Economic Regulation of HHG Carriers In Portland Commercial Zone

John Anderson Q & A, Regulations, Transportation

Question: Does the federal commercial zone exemption for Portland include Vancouver? And does the exemption encompass household goods?

Answer:  The answer to both questions is yes, which should resolve a dispute between state regulators and HHG carriers operating within the federal Portland commercial zone without  HHG authority.  The answer also extends to other carriers operating within the zone.

49 USC 13506(b)(1) exempts from economic regulation “transportation provided entirely in a municipality, in contiguous municipalities, or in a zone that is adjacent to, and commercially a part of, the municipality or municipalities, except when the transportation is under common control, management, or arrangement for a continuous carriage or shipment to or from a place outside the municipality, municipalities, or zone.”  Several comments are necessary:

    1. The exemption is not absolute, but can be eliminated, contracted or expanded as deemed necessary by the Surface Transportation Board (“STB”);
    2. The exemption extends to economic regulation only, not safety regulation;
    3. The exemption applies only to interstate commerce, not to intrastate commerce;
    4. For the transportation to be covered by the exemption, it must not be part of a continuous movement to or from a point outside the zone.

49 CFR Part 372, Subpart B, establishes specific commercial zones for 19 cities and a zone for other cities based on a population-mileage formula. Portland is covered by the population-mileage formula. With a population of over 500,000, the formula sets Portland’s commercial zone at 15 miles.

That the Portland commercial zone includes Vancouver was decided years ago by the Interstate Commerce Commission in Commercial Zones and Terminal Areas, 46 M.C.C. 665, 698 (1946). More recently, in Maudlin, Oregon PUC Commissioner v Southwest Delivery Co, Inc., 1985 Fed. Car. Cases 37,198 (1985), the ICC noted that Southwest Delivery’s Vancouver terminal was located within the Portland commercial zone in finding that Southwest was not operating in a circuitous fashion.  (The issue in Southwest Delivery was whether the carrier was operating in bad faith or as a subterfuge in order to convert Oregon intrastate into interstate traffic to avoid Oregon intrastate regulation.)

Further, the transportation of household goods is encompassed within the federal commercial zone exemption. When the ICC expanded the commercial zone population-mileage formula in 1977 it rejected the argument that specialized carriers (such as household goods carriers, auto transporters, and liquid and dry bulk commodities carriers) should be excluded from the commercial zone exemption. Commercial Zones and Terminal Areas, 128 M.C.C. 422; aff’d sub nom., Short Haul Survival Committee v U.S., 572 F2d 240 (9th Cir. 1978).

Thus, transportation of HHG and other commodities within the Portland commercial zone includes Vancouver and other points in Washington that are within the 15 mile zone.  However, the exemption is limited and includes only those shipments that are actually transported across the Oregon-Washington state line that are not part of a continuous movement from or to a point outside the zone. Oregon to Oregon and Washington to Washington shipments are not covered by the exemption since they would either be intrastate local cartage moves or interstate shipments that are part of a continuous movement.