United States District Court, D. Columbia.
NATIONAL MOTOR FREIGHT TRAFFIC ASSOCIATION, INC., et al., Plaintiffs,
GENERAL SERVICES ADMINISTRATION, et al., GSAs
For NATIONAL MOTOR FREIGHT TRAFFIC ASSOCIATION INC, ABF FREIGHT SYSTEMS INC, T.F. BOYLE TRANSPORTATION INC, doing business as, BOYLE TRANSPORTATION, NEW ENGLAND MOTOR FREIGHT INC, doing business as, NEMF, YRC INC, doing business as, YRC FREIGHT, BED ROCK INC, doing business as, TRI-STATE MOTOR TRANSIT CO., Plaintiffs: Claire Louise Shapiro, LEAD ATTORNEY, EISEN & SHAPIRO, Bethesda, MD; John Robert Bagileo, LEAD ATTORNEY, LAW OFFICES OF JOHN R. BAGILEO, Glenwood, MD.
For GENERAL SERVICES ADMINISTRATION, DANIEL M. TANGHERLINI, in his official capacity as Acting Administrator, GSA, Defendants: Jeremy S. Simon, LEAD ATTORNEY, U.S. ATTORNEY'S OFFICE, Washington, DC.
AMY BERMAN JACKSON, United States District Judge.
Plaintiffs National Motor Freight Traffic Association, Inc. (" NMFTA" ), ABF Freight System, Inc., T.F. Boyle Transportation, Inc. d/b/a Boyle Transportation, Bed Rock, Inc. d/b/a Tri-State Motor Transit Co., and YRC Inc. d/b/a YRC Freight filed this case against defendant General Services Administration (" GSA" ) in April 2013. See Compl. [Dkt. # 1]. The four individual plaintiffs are motor carriers that provide government agencies with transportation services at negotiated commercial rates. Over a period of years, GSA has conducted post-payment audits of their bills up to three years after the reviewed charges were paid.
Plaintiffs filed this case to challenge that practice, arguing that GSA exceeded its statutory authority when it conducted those audits because 31 U.S.C. § 3726 (2012) does not cover transportation contracts performed at negotiated commercial rates, and therefore any government review must be conducted pursuant to 49 U.S.C. § 13710 (2012), which requires that billing disputes be raised within 180 days. See Pls.' Mem. of P. & A. in Supp. of Pls.' Mot. for Summ. J. & in Opp. to Def.'s Mot. for Summ. J. (" Pls.' Mot." ) [Dkt. # 25-1]. Alternatively, plaintiffs contend that even if GSA can audit their bills under section 3726, the agency is still required to notify carriers of any disputed charges within the time limit set by section 13710, and it did not do so here. GSA maintains that section 3726(b) and (d) provide it with authority to conduct the challenged audits and that it is not bound by the time limit contained in section 13710. Def.'s Mem. in Supp. of Def.'s Mot. for Summ. J. (" Def.'s Mot." ) [Dkt. # 24].
Both parties have moved for summary judgment. See Def.'s Mot. for Summ. J. [Dkt. # 24]; Pls.' Mot. for Summ. J. [Dkt. # 25]. Because the Court finds that GSA has authority under section 3726 to conduct the challenged audits in this case, and that the time limit in section 13710 does not apply, the Court will grant GSA's motion
for summary judgment and deny plaintiffs' cross-motion for summary judgment.
I. Statutory and Regulatory Background
The crux of this case is whether GSA has statutory authority under 31 U.S.C. § 3726 to conduct post-payment audits of bills that calculate charges using negotiated commercial rates. If the answer is yes, then the complaint raises a second question regarding the interplay between section 3726 and 49 U.S.C. § 13710.
A. 31 U.S.C. § 3726 and 41 C.F.R. § 102-118.415 et seq.
Section 3726 of title 31 of the United States Code governs both pre- and post-payment audits of bills received by the government for transportation services. 31 U.S.C. § 3726(a)-(b). Subsection (b) provides that " [t]he Administrator [of General Services] may conduct pre- or post-payment audits of transportation bills of any Federal Agency. The number and types of bills audited shall be based on the Administrator's judgment." Id. § 3726(b). If an audit reveals that the government overpaid for the services provided, the government may, " [n]ot later than 3 years (excluding time of war) after the time a bill is paid, . . . deduct from an amount subsequently due a carrier or freight forwarder an amount paid on the bill that was greater than the rate allowed under" one of the types of rates listed in the statute. Id. § 3726(d). If the challenged transportation charges are not billed at a rate specified in one of the three subsections of section 3726(d), then GSA does not have authority under section 3726 to withhold overcharges. Those subsections are:
(1) a lawful tariff under title 49 or on file with the Secretary of Transportation with respect to foreign air transportation . . . , the Federal Maritime Commission, or a State transportation authority;
(2) a lawfully quoted rate subject to the jurisdiction of the Surface Transportation Board; or
(3) sections 10721, 13712, and 15504 of title 49 or an equivalent arrangement or an exemption.
