[Federal Register Volume 60, Number 87 (Friday, May 5, 1995)]
[Notices]
[Pages 22390-22397]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-10993]



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FEDERAL MARITIME COMMISSION

[Docket No. 94-24]


Petition of South Carolina State Ports Authority for Declaratory 
Order; Order Granting Petition in Part and Denying Petition in Part

    South Carolina State Ports Authority (``SCSPA'' or ``Petitioner'') 
has filed with the Federal Maritime Commission (``Commission'' or 
``FMC'') a Petition For A Declaratory Order (``Petition'') pursuant to 
Rule 68 of the Commission's Rules of Practice and Procedure, 46 C.F.R. 
Sec. 502.68 (1993), to allow it to act without peril in issuing in its 
FMC-filed tariff guidelines for the criteria it will apply to license 
stevedores and marine terminal operators (``MTOs'') operating at SCSPA 
facilities. SCSPA alleges that ``economic regulation'' of stevedores 
and MTOs doing business or seeking to do business at public port 
facilities is necessary to protect the public investment in the 
facilities.
    Notice of the filing of the Petition was published in the Federal 
Register inviting interested parties to submit replies to the 
Petition.\1\ Twelve parties filed replies to the Petition. Following 
receipt of all but two of the replies, SCSPA filed a Motion For Leave 
To File A Response (``Motion''). Six parties responded to the Motion.

    \1\Two parties subsequently requested and were granted a 30-day 
extension of time to file replies.
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The Petition

    SCSPA represents that it seeks ``to remove uncertainty, to 
terminate a controversy, and to allow it to act without peril upon its 
view of the right to regulate the activity of persons seeking to 
perform stevedore and public marine terminal functions at [SCSPA] 
facilities.'' Petition at 1. SCSPA maintains that its Petition is an 
appropriate subject for exercise of the Commission's authority to 
entertain petitions for declaratory orders under [[Page 22391]] Rule 
68.\2\ The Petition is supported by the Declaration of W. Don Welch, 
Executive Director of SCSPA.

    \2\Rule 68 provides, inter alia, that ``the Commission may, in 
its discretion, issue a declaratory order to terminate a controversy 
or to remove uncertainty.'' Subsection (b) of the Rule provides 
further that:

    Petitions under this section shall be limited to matters 
involving conduct or activity regulated by the Commission under 
statutes administered by the Commission. The procedures of this 
section shall be invoked solely for the purpose of obtaining 
declaratory rulings which allow persons to act without peril upon 
their own view. Controversies involving an allegation of violation 
by another person of statutes administered by the Commission, for 
which coercive rulings such as payment of reparation or cease and 
desist orders are sought, are not proper subjects of petitions under 
this section. Such matters must be adjudicated either by filing of a 
complaint under section 22 of the Shipping Act, 1916 or section 11 
of the Shipping Act of 1984 and Sec. 502.62, or by filing a petition 
for investigation under Sec. 502.69.
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    SCSPA describes itself as an operating port which provides public 
terminal facilities and performs terminal services, including stuffing 
and stripping containers for some shippers, at its facilities. SCSPA 
states that it ``has in its tariff a provision which gives it broad 
authority `to control all services performed in connection with cargo 
moving through or over its facilities' and has used that authority to 
decide which entities may perform stevedore and related functions at 
Ports Authority facilities.'' Pet. at 5.
    With respect to marine terminal services, SCSPA claims the 
authority to determine whether it will permit such services to be 
performed by others at its facilities and to establish both the terms 
under which it will allow such operations and the identity of firms 
which will be authorized to operate. SCSPA advises that it performs 
marine terminal services at its public facilities with about 250 
employees. SCSPA states that it ``makes a profit on this operation, and 
does not desire to have third parties use its facilities to compete 
with it.'' Pet. at 10. Therefore, it ``has a rule that it will not 
permit any third party to hold itself out to the public to perform 
marine terminal container operations on Ports Authority facilities.'' 
Id. at 11.
    SCSPA informs that the major carriers calling at Charleston have 
``licensed'' facilities at which marine terminal services are performed 
by third parties under contract with the carriers and that SCSPA's 
public marine terminal services are utilized by the smaller lines 
calling at the port and approximately 25 shippers.
    SCSPA indicates that stevedoring operations at the port have 
changed drastically over the past twenty years as a result of the 
effects of containerization, including the International Longshoremen's 
Association 50-mile Rules on Containers. Instead of just three locally-
owned and operated stevedoring firms serving numerous carriers at the 
port, there are now said to be nine stevedore companies, most operating 
as units of large national companies, serving only a handful of 
carriers. These national concerns, says SCSPA, have little or no 
interest in advancing the economic well being of the port or attracting 
cargo to Charleston which they might handle at another port at which 
they operate.
    SCSPA advises that it already requires stevedores seeking to 
operate at the port to ``register,'' but now wishes to implement 
procedures involving economic and financial standards for the licensing 
of stevedores. These standards would include an assessment of the 
applicant's financial resources, safety record, conformity with 
environmental requirements, and safety and substance abuse programs.\3\ 
Applicants would also be required to demonstrate ability to ``promote 
and foster commerce through the ports of South Carolina.'' SCSPA 
reports that twenty of twenty-five deepwater ports it surveyed in the 
South Atlantic and Gulf Coast require that stevedores obtain a license 
to operate from the public port agency.

