Opinion for the Court filed by ROBB, Circuit Judge.
Concurring opinion filed by MacKINNON, Circuit Judge.
Opinion filed by WILKEY, Circuit Judge, concurring in part and dissenting in part.
ROBB, Circuit Judge.
The petitioners are organizations representing interstate carriers of household goods. They petition for review of an order of the Interstate Commerce Commission amending its rules governing carrier liability for loss and damages to the goods they carry. Practices of Motor Common Carriers of Household Goods (Limitation of Liabili ty), 124 M.C.C. 395 (1976), modified May 26, 1976. The challenged portions of the order prohibit carriers from including in their bills of lading any provision absolving the carrier of liability for loss or damage to undeclared items of extraordinary value or to certain fragile items packed by the shipper. The order also prohibits carriers from requiring certain shippers to assume the risk of loss for damage caused by strikes, riots, or civil disturbances, and establishes a uniform formula to be used in settling loss or damage claims.
For the reasons set forth below, we deny the petitions.
I.
For a number of years carriers included a provision in their bills of lading which disclaimed any liability for "items of extraordinary value" included in a shipment unless the shipper specifically declared the items in the bill of lading. In the informal rule-making proceeding here under review, the Commission determined that carriers were using this notice provision as a meahs of limiting their liability in contravention of section 20(11) of the Interstate Commerce Act. Section 20(11) provides that a common carrier
shall be liable . . . for any loss, damage, or injury to . property caused by it . . . and no contract, receipt, rule, regulation, or other limitation of any character whatsoever shall exempt such common carrier from the liability imposed . . . for the full actual loss, . . . notwithstanding any limitation of liability or limitation of the amount of recovery . and any such limitation, with respect to the manner or form in which it is sought to be made is declared to be unlawful and void . . .
49 U.S.C. § 20(11).
A proviso in section 20(11) permits the Commission by order to authorize "released rates" which are lower than those under which the carrier assumes full common law liability. Under the "released rates", which most carriers have established, a shipper can save money by releasing his shipment to the carrier at a value of $.60 per pound per article. For a small additional charge, but still less than the full liability rate, the shipper can release the shipment at a total value amounting to a sum not less than $1.25 times the weight of the shipment in pounds. 49 C.F.R. § 1307.201. For example, if a shipper with a quantity of household goods weighing 1000 pounds releases it at the $1.25 released rate the carrier then has a maximum liability of $1250 for loss or damage to the goods. The Commission found that in practice carriers were using the "items of extraordinary value" reservation in the bill of lading to avoid liability for some lost or destroyed items. In the example above, if the shipper had neglected to note in the bill of lading that a $4000 fur coat was included in the shipment, instead of being liable for the loss of the coat in the amount of $1250, the carrier disclaimed all liability because the coat was considered an item of extraordinary value.
The Commission found that "items of extraordinary value" is an amorphous category which carriers often interpret against the shipper. 124 M.C.C. at 415. For example, carriers have refused to pay for lost items ranging from violin bows to false teeth based upon the carrier's unilateral post hoc determination that these were items of extraordinary value which should have been declared by the shipper. Accordingly, the Commission ruled that the practice was an unlawful attempt to limit liability.
The carriers argue that section 20(11) does not apply because they have not sought to limit their liability. Rather, the carriers claim, they have merely sought to limit the conditions under which they will accept goods for shipment. The argument exalts form over substance, for the result is to limit the carriers' liability regardless of how we characterize the limiting clause in the bill of lading. It is true that carriers may impose just and reasonable regulations relating to the acceptance of goods for shipment, 49 U.S.C. § 316(b), but the distinction between a condition on acceptance and a limitation on liability is not defined sharply. At some point, carriers can so abuse a particular condition that it operates, not as a condition on acceptance but as a limitation on liability. It is the Commission's responsibility in the first instance to determine when that point has been reached. In this case the Commission has determined that it is neither just nor reasonable for carriers to condition their liability upon the shipper's ability to identify at the outset what items in the shipment the carrier may later decide were extraordinarily valuable. The abuses revealed in the record of this rulemaking proceeding testify to the reasonableness of that decision by the Commission.
The carriers offered to cure the potential for abuse by making the notice provision in the bill of lading more specific. They proposed a list of approximately thirty items which would have to be declared as a precondition to carrier liability. The Commission found that the proposed list, which included items such as "antiques", "works of art", "hobby collections" and heirlooms", was still vague and invited abuse by the carriers. We cannot say that the Commission's rejection of this proposal was arbitrary or irrational.
