(This is the third of three parts of my article as published in the April 2018 edition of The Transportation Lawyer. The footnote references were modified to accommodate the formatting parameters of this blog.)
Recent cases. At issue in a recent case was whether lettuce had become “manufactured” and thus no longer exempt. The court cited six different commodity descriptions contained in Administrative Ruling 119 that arguably applied to the lettuce in question, and found that the lettuce in question had not been transformed, had not lost its original identity, and had not become a new and different article. The court concluded by holding that the lettuce remained an exempt commodity. Fn. 13.
Fn. 13. Service First Logistics, Inc. v. J. Rodriguez Trucking, Inc., 2017 WL 1365410 (E.D. Mich. 2017). (The court went on to hold that Carmack did not apply and that therefore there was no subject matter jurisdiction. Note: There are cases holding that federal common law does at times confer federal court jurisdiction, again, a topic beyond the scope of this article.)
There have been a couple of other recent cases involving agricultural commodities. Fn. 14. One case involved a load of Christmas trees (Fn. 15) which sustained damage during transit by motor vehicle. A first quick glance at Administrative Ruling 133, the two page nonexempt list, reveals no reference to Christmas trees. Then a not-so-quick look at Administrative Ruling 119, and the reader sees the following: “Christmas trees – plain, sprayed or coated – Exempt – Law”. Fn. 16.
Fn. 14. No citations are furnished as the focus is on the commodities and on the Administrative Rulings, plus the cases were disposed of on other grounds.
Fn. 15. With origin at Oregon Evergreen International which is the home of Howard Hughes' Spruce Goose and which was also previously involved in spook operations for the CIA.
Fn. 16. And just for fun it is listed again under “Forest Products” which contains 64 subheadings including “Trees” under which we find the same Christmas tree sub-subheading.
The other case involved a shipment of fresh strawberries, commodities to which this writer can relate quite readily. Fn. 17. The strawberries were allegedly damaged during transit.
Fn. 17. I was born and raised on a row crop farm, homesteaded by my ancestors in the 1850s, in the Willamette Valley in Western Oregon. We raised broccoli, cauliflower, bush beans, peas, corn, hops and, yes, strawberries, among other crops. (I started driving tractor for the irrigation pipe crew at age 4.) My parents contracted with General Foods, one of the early movers and shakers in the frozen food industry and involved in the 180 degree frozen food pivot discussed above. In the 1980s General Foods closed its local processing facility (the number of loads that I drove to that facility numbered in the hundreds; no CDL required back then) on the basis that two-thirds of the nation's population lived east of the Mississippi River, and that transportation costs made its local operations impractical. This is ironic given that General Foods, as a shipper, was instrumental in getting Congress to put the brakes on the expansion of the exempt transportation world, which restricted competition which in turn increased the cost of transportation.
The nonexempt list (Ad. Ruling 133) does not include a heading for strawberries. There is a heading for “Fruits and Berries”. Under this heading is a reference to “Purees, strawberries and other, frozen”. The strawberries at issue were not purees. Therefore, the fresh strawberries do not fall within the commodities enumerated on this nonexempt list.
So that takes us to 119 where there is a mistake which is not helpful but in the end it doesn't matter other than to put one through a needless exercise. Fn. 18. This transcription mistake, from the 1987 edition to the 2002 edition, did not matter since had the strawberries at issue been listed under Fruits and Berries (and not Frozen), it would not have changed anything as the fresh strawberries did not fit within either category. The closest commodities on the list are blueberries, incidentally frozen and allowed to thaw during transport, which are classified as exempt. There is a comparable comparison to cranberries as well. Fn. 19. It would be helpful if 119 were to be updated. Fn. 20.
Fn. 18. Please stay with me on this. We first find the heading “Berries – see Fruits”. We then look for Fruits and there is no such heading. There is a heading for “Frozen – see commodity name: Fruits, vegetables, fish, poultry, etc.”, the relevance of which will be shown pretty quickly.
The mistake may have come from the ICC handoff to the FMCSA. In the 1987 edition of 119 in the CFRs there was a heading for “Frozen, see commodity name: Fruits, Vegetables, Fish, Poultry, etc.”, followed by the heading “Fruits and Berries”. So the word “Fruits” was mentioned twice, with the words in close proximity to each other.
