The Coca-Cola Company filed three substantially identical complaints in the district court against three different railroads 1 on August 27,1973, seeking refunds for freight charges paid on import shipments of coffee. The complaints asserted overcharges in violation of railroad tariffs. The district court, applying the doctrine of primary jurisdiction, 2 referred one action 3 to the Interstate Commerce Commission (ICC) for preliminary determination. The three cases were consolidated and stayed pending ICC decision. The ICC referred the matter to an administrative law judge (ALJ) who found that the railroads had properly applied the tariff. App. at 118-20. Coca-Cola filed exceptions to the initial decision of the ALJ with the ICC. The ICC agreed with the findings of the ALJ and dismissed Coca-Cola’s complaint. App. at 137-38. Coca-Cola, by a fourth suit naming the ICC and the United States as defendants, sought reversal of the ICC order. 4 The district court ordered the four cases consolidated on February 3, 1976. The district court ruled that the ICC (and the ALJ) had correctly interpreted the applicable tariff and hence that Coca-Cola was not entitled to refund on any of the freight charges paid to the railroads. App. at 257-61. The district court order is before us for review on Coca-Cola’s appeal. We determine that while the district court selected an incorrect standard of review of the ICC decision, its final conclusion, that the ICC had properly construed the applicable tariff, is correct. We therefore affirm.
The disputed freight charges concern shipments of green coffee imported by *216 Coca-Cola through the Port of Houston and shipped on appellees’ railroads to Omaha, Nebraska. The charges for this movement are set forth in Items 6234 and 9644-C of the governing tariff. 5 Items 6234 and 9644-C list in tabular form the applicable rate expressed in cents per hundred pounds for various minimum weights. The rates are subject to a reference consisting of the circled number “17” (circle reference 17). The meaning of circle reference 17 is explained in the tariff:
Applicable on import traffic only. A charge of 12 cents per 100 pounds must be assessed in addition to rates subject to this reference mark. This charge accrues to the line-haul port railroad which performs the port terminal service or bears the expense of such service.
SWL Tariff 108-U, I.C.C. 4654, quoted in App. at 55.
The chargе is referred to as a “waterborne charge” and is imposed on certain import shipments because carriers provide more facilities and services for import shipments than for domestic shipments. 6 All parties agree that Coca-Cola’s shipments were subject to the Item 6234 and Item 9644-C rates and the waterborne charge imposed by circle reference 17. The disagreement concerns Item 317-H of the tariff. SWL Tariff 108-U, I.C.C. 4654.
Item 317-H provides that as a part of the “from shipside rate” the carrier railroad absorbs wharfage charges up to a stated maximum. 7 Amounts in excess of thе stated maximum absorption are chargeable to the shipper, Coca-Cola in the instant case. The maximum absorption rates were adopted because although wharfage charges were historically included as a part of the “from shipside” rate, the services are actually performed by port operators over whom neither the railroads nor the ICC has control. Sharply escalating port terminal expenses threw the brunt of these charges on the railroads. The railroads responded by publishing maximum absorption rates in order to control the economics of the increased port operator charges. According to railroad witness Donald S. Benyon, the railroads reduced their rates by the amount of the unabsorbed wharfage expense at the time the maximum absorption tariffs were published. App. at 105. Coca-Cola has not presented evidence to the contrary.
Coca-Cola argues that exception 1 to Item 317-H excepts it from the maximum absorption provision. Exception 1 provides:
Rates published in this tariff, which in addition to the line-haul rates also provide stated amounts for port tеrminal services or for loading or unloading, are not subject to the provisions of this item.
Item 317-H SWL Tariff 108-U, I.C.C. 4654.
Coca-Cola contends that the waterborne charge imposed by circle reference 17 is a rate “published ... in addition to the line haul rates” and that the waterborne charge provides “stated amounts for port terminal services.” Therefore, argues Coca-Cola, they are not subject to the maximum absorption tariff.