    \3\The guidelines, attached to the Petition at Tab B, require 
each applicant for a stevedoring license to submit, inter alia: its 
articles of incorporation; a list of managerial employees, including 
supervisors, superintendents and foremen; resumes of its chairman, 
president, vice-president, chief financial officer and local 
business representative; a list of all equipment owned or leased to 
be used at SCSPA facilities; financial statements or other documents 
demonstrating credit-worthiness and resources, as well as credit 
references; a list of business licenses; a list of business 
locations and offices, describing the business done at each 
location; a list of actual or potential customers to be served at 
the port; and insurance certificates an copies of safety, training 
and substance abuse programs.
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    SCSPA believes its actions are lawful but wishes to remove doubt, 
created by stevedore interests, so that it will not be in peril for 
implementing new licensing procedures. The ``doubt'' to which SCSPA 
refers arises from a January, 1993, informal request by ``a national 
group of stevedore companies, the Independent Marine Terminal Operators 
Council (``IMTOC''),'' that the FMC investigate the practices of SCSPA 
and the port authorities of Georgia, North Carolina and Virginia to 
determine whether these ports violated the Shipping Act of 1984 (``1984 
Act''), 46 U.S.C. app. Sec. 1701, et seq., by refusing to permit 
operations by third parties at their facilities. The FMC's Managing 
Director declined to recommend the initiation of such an investigation, 
stating that the matter would more appropriately be the subject of a 
complaint.\4\ SCSPA indicates that the South Carolina Stevedores 
Association, as association of local stevedores, has since continued to 
seek clarification and modification of SCSPA's policy regarding 
reservation of public marine terminal services work at SCSPA facilities 
to itself.\5\

    \4\The IMTOC letter is attached to the Petition at Tab C. The 
Managing Director's response appears at Tab D to the Petition.
    \5\See Tabs E and F to the Petition.
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    SCSPA maintains that the Commission has jurisdiction to determine 
the lawfulness of economic regulation of stevedores by public port 
agencies, citing Baton Rouge Marine Contractors v. FMC, 655 F.2d 1210 
(D.C. Cir. 1981); Cargill, Inc. v. FMC, 530 F.2d 1062 (D.C. Cir.), 
cert. denied, 429 U.S. 868 (1976) (``Cargill''); and Greater Baton 
Rouge Port Commission v. United States, 287 F.2d 138 (5th Cir.), cert. 
denied, 368 U.S. 985 (1961). The guidelines SCSPA wishes to issue 
should be considered a reasonable exercise of its business judgment, to 
which the FMC should defer, says SCSPA. The Commission is said to have 
approved similar business-based actions, or at least deferred to the 
local authority to make such determinations, in Petchem, Inc. v. 
Canaveral Port Authority, ______ F.M.C. ______, 23 S.R.R. 974 (1986), 
aff'd sub nom. Petchem, Inc. v. FMC, 853 F.2d 958 (D.C. Cir. 1988) 
(``Petchem''); and Seacon Terminals, Inc. v. Port of Seattle, ______ 
F.M.C. ______, 26 S.R.R 886 (1993) (``Seacon'').
    Similarly, SCSPA argues that its self-preference with respect to 
the performance of public marine terminal services at its facilities is 
not violative of the Shipping Acts' proscriptions against 
discrimination, in section 16 of the Shipping Act, 1916 (``1916 Act''), 
46 U.S.C. app Sec. 815 and sections 10(b) (11) and (12) of the 1984, 
Act, 46 U.S.C. app. Sec. 1709(b) (11) and (12), because there is no 
triangular relationship involved in self-preference. In support of this 
proposition, SCSPA refers the Commission to Puerto Rico Ports Authority 
v. FMC, 642 F.2d 471 (D.C. Cir. 1980), as well as the decision of the 
Commission's predecessor in Anglo Canadian Shipping Co., Ltd. v. Mitsui 
Steamship Co., Ltd., 4 F.M.B. 535 (1955).

Replies to the Petition

A. Replies in Support

    Replies in support of the Petition were filed by four Ports and one 
association. The American Association [[Page 22392]] of Port 
Authorities (``AAPA'') reports that public investment in port 
facilities, including those of operating ports as well as landlord 
ports, is enormous ($12.5 billion over 46 years) and must be protected 
by the public entities (ports) created for that purpose. AAPA states 
that:

    The goals that [SCSPA] seeks to achieve are laudatory, 
particularly in light of its status as a public agency and the duty 
that it shares with other port agencies to protect its investment of 
public funds.
* * * * *
    It is the position of AAPA that public port authorities, because 
of their nature as governmental enterprises be given the widest 
discretion possible in controlling and regulating and marine 
terminal facilities under their jurisdiction.

AAPA Reply at 2-3. AAPA declares that public port authorities * * *.

    * * * charged with statutory responsibilities relating to the 
planning, development, financing and operation of marine terminal 
facilities * * * financed through the sale of bonds which pledge as 
security the revenues of the public agencies which offer them, * * * 
are motivated not simply by a profit motive but by a mandate from 
the people to stimulate economic growth and to protect the public's 
investment.