The Commission rule does not require- that carriers accept goods which they do not believe can be transported safely. Any carrier is free to request an exception to its certificate for items it does not desire to transport. 124 M.C.C. at 415. The Commission had a choice, either to require the carriers to request such exceptions for those items which they felt they could not transport safely, or to require that shippers attempt to guess which items in their shipments were those the carrier might later determine to be of extraordinary value. The Commission selected the former alternative which in essence holds carriers to the amount of liability for which they had been paid by the shipper. We perceive nothing arbitrary or irrational in that choice. See 5 U.S.C. § 706(2)(A)-(D); National Ass'n of Food Chains, Inc. v. ICC, 175 U.S.App.D.C. 346, 351-52, 535 F.2d 1308, 1313-14 (1976).
II.
We reject the Movers Round Table objection to the elimination of a provision in the bill of lading disclaiming liability for certain fragile goods if packed by the shipper. The Commission concluded such a provision would contravene the prohibition on limitation of liability in section 20(11) and deleted it from the terms authorized for inclusion in a bill of lading. Movers Round Table argues that the Commission's action is arbitrary because it subjects carriers to liability for breakage which may be due to faulty packing by the shipper. However, a carrier need not accept improperly packed items, see Practices of Motor Common Carriers of Household Goods, 121 M.C.C. 347, 362 (1975). On the other hand, under the rule sought by Movers Round Table a shipper who packs goods perfectly might be foreclosed from recovery for damages caused by the carrier. The Commission has selected a rule affording protection for both the shipper and the carrier and we cannot say this is arbitrary or irrational.
III.
The carriers also seek authority to disclaim liability for damage caused by strikes, riots, or other civil disturbances. Noting that at common law carriers were liable for damage from these causes the Commission determined that this additional exception to common law liability was not appropriate, and that the carrier must remain liable for damages to certain classes of goods if the carrier proceeds in the face of such danger. The Commission reasoned that the carrier, rather than the shipper, usually an individual or family, is normally in the best position to determine when the shipment is about to proceed into an area of danger. Thus the Commission thought the shipper should not bear the risk of loss unless the carrier proceeds at the shipper's direction. We cannot substitute our judgment for that of the Commission in determining what exceptions to carrier liability beyond those at common law are, dictated by national transportation policy. The Commission's determination is neither arbitrary nor irrational.
IV.
Finally, we turn to the formula for determining "full actual loss" prescribed for settlements on lost or destroyed goods. The Commission's rule requires that when a carrier settles a loss claim, it shall use replacement cost as a base from which to deduct depreciation. If the item is irreplaceable, then the original cost, augmented by an inflation factor derived from the consumer price index, is used as a base. 124 M.C.C. at 416-17.
The carriers argue that no single formula can accurately apply to all damage claims, and that the chosen formula, for example, does not make sense when applied to an article which can be repaired. The argument is unsound, for the Commission made it clear that the rule applies only when a claim is settled monetarily. Carriers are still free to repair or replace lost or damaged items.
The Commission promulgated this rule in response to numerous complaints from shippers who received from carriers payments insufficient to replace lost or destroyed articles. The carriers contend that the Commission has no jurisdiction to adjudicate damage claims, that this is an issue for the courts. This argument overlooks the Commission's responsibility to establish proper and reasonable practices for the settlement of loss or damage claims. Under section 20(11) carriers are liable for the "full actual loss" suffered by the shipper. There is evidence in the record that some carriers were not fulfilling their responsibilities in this regard, but were, by unduly hard bargaining, forcing shippers to accept niggardly settlements. In view of the mandate to the Commission to promote safe, efficient service and to foster sound economic conditions in transportation, see National Transportation Policy, 49 U.S.C. preceding § 1, 54 Stat. 899 (1940), we believe the Commission has the jurisdiction and the responsibility to establish reasonable ground rules which ensure fair treatment of shippers in the settlement of claims. The rule does not purport to adjudicate claims, nor does it attempt to specify how replacement cost or depreciation are to be determined. We find the Commission's response to the problem of inadequate settlements both rational and reasonable and entirely within its authority to regulate the industry.
Finding none of the challenged rules arbitrary or irrational, we must uphold them. The petitions to review and vacate the order of the Commission are
Denied.
. Petitioners Household Goods Carriers Bureau and Movers' and Warehousemen's Association do not object to this aspect of the rule.
. Carriers are liable for this kind of damage only in cases of shipments of personal effects and property used in a dwelling — shipments usually made by individuals or families. Other types of household goods, office furniture, exhibits, and objects of art, are usually shipped by businessmen experienced in interstate shipping, who are in a position to foresee dangers and to absorb and spread losses as well as the carriers; accordingly, the Commission did not require the carriers to be liable for loss or damage due to strikes, riots or civil distur bances in the cases of these latter shipments. J.A. 201; see 49 C.F.R. § 1056.1(a).