[Federal Register: June 10, 1998 (Volume 63, Number 111)]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
DEPARTMENT OF TRANSPORTATION
Federal Highway Administration
Petition for Declaratory Order Regarding Application of Federal
Motor Carrier Truth In-Leasing Regulations
AGENCY: Federal Highway Administration (FHWA), DOT.
ACTION: Notice of denial of petition for declaratory order.
SUMMARY: The Owner-Operator Independent Drivers Association, Inc.
(OOIDA), Howard Jenkins, Marshall Johnson, Susan Johnson and Jerry
Vanboetzelaer filed with the FHWA a petition for declaratory order (the
OOIDA petition) seeking a formal ruling by the FHWA that New Prime,
Inc., dba Prime, Inc. (Prime) and Success Leasing, Inc. (Success)
violated certain provisions of the federal motor carrier truth-in-
leasing regulations (49 CFR part 376). This petition was filed after
the U.S. District Court for the Western District of Missouri dismissed
petitioners' class action complaint against Prime and Success, seeking
enforcement of these regulations, on the ground that FHWA has primary
jurisdiction to determine whether the regulations have been violated.
The FHWA is denying the OOIDA petition because it fails to raise
any issues not adequately addressed by existing legal precedent which
require the special expertise of this agency. Although denials of
petitions for declaratory orders will not ordinarily be published in
the Federal Register, the FHWA is publishing this decision to
provide guidance to courts, carriers, owner-operators and other
interested parties regarding the agency's general policy in handling
such petitions, particularly those involving issues arising under the
truth-in-leasing regulations. This policy applies to all petitions for
declaratory orders, regardless of whether filed in connection with
FOR FURTHER INFORMATION CONTACT: Mr. Michael J. Falk, Motor Carrier Law
Division, Office of the Chief Counsel, (202) 366-1384, Federal Highway
Administration, Department of Transportation, 400 Seventh Street, SW.,
Washington, D.C. 20590. Office hours are from 8 a.m. to 4:30 p.m.,
e.t., Monday through Friday, except Federal holidays.
The OOIDA Petition
On March 5, 1998, OOIDA and four owner-operators filed a petition
for declaratory order seeking a ruling from the FHWA that Prime and
Success violated the truth-in-leasing regulations. Petitioners
initially sought damages and enforcement of these regulations by filing
a class action complaint, under 49 U.S.C. 14704, in the U.S. District
Court for the Western District of Missouri. However, the court
dismissed the complaint on the ground that the FHWA had primary
jurisdiction to resolve the issues in controversy.
According to the OOIDA petition, several owner-operators leased
equipment to Prime which they obtained through lease-purchase
agreements with Success, an equipment leasing company allegedly under
common ownership with Prime. Under the terms of these lease-purchase
agreements, Prime deducted rental/purchase payments for the equipment
from the owner-operators' compensation and remitted the money to
Success. Owner-operators were also required to remit money into several
reserve funds maintained by Success to cover the cost of repairs and
maintenance of the equipment. Owner-operators who terminated their
leases with Prime were not refunded their reserve fund balances.
Petitioners claim that Prime violated 49 CFR 376.12(i) because its
leases failed to specify the terms of any lease-purchase agreement
authorizing the carrier to deduct lease purchase payments from lessor
compensation. They also allege that the reserve funds maintained by
Success are escrow funds within the meaning of 49 CFR 376.2(f), and
that any balances in these funds must be returned to them with
interest, within 45 days of termination of their leases, under 49 CFR
Petitioners contend that the district court's dismissal of their
complaint, potentially with prejudice: (1) conflicts with their right
to seek private enforcement by filing a civil action under Sec. 14704;
(2) conflicts with congressional intent to eliminate DOT's role in
resolving private disputes; and (3) improperly applied the doctrine of
primary jurisdiction, which is limited to cases where the
reasonableness of a federal regulation is in dispute and an agency's
technical expertise is necessary to resolve the issues before the
court. Petitioners have appealed the dismissal of their complaint to
the Court of Appeals for the Eighth Circuit. Consequently, petitioners
request, in the alternative, that the FHWA rulethat it lacks primary
jurisdiction over regulatory issues where a private party has elected
to litigate these issues in federal district court under 49 U.S.C.