But the ALJ found against Coca-Cola:
The question for determination is whether the waterborne charge is a stated amount for port terminal services or for loading in addition to the line-haul rate within the meaning of the exception to the application of the loading charge less the charge which is to be absorbed. Exceptions provisions must be strictly construed. The exception here provides that the rates (1) must be in addition to the line-haul rates and (2) must be for port terminal services or for loading. *217 The complainant’s position is grounded upon two assumptions, both of which are wrong. It assumes (1) that the waterborne charge is in addition to the line-haul rate and (2) that the waterborne charge is for port services because it accrues to the carrier pеrforming the port terminal services. The waterborne charge is not an addition to the line-haul rate, but is one of two parts of the line-haul rate and accrues to the carrier performing the port terminal services, whereas the other part accrues to all the carriers in the movement, including the port terminal carrier. It is not identified as applying for any port terminal service.
The ICC agreed with the findings of the ALJ and further held that Exception 1 applies only to “two factor” rates of the type described in
Cancellation of Wharfage Absorption,
The district court refused to set aside the ICC’s order and held that: the ICC’s order *218 was based on substantial evidence and expert consideration of transportation policy; the ICC is vested with wide discretion in its area of expertise; ICC orders carry a presumption of validity; it is not the function of the reviewing court to review the wisdom of an ICC order nor the consistency of that order with prior administrative decisions; in the matter of tariff interpretation the ICC’s determination is to be given full effect absеnt arbitrariness or abuse of discretion; and, the ICC’s decision that Exception 1 to Item 317-H did not apply in the instant case was a reasonable resolution of a difficult regulatory ambiguity. App. at 259-60.
Although the district court’s statements concerning scope of review may be appropriate in situations involving judicial review of factual findings of the ICC, they state an inappropriate standard for judicial review of ICC decisions concerning, as in the instant case, questions of law. The standards which a reviewing court must apply to the findings of an administrative agency, like the ICC, are set forth in the Administrаtive Procedure Act:
To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. The reviewing court shall—
(1) compel agency action unlawfully withheld or unreasonably delayed; and
(2) hold unlawful and set aside agency action, findings, and conclusions found to be—
(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;
(B) contrary to constitutional right, power, privilege, or immunity;
(C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right;
(D) without observance of procedure required by law;
(E) unsupported by substantial evidence in a case subject to sections 556 and 557 of this title or otherwise reviewed on the record of an agency hearing provided by statute; or
(F) unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court.
5 U.S.C.A. § 706 (emphasis added).
Factual findings and findings on mixed questions of fact and law of the ICC are subject to a limited standard of judicial review and are set aside only if “arbitrary, capricious, an abuse of discretion or otherwise nоt in accordance with law” or if “unsupported by substantial evidence . . .”
Id. Swearingen Aviation Corp. v. NLRB,
As one commentator has suggested, often questions of fact and questions of law are inextricably entangled. 5 B. Mezines, supra, note 2, at § 51.01. Historically, the law-fact dichotomy has long produced disagreement and confusion. See, e. g., 5 B. Mezines, supra, note 2, at § 51.01 n. 6; 4 K. Davis, Administrative Law Treatise, §§ 30.-01-11 (1958 & 1970 supp.); L. Jaffee, Judicial Control of Administrative Action, 546-94 (1965). But many cases arise, where as here, the questions of law are clearly separate and apart from factual disputes.
To decide this appeal, we must consider two basic questions. In the first place, is the waterborne charge “in addition to the line haul rate?” SWL Tariff 108-U, I.C.C. 4654. Secondly, does the waterborne charge “provide stated amounts for port terminal services or for loading or unloading?” A negative answer to either question *219 defeats Coca-Colа’s claim. Clearly, we must interpret the language of the tariff to reach our decision.
Tariffs filed with the ICC are binding contracts between the carrier and the shipper.
See Great N. Ry. v. Merchants Elevator Co.,
Mr. Justice Brandéis, in the landmark case of
Great N. Ry., supra,
addrеssed the question of whether construction of a tariff involved a question of fact or of law. The issue was whether orders for reconsignment after inspection were “disposition orders” within the coverage of an exemption provision of the tariff. If so, the shipper would not have to pay a $5.00 per car reconsignment fee. The carrier argued that the courts, under the doctrine of primary jurisdiction,
9
were without jurisdiction to construe the tariff until the “true construction” was determined by the ICC.
Id.
at 289, 42 S.Ct.- 477. The Court rejected this argument and held that “[ejvery question of the construction of a tariff is deemed a question of law . . ” and, under the doctrine of primary jurisdiction, questions of law, unlike questions of fact, are originally cognizable in the courts without preliminary resort to the ICC.
