commodity rate for picoline transport.⁴  As a result, when the ship Galloway left port in June 1978 with the picoline cargo, Sea-Land was obligated to charge Nepera the Cargo N.O.S. (not otherwise specified) rate for nonhazardous liquids, which produced total freight charges of $56,361.15.⁵  These charges were more than 300 percent above the original rate.

It was the clearly documented understanding of Sea-Land and Nepera that the original rate for picoline transport would apply to the shipment and be carried forward in Tariff 232. On November 30, 1977 Sea-Land's Sales Division sent instructions to its Pricing Department to "assure that (the Tariff 166 picoline) rate (was) protected and converted to the new # 232 tariff" when it was published. (J.A. at 7-8) The Sales Division then notified Nepera that the picoline rate would be extended to Tariff 232. (J.A. at 9)

Ten days after shipment Sea-Land sought to rectify its oversight by publishing the Tariff 166 rate for picoline in Tariff 232.⁶  Because the two tariffs employed different weight measures (hundred pounds and tons, respectively), conversion computations involving some "rounding off" were required. The resulting charges for the Nepera shipment under Tariff 232 were $13,791.25. Nepera was content to accept this minor increase of $91.25 in the original freight charges given the alternative overcharge of $42,661.15 under the Cargo N.O.S. rate.⁷ 

Pursuant to the procedure established by section 18(b) (3) of the Shipping Act of 1916, as amended, 46 U.S.C. § 817(b) (3)⁸  Sea -Land filed an application with the FMC for permission to waive and refund the excess of the Cargo N.O.S. charges over the Tariff 232 charges ($42,569.90). (J.A. at 1) The Administrative Law Judge denied the application on the ground that the slight difference in rates under the two tariffs constituted a "fatal (jurisdictional) defect". (ALJ Decision, J.A. at 32) Sea-Land filed exceptions to the decision which demonstrated that the charge differential was due solely to "rounding off" in the conversion process and that the Tariff 232 rate accurately reflected the original agreement between shipper and carrier. (Exceptions, J.A. at 39-40) On appeal the FMC affirmed the ALJ's Decision. (FMC Decision, J.A. at 43-45)

The Shipping Act of 1916, as amended, 46 U.S.C. § 801 et seq., provided in section 18(b) (3) for the waiver and refund of charges by a carrier "where it appears that there is an error in a tariff of a clerical or administrative nature or an error due to inadvertence in failing to file a new tariff ...." 46 U.S.C. § 817(b) (3). Four requirements must be met by the carrier as a prerequisite to FMC approval: (1) it must be shown that the waiver and refund will not result in discrimination among shippers; (2) the corrected tariff upon which relief will be based must be filed; (3) notice of the corrected tariff must be given to all affected shippers; and (4) the application for waiver and refund must be filed with the FMC within 180 days after shipment. Id. The FMC held that Sea-Land failed to fulfill the second jurisdictional requirement, because the "rate negotiated between Sea-Land and Nepera and the rate filed by Sea-Land pursuant to its application are clearly at variance." (FMC Decision, J.A. at 44)

Section 18(b) (3) requires, in relevant part:

That the common carrier by water in foreign commerce or conference of such carriers has, prior to applying for authority to make refund, filed a new tariff with the Federal Maritime Commission which sets forth the rate on which such refund or waiver would be based....

46 U.S.C. § 817(b) (3) (Emphasis supplied). The new tariff, in short, must reflect the rate which was intended to be applicable by both shipper and carrier. Nepera maintains that the rate filed by Sea-Land pursuant to the above requirement accurately reflects the parties' original agreement and that the charge differential is attributable solely to the conversion from a cwt (hundred pounds) to a WT (ton) weight measure.⁹  The FMC interpreted section 18(b) (3) strictly to require the filing of the exact promised rate without any allowance for minor mathematical variation. (FMC Decision, J.A. at 45) We disagree. "The canon in favor of strict construction is not an inexorable command to override common sense and evident statutory purpose." United States v. Brown, 333 U.S. 18, 25, 68 S. Ct. 376, 379, 92 L. Ed. 442 (1948).