Id. at 3-4. AAPA maintains that port authorities are entitled to impose 
reasonable conditions on those who seek to do business within the port; 
to find otherwise would be to grant them less freedom to choose their 
business partners than is enjoyed by all other enterprises.
    The Tampa Port Authority (``Tampa''), an operating port, supports 
SCSPA's right to reserve to itself the right to perform public MTO 
functions at its facilities and to apply economic criteria in granting 
permits or licenses for stevedores and MTOs to operate at its 
facilities. Tampa declares that the port provides major employment (in 
Tampa's case, 68,000 jobs), tax revenues, income and economic impact on 
its region. Tampa reports that it licenses stevedores and MTOs under 
its tariff. Presently, Tampa advises that it is defending a suit in 
state court challenging its right to reserve general cargo terminal 
operations for itself and is seeking to have the suit referred to the 
FMC under its primary jurisdiction. Tampa's arguments in favor of the 
port's right to regulate operations at or in connection with its 
facilities, and to reserve operations to itself, are said to be 
supported by the same cases cited by SCSPA.
    The reply in support by the Virginia Port Authority refers to the 
responsibilities of public port authorities to enhance the long-term 
economic growth of their respective ports and to protect their public 
investors.
    The Board of Trustees of the Galveston Wharves (``Galveston'') also 
supports SCSPA's proposal to license stevedores and the economic 
standard to be applied by SCSPA.\6\ Galveston indicates that it 
presently licenses stevedores for operation at its facilities, but does 
not apply the specific economic criteria proposed by SCSPA.\7\ 
Galveston states that it would amend its tariff to adopt the same 
proposal if SCSPA is successful. Galveston suggests, based on its own 
experience, tha it is necessary for the Commission to make clear in any 
ruling that port authorities may deny stevedore licenses if sufficient 
economic demand does not exist to support such services. Specifically, 
Galveston asserts that ports should be able to base stevedore licensing 
decisions on such criteria as: existing demand for stevedore services; 
an applicant's support by a vessel carrier; proof that an applicant 
will bring new business to a port; and proof that grant of an 
additional license will not result in duplicative services or 
destructive competition which will impair the quality of port services. 
In support of its arguments for the authority claimed by itself and 
SCSPA to regulate stevedores, Galveston cites the Petchem, Seacon, and 
Cargill cases relied on by SCSPA.

    \6\Galveston's comments are supported by the Declaration of 
Ernest Connor, General Manager of Galveston Wharves.
    \7\It reports that, because the number of companies exceeds 
demand, Galveston quit granting new licenses and, as a result, has 
been challenged in court and at the Commission on its right to 
withhold a license. Although these cases were ultimately dismissed 
at both the District Court and the FMC, it cost the port a great 
deal for attorney's fees to defend the suits.
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    Lake Charles Harbor & Terminal District (``Lake Charles''), a 
political subdivision of the state of Louisiana, describes itself as a 
general and bulk cargo port, serving more than 800 ships and barges in 
1992 and 1993. Much of the cargo is said to be P.L. 480 agricultural 
aid for the Department of Agriculture, which uses a sophisticated, 
computer analysis to determine the lowest landed cost to select the 
exit port for shipments. By keeping its charges to cargo low, Lake 
Charles states it has attracted this cargo and moved 1.1 million tons 
over facilities meant to handle annual volume of 600,000 tons. It 
allegedly has done so in part by having an exclusive contract with a 
single firm to load and unload cargo and to move and spot railcars on a 
continuous basis. Lake Charles advises that it requires stevedores to 
get a permit to work and states that it is considering tariff 
amendments to tie the grant of a permit to the economic interests of 
the port. Lake Charles suggests that the Commission give its blessing 
to these business-based decisions by granting the Petition.