Administrative Ruling 119, however, does not contain this “Fruits and Berries” heading, the second heading. Instead, immediately following the heading “Frozen, see commodity name: “Fruits, Vegetables, Fish, Poultry, etc.” are 52 subheadings which should be under the heading “Fruits and Vegetables”. Sadly, they are now found under the “Frozen” heading. That means that 52 commodities which should be unfrozen, under the heading “Fruits and Vegetables”, are instead listed as frozen under the “Frozen” heading. This is what the lists look like:
Administrative Ruling 119 (1987 version which is the same as the 1974 version)
Frozen, see commodity name: Fruits, Vegetables, Fish, Poultry, etc.
Fruits and Berries
Administrative Ruling 119 (2002 version):
Frozen – see commodity name: Fruits, vegetables, fish, poultry, etc.
So now, having been relegated to the Frozen heading (instead of Fruits and Berries), there are two references to strawberries. The first states “Strawberries – in syrup and unsealed containers in cold storage – Exempt – Law”, which did not apply to the fresh strawberries in issue. The second reference states “Strawberries – in unsealed containers with temperature controlled at 10 degrees or lower – Not exempt – Office”, which also did not apply to the fresh strawberries at issue. Incidentally, the 107 list contained only 25 subheadings under Fruits and Vegetables, and only included the first strawberry description above, the exempt description.
It is quite ironic that courtesy of Congress in 1958, certain frozen commodities were changed from exempt to nonexempt, only to have Administrative Ruling 119 in 2002 misclassify 52 commodities as frozen (and the internal inconsistency, where there are references within the subheadings to fresh, frozen, partially frozen etc.) instead of being listed under Fruits and Vegetables, with various degrees (sorry for the pun) of conditions, e.g. fresh, frozen, partially frozen, etc.
Fn. 19. Circling back in time, in the early 1990s I handled a case on behalf of a motor carrier involving the transportation of mushrooms by motor vehicle from Oregon to Vancouver, B.C. where they were put on Lufthansa planes destined for either Europe or Japan. The mushrooms froze en route. There were actually two exemptions in play. One was the agricultural exemption. The other exemption was the transportation of property by motor vehicle as part of a continuous movement which, prior or subsequent to such continuous movement, has been or will be transported by an air carrier or foreign air carrier. 49 U.S.C. §13506 (a)(8)(B). The plaintiff did not challenge the exemptions, and instead challenged the application of the released rate. The Oregon Court of Appeals upheld the released rate based upon federal common law. Karnecki v Wick's Air Freight, 126 Or. App. 621, 869 P.2d 388 (1994).
Fn. 20. Perhaps a TLA member with some juice with the FMCSA can get it to re-key the list to differentiate the fonts and sizes, and spacing, of the various headings, subheadings and sub-subheadings, like is presently shown for Milk and Cream (which also had a different size on the 107 list). Approximately 15 years passed from the last CFR publication of 119 (1987) to the 2002 version of 119, and in view of a passage of another 15 years or so, it seems to be an appropriate time to dust it off and publish it again, in a better format and with the errors removed. (I have not reviewed the list for other mistakes.)
Summary. While Congress deregulated much of interstate transportation by motor vehicle in 1980, and later on removed most tariff filings (TIRRA in 1994), preempted intrastate regulation (FAAAA in 1994), and did away with the ICC (ICCTA in 1995), it largely left intact the exempt and nonexempt status of many agricultural commodities. So the 1958 Act still has some staying power, albeit with much less purpose and application given that since (as of 1980) there is no pc & n barrier to entry, the ag folks (as well as the rest of the exempt commodity transportation industry) can become duly licensed carriers and transport the previously regulated (nonexempt) commodities.
Normally, the analysis of whether a commodity is exempt or nonexempt would not be as torturous as the strawberry experience and would be more like the Christmas tree excursion discussed above. Hopefully it will not be an arduous task to ascertain whether the commodity at issue is exempt or nonexempt. Fn. 21. What does frequently, though perhaps not necessarily always, matter is to make an initial determination as to whether the transportation is “ICC-exempt”, and then take it from there. Fn. 22.
Fn. 21. The Determinations decision cited above is 55 pages long. It gives a person a sense of how much effort was expended in developing various commodity descriptions such as are currently found in the NMFC. Those efforts were much more extensive than any challenges Administrative Ruling 119 might present.
Fn. 22. The obligatory hedge given the limited scope of this article.