Planning to arbitrate a CCSB Classification decision? Think again.
Ray Bohman -- Logistics Management, 4/1/2009
Since 2003, the federal Surface Transportation Board (STB) has allowed parties dissatisfied with freight classification decisions made by the former National Classification Committee (NCC), and now its successor, the Commodity Classification Standards Board (CCSB), to have such decisions arbitrated. However, no party has opted for arbitration until just recently.
On December 12, 2008, the National Paint and Coating Association (NPCA) filed for arbitration. They were objecting to an earlier decision by the CCSB establishing a multiple scale of ratings (classes), based on density, ranging from class 60 all the way up to class 400. The proceeding was arbitrated by the Transportation Arbitration and Mediation, P.L.L.C., which is based in Washington, D.C. Fritz R. Kahn, well known in the transportation industry, was the arbitrator in the decision that was handed down on January 22, 2009.
In these types of proceedings, the burden of showing that the CCSB's decision was not supported by "substantial evidence" and was not "reasonably explained" is on the claimant, which in this case was the NPCA. The arbitrator ruled that the paint and coating manufacturers had not met its burden and found in favor of the CCSB.
To justify that a product should be subject to a multiple scale of ratings based on density, data gathered by the CCSB must show a wide range of densities. In this case, the CCSB's data showed a range of densities from 2.07 lbs. per cubic foot to 103.85 lbs. per cubic foot, with an average density of 31.26 lbs. per cubic foot. Of course, other factors were considered, namely liability (value per pound), loadability, and stowability, but were found to be within normal ranges. Density, in this case, was clearly the controlling factor, as it is in practically every case involving the establishment of ratings (classes) in the National Motor Freight Classification (NMFC).
Dissatisfied shippers should think twice before going to arbitration. The CCSB is usually very thorough about gathering evidence to support any proposal it initiates. If it is subsequently found that the CCSB's data is insufficient or incorrect and could lead it to a different decision, that information should be brought to the attention of the CCSB, along with a request for reconsideration. They're reasonable people, and if they agree that further consideration is warranted, they would most likely hold the matter open for further public discussion at its next public meeting.
Remember that the prescribed procedures in classification cases are not really characteristic of normal arbitration. "Indeed, the arbitrator is denied the ability to conduct a review of the evidence in the CCSB's public docket. The arbitrator's task simply is to determine whether to affirm the challenged classification action the CCSB has taken," said arbitrator Kahn.
Even if a higher rating should be published in the NMFC, you always have the option of approaching your individual carrier or carriers to seek relief either by attempting to negotiate a lower exception rating or a favorable F.A.K. (freight, all kinds) rating.
Keep in mind that if you decide to challenge a CCSB classification decision through arbitration, the burden is on you to show that the CCSB's decision was not supported by "substantial evidence" and was not "reasonably explained."
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