Due deference should be accorded statutory interpretation by an agency which has the responsibility for implementing and administering the statute. "Ultimately, however, statutory construction is a judicial function...." Austasia Intermodal Lines, Ltd. v. FMC, 188 U.S.App.D.C. 379, 381, 580 F.2d 642, 644 (1978).

The relevant language of section 18(b) (3) "the rate on which such refund or waiver would be based" says nothing regarding exactitude. The legislative history of this section is similarly silent on the issue of whether the intended and filed rates need be precisely equivalent.¹⁰  The drafters of this provision, it would appear, did not contemplate the situation before us: the filing of a promised rate which because of a change in the method of computation varies slightly from the intended rate and which is accepted by both parties as an adequate representation of their understanding.

We turn for guidance to the purposes of section 18(b) (3), for "(t)here is no surer guide in the interpretation of a statute than its purpose when that is sufficiently disclosed...." FDIC v. Tremaine, 133 F.2d 827, 830 (2d Cir. 1943). As the FMC concedes, the overriding purpose of this section is unquestionably remedial. (Br. of FMC at 7) First, the statute is intended to remedy carrier tariff errors which have adverse economic effects on shippers: "shippers ... should not be made to bear the consequences of a carrier's bona fide neglect or omission." House Hearings, supra, n.10 at 85 (Statement of FMC Chairman Harllee). Second, if a tariff error is corrected equal treatment of all shippers is required. Proof of the prior tariff agreement as well as publication of the new rate assure that the refund and waiver remedy will not result in rate discrimination or rebate. 46 U.S.C. § 817(b) (3); S.Rep.No.1078, 90th Cong., 2d Sess. 2 (1968); H.R.Rep.No.920, 90th Cong., 1st Sess. 2-3 (1967), U.S.Code Cong. & Admin.News 1968, p. 1911.¹¹ 

The two remedial purposes of section 18(b) (3) relief of shippers from the burdens of carrier negligence and the prevention of rate discrimination and rebates are not furthered by the FMC Decision. The Commission's construction of the statute forces the shipper to bear a $42,569.90 overcharge which is due solely to Sea-Land's negligence in failing to carry forward the picoline rate. Because the Tariff 232 rate results in a minor overcharge of $91.25 to Nepera, it is certain that no rate discrimination or rebate in favor of Nepera was either intended or possible.

The reliance by FMC on Munoz Y Cabrero v. Sea-Land Service, Inc., 20 FMC 152 (1977) to support its holding is incorrect. A rejection of the refund application in the Munoz case served the statutory purposes not because the intended and new rates differed, but rather because the new rate was both lower than and unjustifiably different from that intended by the parties. The danger of rebate and blatant rate alteration which was controlling in that case is wholly absent here, where the new rate is both higher than and justifiably different from the intended figure. It was error for FMC to ignore the clear distinctions between the Munoz case and this case.¹² 

An interpretation of section 18(b) (3) which permits the minor rate variation here is appropriate for several reasons. First, such a construction alone serves the remedial purposes of the statute. Surely "it is the business of the judges so to construe the act as to suppress the mischief and advance the remedy." I Blackstone's Commentaries 87. Second, the FMC's concern with a trifling mathematical variance results in an economic absurdity. "If a literal construction of the words of a statute be absurd, the act must be so construed as to avoid the absurdity." Church of the Holy Trinity v. United States, 143 U.S. 457, 460, 12 S. Ct. 511, 512, 36 L. Ed. 226 (1892). There is no support in the statute, legislative history, case law, or in common sense for FMC's requirement of mathematical exactitude.

"If ever we are justified in reading a statute, not narrowly as through a keyhole, but in the broad light of the evils it aimed at and the good it hoped for, it is here." United States ex rel. Marcus v. Hess, 317 U.S. 537, 557-558, 63 S. Ct. 379, 390-391, 87 L. Ed. 443 (1943) (Jackson, J., dissenting) : "for the letter killeth, but the spirit giveth life." II Corinthians 3:6. FMC must accept the Sea-Land application.

This case is remanded for further proceedings not inconsistent with this opinion.

So ordered.