14704. Petitioners further contend that FHWA's technical expertise is
not needed in this case because the Interstate Commerce Commission
(ICC) previously ruled on the applicability of the part 376 escrow
provisions to carrier-affiliated equipment leasing companies in Dart
Transit Company--Petition for Declaratory Order, 9 I.C.C. 2d 700
Petitions for Declaratory Orders
Although fairly new to the FHWA, petitions for declaratory orders
were a common device for obtaining guidance from the ICC in resolving
disputes within that agency's jurisdiction. An agency's authority to
issue declaratory orders comes from Sec. 5(d) of the Administrative
Procedure Act, 5 U.S.C. 554(e), which gives agencies ``sound
discretion'' to issue declaratory orders to ``terminate a controversy
or remove uncertainty''. The FHWA intends to exercise this authority
much more selectively than the ICC because Congress, in transferring
several ICC functions to the Department of Transportation (DOT) through
the ICC Termination Act of 1995 (ICCTA), envisioned that DOT would
generally not become involved in resolving disputes between private
The ICCTA expanded the rights and remedies of persons injured by
carriers by providing for private enforcement of its provisions in
court. Under 49 U.S.C. 14704, an injured party may seek both damages
and injunctive relief against a motor carrier in federal district court
to redress violations of part 376. In discussing this provision, the
House Transportation and Infrastructure Committee stated that DOT
should not allocate its scarce resources to resolving essentially
private disputes, and that the right of private enforcement ``will
permit these private, commercial disputes to be resolved the way that
all other commercial disputes are resolved--by the parties''. H. Rep.
No. 104-311, pp. 87-88.
The FHWA believes that issuing declaratory orders, except in
extraordinary circumstances, would undermine the Congressional intent
to keep DOT out of private commercial disputes, particularly where one
of the parties has filed suit in federal court under Sec. 14704.
Accordingly, although the FHWA reserves the right to issue declaratory
orders to resolve controversies between third parties in appropriate
circumstances, it will generally do so only in cases having industry-
wide significance that raise issues not adequately addressed by
existing legal precedent.
The doctrine of primary jurisdiction is ``a doctrine specifically
applicable to claims properly cognizable in court that contain some
issue within the special competence of an administrative agency.''
Reiter v. Cooper, 507 U.S. 258 (1993), at 268. In contrast to the
doctrine of exhaustion of administrative remedies, it does not require
parties to seek relief from the agency before invoking the jurisdiction
of the court. The court, when faced with an issue it believes requires
the special expertise of an agency, has equitable discretion to give
that agency the first opportunity to pass on the issue by staying
further proceedings and giving the parties a reasonable opportunity to
seek an administrative ruling. However, an agency is not required to
rule on issues directly referred to it by a court or, as in this case,
indirectly referred to it following a court's order of dismissal. If an
agency declines to issue a ruling, the court must then resolve the
issues without the benefit of the agency's views. See Atchison, Topeka
& S.F. Ry. Co. v. Aircoach Transp. Ass'n, 253 F.2d 877 (D.C.
Although the FHWA does not agree with petitioners' contention that
the doctrine of primary jurisdiction applies only to issues involving
the reasonableness of a federal regulation, it does agree that special
expertise is generally not needed to resolve disputes regarding the
part 376 truth-in-leasing regulations. These regulations contain
specific, straightforward, non-technical requirements which a court is
ordinarily competent to construe. Consistent with the Congressional
intent underlying 49 U.S.C. 14704, the FHWA will generally
decline to exercise its primary jurisdiction with regard to court
referrals involving violations of part 376.
The OOIDA petition does not raise issues which require special
expertise by the FHWA. The questions of whether Prime's leases contain
the necessary terms required by Sec. 376.12(i), or whether escrow funds
were returned within 45 days of lease termination, are fairly
straightforward matters clearly within the competence of a court to
resolve. Although part 376 does not expressly apply to carrier-
affiliated equipment leasing companies, the ICC fully addressed the
applicability of the regulations to such entities in the Dart decision.
The FHWA sees no reason to revisit this issue. Accordingly, OOIDA's
petition for declaratory order is denied.
In Washington, District of Columbia, this 29th day of May, 1998.
Gloria J. Jeff,
Deputy Administrator, Federal Highway Administration.
[FR Doc. 98-15391 Filed 6-9-98; 8:45 am]
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