B. Replies in Opposition

    Carolina Marine Handling (``CMH'') suggests that the Commission 
deny or return the Petition unanswered. CMH says the matter is one for 
the SCSPA Board of Directors. CMH alleges that SCSPA is trying to 
monopolize local stevedoring functions of stuffing and stripping 
containers and flatracks, and fears that SCSPA may even attempt to 
reserve to itself deep-sea stevedoring if its revenues continue to 
decline. More specifically, CMH alleges that the proposed guidelines 
for licensing stevedores are ``overly broad, subjective and subject to 
abuse by the Executive Director.'' CMH Reply at 1. CMH objects 
particularly to the guidelines' requirements that applicants provide 
resumes, financial statements, customer lists and customers targets, as 
part of the licensing process.
    In the most comprehensive reply filed by any party, Ceres 
Corporation argues that the Petition is inappropriate for declaratory 
order disposition. Ceres states that it provides stevedore and marine 
terminal services at Charleston through an affiliate, Ceres Marine 
Terminals, Inc., which will be directly affected by the proposed tariff 
rules. Its Reply is supported by two affidavits: That of Lester 
Francis, former General Manager of Ceres Marine Terminal, Inc.'s 
stevedoring facility at Charleston, which describes operations at 
Charleston by Ceres and other stevedores; and that of James R. Bramson, 
an attorney, who reports that he examined 23 Atlantic and Gulf coast 
port tariffs and found no similar licensing provisions. Bramson reports 
that his survey of port tariffs uncovered a few license provisions but 
none requiring production of new business or a pledge of new business 
to permit operations.
    According to Ceres, all container terminal facilities at the port 
of Charleston are owned by SCSPA; a few carriers with large volumes of 
traffic lease some of the container terminal facilities at which 
private stevedore companies, including Ceres, perform marine terminal 
services for the containerized cargo. Receipt and delivery of 
containerized cargo at the public terminal is allegedly reserved by 
SCSPA. In addition, all CFS cargo (cargo stuffed or stripped at the 
port) is said to [[Page 22393]] be handled at the public facilities 
owned and operated by SCSPA; receipt and delivery of all such cargo is 
allegedly reserved by SCSPA for its own performance. Most of the cargo 
controlled by carriers (including but not limited to those with leased 
container facilities) is stuffed and stripped by private stevedores, 
reports Ceres; shipper-controlled cargo is stuffed and stripped by 
SCSPA.
    Ceres argues that the tariff is unreasonable because it would 
extend the port's monopoly of cargo receiving and delivering and 
stripping and stuffing of containers from shipper-controlled cargo to 
all cargo except that of the few large carriers with leased facilities. 
Under the proposed guidelines, SCSPA would continue to reserve to 
itself the receiving and delivery of all CFS and containerized cargo at 
the public terminal; in addition, Ceres points out, SCSPA would reserve 
for itself the stripping and stuffing of CFS cargo under the control of 
carriers other than the few who lease terminal facilities, as well as 
the already-reserved shipper-controlled CFS cargo. Ceres points out 
that the Commission is asked to rule on the lawfulness of these 
practices without benefit of economic or financial analysis which shows 
the necessity for the practice, the effect on stevedores, or the amount 
of cargo served by the SCSPA or the stevedores to be affected by the 
rule.
    With respect to the specific elements of the licensing guidelines, 
Ceres states that the past SCSPA practice of requiring annual 
``registration'' of stevedores operating at the port involved only a 
one-page form identifying responsible persons and credit references, 
with proof of insurance coverage, which Ceres compares to the much more 
extensive and intrusive requirements of the proposed licensing 
guidelines. In addition to the information requirements noted at 
footnote 3, above, Ceres points out that the Executive Director is 
authorized to request additional information ``as he sees fit'' and is 
directed to consider, in addition to the financial and other factors 
specified and such other factors as he deems relevant, the ability of 
the applicant to ``promote and foster commerce through the Ports of 
South Carolina.''
    Ceres takes issue with the lack of factual material offered in 
support of the Petition. Ceres notes for example that SCSPA has neither 
alleged nor shown that any stevedore at the Port of Charleston has ever 
diverted to another port traffic that would otherwise have moved 
through Charleston, although the likelihood of such behavior is offered 
as justification for requiring that stevedores demonstrate the ability 
to promote and foster commerce through South Carolina ports. Similarly 
lacking are said to be alleged instances of destructive competition 
among stevedoring companies, which, to the contrary, notes Ceres, have 
objected only to SCSPA's solicitation of their private customers in the 
past. Ceres points out that, according to SCSPA's Petition, a port 
formerly served by just three local stevedores now supports the 
operations of nine stevedoring companies and states that no stevedore 
has left the Port of Charleston in at least the past three years. Ceres 
Reply at 12.
    Ceres notes that the Petition refers to various objections raised 
in the past by IMTOC, Stevedoring Services of America and CMH to its 
practice of reserving public marine terminal services to itself, and 
offers those objections as a basis for its need to secure a declaratory 
order to terminate a controversy and enable it to act on its proposed 
tariff guidelines without peril. Ceres argues that the objections 
raised related to the reservation of terminal services only, not the 
later-drafted proposal to license stevedores. Ceres also represents 
that the stevedores sought to resolve their differences with SCSPA 
concerning the division of operating rights between the private and 
public entities at the Port prior to SCSPA's promulgation of the 
guidelines and its request for advance approval by the Commission 
through the Petition. Ceres protests that SCSPA is here seeking FMC 
approval in advance of its actions on the basis of a very sketchy 
factual presentation.
    Ceres alleges that SCSPA is seeking Commission approval for 
exclusive arrangements rarely found reasonable, and then only on fact-
intensive records showing extraordinary circumstances not present at 
Charleston. This case, moreover, is said to involve a major container 
port, unlike the exclusive franchising cases involving individual 
terminals or small or start-up ports, such as Petchem, relied on by 
SCSPA.
    Consideration of the Petition would require significant factual 
investigation and hearings on material issues of fact, including 
economic justification for the proposal and the impact on stevedores 
presently operating at the port, says Ceres. The Petition is therefore 
said to be unsuitable for disposition on declaratory order.
    The licensing standards, Ceres charges, are vague and subjective 
and therefore unreasonable. With respect to the reservation of MTO 
services, Ceres argues that, even if the antidiscrimination provisions 
of section 16 of the 1916 Act and sections 10(b) (11) and (12) of the 
1984 Act do not apply to the proposal in the absence of a triangular 
relationship, as urged by SCSPA, the reasonableness standard of section 
17 of the 1916 Act, 46 U.S.C. app. section 816, and section 10(d) of 