Id.
at 289-90,
[Wjhat construction shall be given to a railroad tariff presents ordinarily a question of law which does not differ in character from those presented when the construction of any other document is in dispute. * * *
But words are used sometimes in a peculiar meaning. Then extrinsic evidence may be necessary to determinе the meaning of words appearing in the document. This is true where technical words or phrases not commonly understood are employed. Or extrinsic evidence may be necessary to establish a usage of trade or locality which attaches provisions not expressed in the language of the instrument. Where such a situation arises, and the peculiar meaning of words, or the existence of a usage, is proved by evidence, the function of construction is necessarily preceded by the determination of the matter of fact.
Id.
at 291-92,
The confusing law vis-a-vis fact distinction was again before the Supreme Court in
United States v. Western Pac. R.R.,
*220 where, as here, the problem of cost-allocatiоn is relevant, and where therefore the questions of construction and reasonableness are so intertwined that the same factors are determinative on both issues, then it is the Commission which must first pass on them.
Id.
at 69,
As the foregoing discussion indicates,
Western Pacific
tempered the rather sweeping language of
Great N. Ry.
by stating that where questions of reasonableness are involved, tariffs must
initially
be construed by the ICC.
Louisiana & Ark. Ry. v. Export Drum Co.,
The district court properly referred the present controversy to the ICC because there was a contention that the words of the tariff were not used “in their ordinary meaning”.
Great N. Ry., supra,
The district court’s referral was also proper because there is a factor of reasonableness involved in the construction of this tariff.
Western Pacific, supra,
It is apparent that considerations of reasonableness and underlying cost-allocation, matters within the special competence of the ICC, reflect one of the rules of tariff construction. Tariffs should be construed to avoid unjust or improbable results, and an interpretation that is reasonable and consistent with the purpose of the tariff is preferred.
National Dairy Products Corp.Kraft Foods Division v. Missouri-Kan.-Tex. R.R.,
There were two factual prongs involved in the instant controversy. The ICC has resolved both and a reviewing court may not interfere with this determination so long as it is supported by substantial evidence. 5 U.S.C.A. § 706. These ICC determinations are supported by substantial evidence. Therefore, this court, like the district court before us, is faced with a pure question of law because the entwined questions of fact have been determined by the ICC. The ICC’s construction of the tariff is freely reviewable and this court is not obligated to accept the construction of the agency. Nonetheless Coca-Cola comes into court with one strike against it; one significant tariff construction rule, reasonableness, has already been decided against it.
In interpreting tariffs, the terms are read in the sense in which generally used.
Pennsylvania Central Co., supra,
A specific tariff provision takes precedence over a more general one where ambiguity exists.
Indiana Harbor Belt R.R. v. United States,
Exceptions to tariffs are strictly construed and only situations clearly within an exception provision are excepted from application of the tariff.
Union Pac. R.R.
v.
United States,
Generally an ambiguous tariff is construed against the drafter, in this instance the railroads.
E. g., Strickland Transportation Co.
v.
United States,
The final rule of tariff construction applicable to the instant situation is that even ICC
findings of law
involving tariff construction are entitled to some deference or weight. This rule, unlike the statutory requirement that factual findings of the ICC be upheld if supported by sub
*222
stantial evidence, is not conclusive.
Id. Great N. Ry., supra; National Van Lines, supra,
The thread of the rule can be found in decisions interpreting statutes, regulations, staff opinion letters, agency rules, contracts and tariffs. Courts generally grant “great deference” to an agency’s interpretation of its enabling statute.
E. g., Udall v. Tallman,
An administrative agency’s interpretation of its own regulation is also given “weight” or “great deference.”
E. g. Udall v. Tallman, supra; Builders Steel Co. v. Marshall,
The Court of Claims has held that a contractual interpretation by an administrative agency within its area of expertise is entitled to “weight and respect” if based on sound reasoning.
H & M Moving, Inc. v. United States,
Administrative interpretations of tariffs are likewise entitled to weight and respect.