The statute does not specify the procedures that GSA must follow when reviewing agency transportation bills, but GSA has promulgated regulations establishing an audit procedure and appeals process. See 41 C.F.R. § § 102-118.435, 102-118.600, 102-118.625, 102-118.650, 102-118.655 (2009). It also published questions and answers to provide additional guidance to government agencies that contract with transportation providers. See generally 41 C.F.R. § 102-118.5 et seq.
Most pertinent to this case are sections 102-118.435(f) and 102-118.35 of the regulations. Section 102-118.435(f) provides that if the Audit Division discovers an overcharge, GSA will " [i]ssue a Notice of Overcharge stating that [the motor carrier] owes a debt to the agency," and that the notice will include information regarding " the amount paid, the basis for the proper charge for the document reference number, and [the] applicable tariff or tender along with other data relied on to support the overcharge." Id. § 102-118.435(f). The regulations do not require that notices of overcharges be sent within a specific time period. See id.
Section 102-118.35 defines terms used in GSA's regulations. Among other things, it defines " post-payment audit" as " an audit of transportation billing documents after payment to decide their validity, propriety, and conformity with tariffs, quotations, agreements, or tenders." Id. § 102-118.35;
see also Def.'s Statement of Undisputed Material Facts (" Def.'s SOF" ) ¶ 2 [Dkt. # 24]. It further explains that the post-payment audit " process may . . . include subsequent adjustments and collections actions taken against [transportation service providers] by the Government." 41 C.F.R. § 102-118.35.
B. 49 U.S.C. § 13710
As noted above, there is another statute with potential application to this case. Section 13710 of title 49 of the United States Code governs, among other things, billing disputes between motor carriers and shippers. 49 U.S.C. § 13710(a)(3). Specifically, it provides that, " [i]f a shipper seeks to contest the charges originally billed or additional charges subsequently billed, the shipper may request that the [Surface Transportation] Board determine whether the charges billed must be paid." Id. § 13710(a)(3)(B). A shipper must raise a challenge to the transportation charges " within 180 days of receipt of the bill," otherwise the challenge is time-barred. Id.
Although the statute does not specifically define " shipper" or elaborate upon the term, the statute has been applied to government agencies that contract for transportation services. The statute defines " motor carrier" as a motor carrier of property " other than a motor carrier providing transportation in noncontiguous domestic trade." Id. § 13710(a)(1).
II. Factual and Procedural Background
Plaintiffs are four individual motor carriers and a trade association comprised of motor carriers. See Compl. ¶ ¶ 4-6, 8-9. The membership organization, NMFTA, is a nonprofit entity " whose membership consists of motor carriers of freight and transportation companies operating in interstate, intrastate, and foreign commerce," many of which " provide cargo transportation services for the United States government." Compl. ¶ 4; see also Compl. ¶ 20. The other four plaintiffs are " motor carrier member[s] of NMFTA." Compl. ¶ ¶ 5-6, 8-9. All four transport nonhousehold goods for the federal government, and " all of the freight movement at issue in this case [is] moved at commercial rates set forth in tenders that the carriers submit to various agencies," as opposed to regulated tariffs under title 49 of the United States Code. Pls.' Statement of Undisputed Material Facts (" Pls.' SOF" ) ¶ ¶ 2-4, 6 [Dkt. # 25-2]. Each of the four individual motor carrier plaintiffs transports goods " in interstate commerce throughout the United States and Canada." Compl. ¶ ¶ 5-6, 8-9.
After a delivery is completed, the individual motor carrier sends an invoice to the agency for which it provided the transportation services. Pls.' SOF ¶ 7. Although the agency is required to conduct a pre-payment audit to ensure the accuracy of the bill, GSA may also, in some circumstances, conduct a post-payment audit. See 31 U.S.C. § 3726(a)-(b). If an overpayment is discovered, GSA will issue a notice of overcharge to the carrier involved. Pls.' SOF ¶ 8; see also 41 C.F.R. § 102-118.435(f).
NMFTA and its members contend that GSA has increased the number of these " post-payment audits of transportation bills for transportation services provided to Government shippers," and they object to the fact that the post-payment audits resulted in the issuance of thousands of notices of overcharge that demanded refunds of money " between 2 and 3 years after the Government was billed for the involved transportation services." Compl. ¶ ¶ 22-23. Specifically, the following overcharge notices were received approximately one to three years after the government received the transportation bills:
o ABF Freight: In 2009, ABF Freight received 1,483 notices, totaling more than $401,000 in overcharges that it must repay. In 2010, it received 2,662 notices, amounting to more than $507,000 in repayments. In 2012, it received 347 notices, seeking repayment of more than $27,000. And in 2013, it received 144 notices, totaling more than $137,000. Pls.' SOF ¶ 9; see also Compl. ¶ 24.
o Boyle: In 2010, Boyle received 257 notices, totaling about $71,000 in overcharges that it must repay. In 2011, it received 255 notices, amounting to approximately $186,000 in repayments. And in 2012, it received 131 notices, seeking repayment of about $121,000. Pls.' SOF ¶ 10; see also Compl. ¶ 25.
o Tri-State Motor: In 2009, Tri-State Motor received 27 notices, totaling about $71,000 in overcharges that it must repay. In 2010, it received 524 notices, amounting to approximately $160,000 in repayments. And in 2011, it received 181 notices, seeking ...