the 1984 Act, 46 U.S.C. app. section 1709(d), does apply, and that the 
practice is unreasonable under that standard. And, says Ceres, the 
unlawful preference sections probably do apply where, as here, the port 
authority wears two hats: MTO and stevedore, and acts in one capacity 
to favor the other.
    The Carriers Container Council, Inc. (``CCCI''), claiming to 
represent carriers of 90 per cent of the containerized cargo moved 
through the Port of Charleston, states that, while SCSPA has a monopoly 
of MTO functions at Charleston, carriers now have a choice of nine 
stevedores to service their vessels. CCCI alleges that the proposed 
tariff guidelines would deprive the carriers of this choice. In 
addition, CCCI objects that the licensing standards are vague, 
subjective, and unconstitutionally delegate to the FMC a state 
function: review of the actions of the state port authority acting 
under state law. The stated standards are said to show bias in favor of 
local companies, which was found to violate the Shipping Act in 
Plaquemines Port, Harbor and Terminal District v. FMC, 838 F.2d 536 
(D.C. Cir. 1988). CCCI argues that an evidentiary hearing is necessary 
to test the proffered economic justification for the licensing scheme, 
and that a triangular relationship is not necessary to find a violation 
of section 16 where the port authority wears two hats, as here, citing 
Puerto Rico Ports Authority v. FMC, 642 F.2d at 489.
    Stevedoring Services of America (``SSA'') opposes the Petition and 
asserts that it seeks an inappropriate use of Rule 68: both an advance 
ruling that its implementation of its guidelines will not violate the 
Shipping Acts of 1916 and 1984 (quoting the Petition as seeking ``a 
Commission declaration that its prospective stevedore license judgments 
will be lawful.'' SSA Reply at 4, quoting Petition at 6) and a ruling 
as to past conduct which has already been alleged, by IMTOC, to be 
violative of the Acts. The latter request is said to be akin to an 
attempt to use the declaratory order procedure to defend against past 
or future complaint proceedings, ruled improper in Petition of Yangming 
Marine Transport Corp. for Declaratory Order, ______ F.M.C. ______, 24 
S.R.R. 1057, 1058 n.3 (1988), says SSA.
    SSA also objects to the stevedoring guidelines requirement that 
applicants [[Page 22394]] provide a customer list. SSA argues that the 
guidelines are objectionable because they would deprive stevedores of 
the right to operate, are vague and subjective, would impermissibly 
permit monopoly practices by SCSPA, and would deprive carriers of their 
right to a stevedore of their choice. With respect to the guidelines' 
requirement that stevedore license applicants demonstrate ability to 
promote and foster commerce through South Carolina ports, SSA points 
out that no similar requirement is placed on carriers who call the 
port, and that the carrier, rather than the stevedore, controls the 
choice of port to be served by a vessel. Finally, SSA alleges that the 
guidelines impermissibly seek to deprive stevedores of the right to 
redress in state and federal courts, through a provision that exclusive 
appeal of a license denial by the Executive Director and the Board of 
the Ports Authority is to the Federal Maritime Commission. This, says 
SSA, would deprive the applicant of rights to challenge the action 
under laws other than the Shipping Acts. SSA urges that the Petition be 
denied or investigated by the FMC through a fact-finding proceeding 
initiated by show cause.
    Maritrend, Inc., a stevedoring company operating in two ports in 
the Gulf region, declares that the guidelines are too vague and 
subjective: licensing should be based solely on objective criteria such 
as insurance, bonding, etc., not whether the stevedore operates at 
competing ports, uses non-union labor or competes with existing 
licensees. The guidelines are said to reflect ``loyalty'' requirements 
and local favoritism which are inappropriate considerations according 
to Maritrend. Also allegedly inappropriate is the guidelines' 
requirement that applicants show that they will bring ``new business'' 
to the port, because carriers, not stevedores, control the cargo and 
selection of port calls.
    IMTOC, among whose members are MTOs who perform stevedoring at 
SCSPA, claims that, with respect to the reservation to SCSPA of the 
right to perform all MTO operations at its facilities, the Petition is 
the mirror image of the IMTOC request for investigation refused by the 
FMC last year. IMTOC agrees with the FMC Managing Director's 
determination in his letter to IMTOC that the matter can be concluded 
only after a proceeding permitting receipt of evidence and legal 
arguments from all affected parties. IMTOC submits that a full 
investigatory proceeding is necessary; therefore, a declaratory order 
is not appropriate. Regarding the possible violation of section 16 of 
the 1916 Act by SCSPA's reservation of MTO functions at its facilities, 
IMTOC maintains that because some third party MTOs are permitted to 
operate the SCSPA facilities of licensed carriers, as SCSPA admits, the 
triangular relationship necessary to find a violation of section 16 
does exist. Moreover, IMTOC claims, no justification under Petchem 
exists for the exclusionary nature of SCSPA's practices: its only 
stated reason is unwillingness to forgo profits from its MTO 
operations, which is not a proper public purpose.
    The South Carolina Stevedoring Association (``SCSA''), an 
association of privately owned stevedoring companies, some of which are 
also MTOs, who do business at South Carolina Ports, notes that the 
Petition asks the Commission to rule on the legality of two separate 
matters: the proposal to license stevedores eligible to work at SCSPA 
facilities, and SCSPA's past and present practices of excluding certain 
third-party terminal operations on its facilities. Neither the 
licensing issue nor the MTO exclusion issue can be determined on this 
Petition, claims SCSA. The MTO exclusion issue allegedly involves past 
and present conduct as to which the Petition does not begin to meet its 
burden of proof that there are no violations of the Shipping Acts.
    And despite SCSPA's characterization of it, SCSA claims that the 
licensing issue does not concern the general authority of SCSPA to set 
reasonable terms and conditions for use of its facilities, but the 
reasonableness of the terms proposed. Those terms are said to include 
too many vague and unspecified powers of the Executive Director to 
establish requirements for applicants, revoke or suspend licenses, and 
condition licenses which are unreasonable on their face. SCSA submits 
therefore that the matter is unsuitable for determination on a petition 
for a declaratory order.
    The licensing provisions are also argued to be objectionable 
because they require a ``loyalty oath'' of stevedores by requiring 
promotion of the interests of the port, in addition to the 
inappropriate statements about lack of local ownership. This 
requirement that local interests be promoted and favored does not, in 
SCSA's opinion, appear to be required of carriers that call at the 
port, or the MTOs who work for licensed carriers at the port; there is, 
moreover, no indication of their loyalty or lack of loyalty to the 
port. SCSA charges that these attempts to favor local interests, or to 
recreate the days of local stevedoring firms, are an unconstitutional 
burden on interstate commerce. SCSA concludes that the FMC should deny 
the Petition and order a full-scale evidentiary hearing on an order to 
show cause.