Indiana Harbor Belt R.R. v. United States, supra,
The railroads and Coca-Cola presented plausible interpretations of the ambiguous tariff provisions. The ICC’s interpretation agreed with that of the railroads. In the rather murky light shed on our problem by the rules of tariff construction explicated above, we conclude that Coca-Cola has not demonstrated that the ICC’s (and the railroads’) interpretation is incorrect. This means that Coca-Cola is not entitled to the refunds it seeks of moneys paid under the maximum absorption tariff.
While the district court selected the wrong standard of judicial review, its ultimate conclusion, upholding the ICC order, was right. It’s judgment is
AFFIRMED.
Notes
. Coca-Cola Co. v. Atchison, T. & S. F. Ry., no. 73-H-1203 (S.D.Tex. filed Aug. 27, 1973); Coca-Cola Co. v. Chicago, R. I. & Pac. R.R., no. 73-H-1204 (S.D.Tex. filed Aug. 27, 1973); Missouri-Kan.-Tex. R.R., no. 73-H-1205 (S.D.Tex. filed Aug. 27, 1973).
. Under the doctrine of primary jurisdiction courts defer action pending appropriate administrative agency’s ruling. See generally, 5 B. Mezines, J. Stein & J. Gruff, Administrative Law §§ 47.01-03 (1979).
. Coca-Cola Co. v. Missouri-Kan.-Tex.Ry., supra.
. Coca-Cola Co. v. United States, no. 75-H-1039 (S.D.Tex. filed June 19, 1975). In reparation actions the district court has jurisdiction to initially review decisions of the ICC. 28 U.S.C. § 1336(a) (1979).
. SWL Tariff 108-U, I.C.C. 4654. The date of each shipment determined whether Item 6234 or Item 9644-C applied.
.
Ex Parte 212, Increased Freight Rates,
. The charges and the maximum amounts to be absorbed by the railroads are set forth in TLFB 21-G and H, I.C.C. 1105.
. Railroad witness J. J. Dolan explained the possible classes of rates as follows:
The rates were published as either (1) ship-side rates (included in this type are partial shipside rates i. e., rates which include loading of the rail car but did not include wharf-age charges, or vice versa, or rates where the absorption of loading and/or wharfages charges were limited); (2) so-called two-factor rates; and (3) non-shipside rаtes.
I
The shipside rate published by railroads referred to in (1) above originally included all the costs for loading service and for wharf-age, and were not subject to any added charges to cover terminal expenses. Under ExParte 212 and 223, however, such rates were made subject to an added waterborne charge of 12 cents per 100 lbs. This additional charge was allowed by the Commission in order to defray the rapidly rising terminal expenses. (ExParte increases are geared primarily to line-haul costs.) This 12 cents accrued to the line-haul carrier serving the port as such carrier absorbed the expense for loading import cargo.
The railroads’ costs for performing shipside service, however, continued to escalate, and at a much more rapid pace than the amounts recovered under general ExParte increases. In the mean time railroads were unable to increase the 12-cent waterborne charge to an amount that would adequately cover their rising port terminal expense. To protect their revenue, the railroads published maximum absorption provisions to apply in connection with their shipside ratеs. Insofar as Texas ports are concerned, effective November 8, 1965 (or shortly thereafter depending on the tariff involved), the railroads no longer absorbed handling or wharfage charges in excess of the maximum amounts authorized in TLFB Tariff 21-series. The shipper or his agent was responsible for the excess.
It should be understood that only rates that applied from shipside were subject to the added waterborne charge and only these rates were subject to the maximum absorption provisions. It should be further understood that the added waterborne charge was not identified as applying for any specific service. It merely acсrued to the carrier performing port terminal services or bearing the expense of such service.
II
A two-factor rate is the second category of import rates referred to earlier. This rate is generally comprised of the domestic line-haul rate (one factor) plus the charge for port terminal services (second factor) applicable at the rate-making port. These particular rates included all of the port terminal expenses, and the shipper was not required to pay the excess amount that was applicable in сonnection with shipside rates referred to above.
The second factor reflected the actual terminal expense applicable at the rate-making port, and for that reason the two-factor rates were excluded from the maximum absorption provisions. These particular rates provide a specific amount for a specific service.
III
The third category is non-shipside rates. Such rates include only the line-haul service, and the entire expense of moving import cargo from ship to rail car is borne by the shipper or owner of the cargo.
App. at 33-35.
. See note 2, supra.