SCSPA Motion for Leave To File a Response and Replies

    SCSPA requests an opportunity, normally prohibited by the terms of 
Rule 68,\8\ to address ``1) certain erroneous assumptions, and 2) 
misapprehensions of fact, made by parties responding to the petition * 
* *.'' SCSPA Motion at 1. SCSPA states that grant of its Motion will 
narrow some of the issues raised by opponents of the Petition and 
eliminate other issues.

    \8\Rule 68(e) provides that ``No additional submissions will be 
permitted unless ordered or requested by the Commission.''
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    SCSPA believes that opposition to the Petition stems in part from a 
misunderstanding of the purposes and goals of SCSPA's proposed 
regulation of stevedores and MTOs. Referring specifically to the 
concern of CCCI that the guidelines will deprive carriers of their 
choice of stevedores, SCSPA offers to add appropriate language to the 
guidelines to remove that issue if it is permitted to file a response; 
also to be addressed would be the ``loyalty oath issue,'' as raised by 
SCSA.
    Stating that some opponents have misunderstood ``some of the facts 
underlying the * * * Petition,'' relying on ``facts which are 
demonstrably incorrect,'' SCSPA seeks the opportunity to ``sort out the 
incorrect fact assertions and * * * correct them'' in a response. 
Motion at 4. Nevertheless, SCSPA does not ``mean that there may not be 
some facts as to which there is a dispute * * *.'' Id.
    SCSPA notes that the Commission permitted a response to replies in 
another declaratory order proceeding, Matson Navigation Co., Inc.--
Transportation of Cargoes Between Ports and Points Outside Hawaii and 
Islands Within the State of Hawaii, ______ FMC ______, 25 S.R.R. 245 
(1989), so that it could ``render a definitive verdict'' on the issue. 
SCSPA Motion at 5, quoting Matson, 25 S.R.R. at 245. Similar to the 
procedure used in that case, SCSPA suggests that it be permitted to 
file a response limited to 20 pages and that interested parties be 
permitted to make surrebuttal filings within 15 days.
    Six parties filed Replies to the Motion. Maritrend claims that the 
Motion demonstrates the inappropriateness of proceeding by declaratory 
order in this matter. SSA reiterates its position that allegations of 
[[Page 22395]] violation of the Shipping Acts are outside the scope of 
Rule 68 and maintains that declaratory orders are not suited to dispose 
of contested factual issues, citing Petition for Declaratory Order of 
Seatrain International, S.A., 21 F.M.C. 187 (1978). IMTOC suggests that 
the Motion ``be denied or held in abeyance until the Commission decides 
what to do with the original Petition * * *.'' IMTOC Reply at 1. Ceres 
does not object to SCSPA's request ``so long as any response is 
strictly limited to a factual presentation that is directly responsive 
to specific factual assertions or assumptions made by others.'' Ceres 
Reply at 1 (emphases in original).
    Ceres states that it does not believe that any factual 
supplementation of the record by SCSPA can cure the flaws in its 
Petition. For example, says Ceres, SCSPA wants to respond to questions 
Ceres raised about SCSPA's survey of licensing practices at other 
ports, but the real problem is not whether 20 or even all other South 
Atlantic and Gulf ports license stevedores, but the particular 
requirements and practices proposed by SCSPA. Ceres takes the position 
that SCSPA has not requested, nor should it be permitted, to respond to 
the legal arguments offered by those opposed to the Petition.
    CCCI reads the Motion as indicating that ``the SCSPA confesses that 
it made an error in not telling the carriers that they have a right to 
appoint their own stevedore to work anywhere on the terminals.'' CCCI 
Reply at 1. CCCI suggests that SCSPA end the dispute and 
misunderstanding by withdrawing its Petition. Otherwise, CCCI opposes 
the Motion.
    SCSA argues that because Rule 68 requires that a petition be 
accompanied by petitioner's complete legal and factual presentation, 
and does not provide for submission of additional evidence or argument 
by a petitioner, the Motion is in reality an amended petition. SCSA 
notes that the Motion addresses only factual questions related to the 
proposed stevedore licensing scheme, rather than past and present SCSPA 
practices concerning the exclusion of certain marine terminal 
operators. SCSA submits that the Motion should be denied, but that, if 
it is granted, at least 30 days be permitted for the filing of 
responses to SCSPA's submission.

Discussion

    The replies to the Petition reflect a division of views between 
stevedores and non-port MTOs, who oppose the proposals, and public 
ports, who support the proposals. The level of interest and concern 
generated by the proposals is arguably an indication that application 
of the Commission's resources to resolution of the controversy is 
appropriate.
    However, as many of the opponents point out, SCSPA's petition has 
two purposes: To secure the Commission's imprimatur of lawfulness of 
its present and continuing practice of reserving certain terminal 
functions at its public facilities for itself and to prospectively 
assure the lawfulness of its proposal to license stevedores under the 
criteria in its guidelines. These two areas of concern covered by the 
Petition differ to some extent as to their impact and eligibility for 
disposition on a petition for a declaratory order.
    A distinction may be made between issues which appear to be 
appropriate for disposition under Rule 68 and those which are not. 
Thus, we would agree with those parties who regard the issue of SCSPA's 
reservation of terminal functions for itself as inappropriate for 
disposition on declaratory order because it involves past and present 
conduct which may entail violations of the Shipping Acts.
    We are reluctant to undertake a proceeding on a declaratory order 
which, even implicitly, involves ruling on the lawfulness of 
Petitioner's past activities. The new policies governing reservation of 
functions are incorporated in the draft tariff rule attached at Tab B 
to SCSPA's Petition, while the policies applied in the past are 
reflected in the existing tariff rule attached to the Petition at Tab 
A. While the policies regarding reservation of certain MTO functions 
for future application are not co-extensive in coverage with the 
policies SCSPA has applied to its marine terminal operations for some 
time, they are, nevertheless, intertwined: they differ in scope, not 
kind. Ruling on the legal issue raised--the reservation of functions 
and exclusion of competing MTO's by the public owner of the facility--
with respect to the future would necessarily determine the same issues 
raised with respect to SCSPA's past conduct. These practices, reflected 
in SCSPA's present tariff, were the subject of IMTOC's 1993 informal 
request for an FMC-initiated investigation of the practices of SCSPA 
and three other public ports, rejected by the Commission's Managing 
Director. We therefore find these issues procedurally inappropriate for 
determination under Rule 68. The declaratory order proceeding initiated 
herein will not address the merits of SCSPA's reservation of terminal 
functions for itself. SCSPA's reservation practices are neither found 
lawful nor prohibited by anything herein.
    The proposed tariff rule for the licensing of stevedores, on the 
other hand, raises issues which are uniquely within the expertise of 
the Commission, do not involve possible past or present violations of 
the Shipping Acts, and, insofar as they arise under the Shipping Acts, 
are not issues which are or may be raised in another forum.\9\ In 
United States Lines, S.A.--Petition for Declaratory Order Re: The 
Brazil Agreements, order entertaining petition and referring matter to 
administrative law judge, ______ F.M.C. ______, 24 S.R.R. 1034, 1040 
(1988) (``Brazil Agreements''), the Commission discussed the factors to 
be assessed in determining whether to entertain a petition which is 
within the Commission's substantive jurisdiction. Analyzing cases in 
which declaratory orders had been granted or denied on the merits, the 
Commission explained that * * *

    \9\SSA raises an issue regarding the guidelines provision which 
allegedly would deprive stevedores of right to redress in state and 
federal courts by making license denials appealable only to the FMC. 
The question of whether this provision is an ``unreasonable 
practice'' under the 1916 and 1984 Acts is one for the Commission's 
determination in the first instance.

    * * * the following weigh heavily in favor of issuance of such 
orders (and their absence against it): (1) Presentation of clear-cut 
legal issues and non-disputed facts; (2) ability of the Commission 
to resolve all issues in a proceeding so as to terminate the 
controversy; (3) presence of issues of fact or law which require the 
Commission's expert knowledge or judgment; (4) non-pendency of other 
proceedings or absence of need to resort to other tribunals to 
resolve matters in dispute; (5) claim which is purely declaratory in 
nature as opposed to an action for reparation for violation of 
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statutes or regulations.

    In Brazil Agreements, the Commission concluded that the issues 
presented, which involved interpretation of a Commission-approved 
agreement, were clear-cut and appropriate for determination by the 
agency. Although some factual issues were also in dispute, the 
Commission determined that disposition of those issues through an 
evidentiary hearing would not be inconsistent with issuance of an 
otherwise appropriate declaratory order. 24 S.R.R. at 1040. It is, 
similarly, clear from the replies to the Petition, as well as from 
SCSPA's Motion and the replies thereto, that there are material issues 
of fact in this case which cannot be disposed of on the basis of the 
existing record.
    Some of the parties in this proceeding make the point that these 
disputed [[Page 22396]] factual issues, involving the economic and 
other justification for the proposed licensing guidelines, as well as 
the need for the specific information being requested, render the 
Petition inappropriate. This does not appear to be an insurmountable 
problem; questions of disputed fact may be referred to an 
administrative law judge (``ALJ'') for an evidentiary hearing. Brazil 
Agreements; see also In the Matter of Rates Applicable to Ocean 
Shipments via American President Lines, ______ F.M.C. ______, 21 S.R.R. 
1168, 1169 (1982). Furthermore, the participation in this case of other 
public ports with an interest in similar actions, as well as national 
stevedoring companies with operations at several ports, make this a 
particularly appropriate proceeding in which to determine these issues.
    Some parties opposing the Petition allege that it is an 
inappropriate effort by SCSPA to secure FMC approval in advance for 
specific decisions SCSPA will make in granting or denying licenses. 
Ceres, in particular, notes that SCSPA specifically ``seeks a 
Commission declaration that its prospective stevedore license judgments 
will be lawful.'' Ceres Reply at 30, quoting Petition at 6. We see no 
bar to consideration of the lawfulness of the guidelines themselves on 
the same basis that the Commission is frequently called upon to 
determine an allegation that a tariff provision is unlawful not in its 
execution but in its terms. We see nothing in SCSPA's Petition or the 
guidelines themselves that would prevent the filing of a complaint 
alleging unfair prejudice or disadvantage in an individual case based 
on denial of a license.
    Section 5(d) of the Administrative Procedure Act, 5 U.S.C. 554(e), 
authorizes each agency to issue declaratory orders ``* * * in its sound 
discretion * * *.'' Similarly, FMC Rule 68 provides, inter alia, that 
``[t]he Commission may, in its discretion, issue a declaratory order to 
terminate a controversy or to remove uncertainty'' (emphasis added). In 
exercising its discretion, the Commission is entitled to assess the 
advantages and disadvantages associated with declaratory relief. 
Advantages include the opportunity to efficiently terminate a 
controversy or remove uncertainty, while disadvantages include both the 
administrative burden imposed by a policy of issuing advisory opinions 
and the familiar problems surrounding the adjudication of abstract 
controversies. Climax Molybdenum Co. v. Secretary of Labor, 703 F.2d 
447, 452 (10th Cir. 1983). See also Yale Broadcasting Co. v. FCC, 478 
F.2d 594, 602 (D.C. Cir.), cert. denied, 414 U.S. 914 (1973).
    In this case, the issues with respect to the licensing guidelines 
do not appear to be abstract or lacking in sufficient factual context 
for determination upon a more complete record. We also note, as several 
parties have pointed out, that the burden of proof in commission 
proceedings falls on the proponent of a rule or order, 46 CFR 502.155, 
in this case SCSPA. See, e.g., Ceres Reply at 15.
    Therefore, we find that portion of the Petition which relates to 
the guidelines for licensing stevedores appropriate for declaratory 
relief and refer the matter to an administrative law judge for 
determination of critical facts and issuance of an initial decision. 
This approach will enable the Commission to fully resolve the questions 
raised in the Petition which are appropriate for declaratory relief, 
without addressing questions of past practices of SCSPA which the 
parties were free to raise by way of a complaint at any time.
    All filings made to date with respect to the Petition will be 
incorporated into the record herein, for such purpose and weight as may 
be appropriate. In addition, we specify in our referral particular 
issues of fact and law to be resolved. SCSPA's Motion to Supplement the 
Record is denied as moot, because it will have an opportunity to 
supplement the record in the proceedings before the ALJ.
    Therefore, it is ordered, That SCSPA's Petition for a Declaratory 
Order is granted to the extent that proposed tariff Rule 34-051 relates 
to the licensing of stevedores and it is referred to the Chief 
Administrative Law Judge, for assignment and issuance of an initial 
decision;
    It is further ordered, That the administrative law judge to whom 
this proceeding is assigned shall exercise his discretion to insure 
that the issues are resolved in the most expeditious means consistent 
with due process and a sufficient record upon which to render a 
decision;
    It is further ordered, That in reaching the ultimate issue of the 
lawfulness of the proposed tariff Rule No. 34-051 in this proceeding, 
attention shall be devoted to resolution of the following issues:
    1. Whether SCSPA, a public marine terminal operator, engages in an 
unreasonable practice or acts in an unfairly prejudicial manner when it 
allows some stevedoring companies access to its facilities and denies 
such access to other companies on the basis of the public marine 
terminal operator's assessment of demand for services by carriers and 
shippers using its terminals, or similar economic criteria not related 
to an individual applicant for a license.
    2. Whether any of the specific provisions of the proposed tariff 
Rule No. 34-051 are unduly prejudicial or are likely to unfairly 
discriminate against individual applicants for stevedoring licenses.
    3. Whether the powers granted the Executive Director to require 
additional information or to place conditions on licenses granted 
constitute an unreasonable practice under the Shipping Acts.
    4. Whether the provision of draft tariff Rule No. 34-051 
restricting appeals of license denials or other actions to the Federal 
Maritime Commission constitutes an unreasonable practice or is 
otherwise unlawful under the Shipping Acts.
    It is further ordered, That SCSPA's Petition for a Declaratory 
Order is denied in all other respects;
    It is further ordered, That SCSPA's Motion For Leave to Supplement 
the Record is denied;
    It is further ordered, That pursuant to Rule 61 of the Commission's 
Rules of Practice and Procedure, 46 CFR 502.61, the initial decision of 
the Administrative Law Judge shall be issued by May 1, 1996 and the 
final decision of the Commission shall be issued by September 2, 1996;
    It is further ordered, That notice of this Order be published in 
the Federal Register, and a copy be served on parties of record;
    It is further ordered, That each person who filed a reply to the 
Petition herein is designated a party to this proceeding;
    It is further ordered, That other persons having an interest in 
participating in this proceeding may file petitions for leave to 
intervene in accordance with Rule 72 of the Commission's Rule of 
Practice and Procedure, 46 CFR 502.72;
    It is further ordered, That all further notices, orders, and 
decisions issued by or on behalf of the Commission in this proceeding, 
including notice of the time and place of hearing or prehearing 
conference, shall be served on parties of record; and
    It is further ordered, That all documents submitted by any party of 
record in this proceeding shall be directed to the Secretary, Federal 
Maritime Commission, Washington, DC 20573, in accordance with Rule 118 
of the Commission's Rules of Practice and Procedure, 46 CFR 502.118, 
and shall be served on all parties of record.

    [[Page 22397]] By the Commission.*

    *Commissioner Scroggins did not participate in this proceeding.
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Joseph C. Polking,
Secretary.
[FR Doc. 95-10993 Filed 5-4-95; 8:45 am]
BILLING CODE 6730-01-M